ArthurFonzarelli wrote:timber2012 wrote:Back to the topic -
how does the new mortgage rules effect the typical home in the greater vancouver area?
I say it has no effect.
I'm surprised you would say that. It seems to me that the bit of hard data we have on this is that 40% of mortgages nationally are 30 year terms. Ceteris paribus, it should be >40% in local markets with higher price:income ratios. Going forward, you have to assume that some (I think a high) proportion of people will still be purchasing based on their present carrying costs, which just went up for probably half of the local market, give or take. Polls have shown that a high percentage of people are maxxing out based on what they can afford at present rates and taking the longest possible terms to get into this "crazy" market. So I think it will have a huge impact in Vancouver proper - less so in the less inflated markets where price:income isn't so outlandish. In terms of product mix, everyone said houses were immune to the downturn pre 2008 as well but SFHs crashed more than other product mixes at the time, non? But for the specker condo flipper covering that mortgage payment with rental income just got a whole lot harder than it was with a 40 year term so even though it hasn't appreciated as rapidly that segment should be in for a smack in the pants too, methinks.
Am I missing something here, Timber? Why don't you think it will have an impact?
I think that the commoner has become a lemming - they'll figure out a way around the rules. Whether they get the DP from somewhere else (credit line) or they fake rental income on the home (to give the impression of higher income to cover gds).
For some reason, people in Vancouver are stupid when it comes to real estate. They'd rather shovel their entire life's savings and income into a home than actually live life. I don't care how nice of a city Vancouver is perceived to be (I don't agree with that by the way - there are many places I'd rather live than Vancouver all things being equal), if I couldn't afford some of the nicer things in life because I was spending too much on housing, I'd move.
I guess the real reason I don't think it will have an effect is because we've had two or three mortgage rule changes that have done virtually nothing to slow our market. If our market slows, I think it will be because of something else.