All one really needs to know is that there's nothing legislated here, these are merely "guidelines" for the banking industry, i.e. essentially nothing.
this post was submitted on 23 Nov 2023
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Just like
this meeting could have been an email
well,
this policy point could have been a search result.
In all seriousness, all levels of government are moving too slowly on housing affordability. They should be trying to reduce prices to prepandemic levels, or, even better 2010 levels.
I think there might be a balance here that's hard to strike, every one who's in a house is going to hate loosing that value, and any politician who lowers the current value of property will have to deal with upsetting that category of voters. It seems like building more affordable houses would be better, it'll have a similar effect, but probably not as drastic.
If they put effort into making them environmentally friendly and employeed/educated people to do that we could make our country a nicer place to live. Just have to breakup the grocery conglomerates and things would be looking up
every one who's in a house is going to hate loosing that value
False. I'm in a house. I want to live in a different house. I can't afford a different house. Make houses cheaper.
That said there is some financial fuckery that can happen with house prices reducing. Particularly if you end up needing major repairs (though that's just the nature of owning...)
Housing price stagnation seems an acceptable medium.
upsetting that category of voters
I postulate the criticalist category is the >70 crowd, for the following reasons:
-
They vote.
-
They don't work much, so existing assets and pensions are the main finances in their life. Owned housing is probably the biggest part of that portfolio; with little chance of opening up new revenue streams. This makes them the most vulnerable to (real or precived) decreases in housing stock value.
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They may be, or are planning to become, reverse mortgaged.
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They vote.
I'm in a house. I want to live in a different house. I can't afford a different house. Make houses cheaper.
At least how I see it house prices rising is good for you short term if you are hopping from one house to another. For instance I bought my first house in 2020 for 800k, I sold for 1.1mil and bought a 600k house (so I don't get screwed when my mortage renews) that 300k I 'made' from the sale gets to go directly to making my mortgage cheaper and/or renovations.
If house prices drop below what you have left on your mortage then it becomes quite difficult to move, especially if you are upgrading, unless I am missing something.
If you don't plan on moving then the value doesn't really matter much at all besides possibly lowering land tax (but land tax valuations are really divorced from the market rate)
This is a selfish take of course, I think housing prices need to go down, and part of why I choose my current home is because it's a forever home and I don't ever plan on selling so I don't need to care about how the housing market fluxuates. One way or another someone is going to get caught holding the bag, I think home owners are a lot more likely to absorb that damage than most others.
Housing is complex, and I am ni expert, so how do you think this reasoning is incorrect.
The statement was all home owners want prices to increase.
I do not. Therefore the statement is incorrect.
A percentage of homeowners want prices to increase would be more correct. I don't know what that percentage is, but it cannot be 100%.
The statement was all home owners want prices to increase.
This statement was never made.
My apologies, the statement was "every one who's in a house is going to hate loosing that value"
As a person who's in a house and won't hate losing that value, the statement remains false.
I'd also guess that the members of the local anti-gentrification groups also won't hate losing that value; but that's only a guess.
I finally see what you are trying to say. You wouldn't mind losing value in your house, so "the statement remains false" for you.
All i was saying originally is: lowering housing prices would be hard to pull off politically because there will be a significant portion of the 65% of canadians that own houses, that would mind losing that value.
CMHC built and helpt built about a million houses in '45 to '49 because we needed them.
We're soon to be short 3.5 million houses. So build them.
The only discernable difference is that than in '45 the unhoused were already organized and more apt to violence due to the nature of being a demobilized army.
65% of Canadians can get pissed off about it. But the alternatives look worse, and they'll be more pissed off.
Or we can wait until the number of homeowners drops below the number of non-owners (20 years based on the trend of the last two censuses) and see what the masses decide over the gentry then.
Ah okay you just don't understand hyperbole. Have a good day.
Your one example is pretty easy to refute, I own my house I don't want houses to lose that stored value, or all the money I've been shoveling into my mortgage I could have been saving for w/e. It ignores that people with houses have been saving for years.
Reduction and stagnation are different.
You have provided exactly as many sources as the person you are responding to. If you think that you are somehow in a stronger debate position, you are incorrect.
I remain unconvinced the original statement is false. I don't care about being correct.
I don't want houses to lose that stored value, or all the money I've been shoveling into my mortgage I could have been saving for w/e.
Obviously I don't either.
It ignores that people with houses have been saving for years
No, we've been purchasing a thing for years, we have not been saving. We can sell that thing, but it is under no obligation to be valued higher than when we bought it.
How are you calculating the value it had when βweβ bought it? No matter where you draw the line if you reduce prices, some people are still going to do well, some will come out even, and some ( the ones that can least afford it ) will get killed.
Stagnation is the most fair to all interests. Inflation will take care of affordability.
How are you calculating the value it had when βweβ bought it
Literally how much you were willing to pay. That's it's. (Technically also how much the previous owner/builder was willing to sell for; but that's also how much they would pay in an indirect sense)
if you reduce prices
And if prices reduce on their own? I've sold for less than purchase twice. It sucks. But I could have rented and not accepted that risk.
and some will get killed.
If you get killed, it's because you tried to invest in something that shouldn't be an investment?
You know who really gets killed? People who buy a home, and then that home has major defaults, and the repairs are 50% of the purchase price 5 years in, and insurance doesn't pay because it's a building fault, and the builders down pay because they rotate companies every year, and maybe you'll be able to sue the city who neglected their inspection duties or the insurance of the builders and architects but that file is still ongoing 4 years later, and even if it is successful will maxed at an amount that will only cover 30% of the work.
But that's a risk of home ownership, and I could have rented to avoid those risks.
No, we've been purchasing a thing for years, we have not been saving. We can sell that thing, but it is under no obligation to be valued higher than when we bought it.
What do you mean "no", I never said "people who bought houses must get a higher return on money spent", i said a policy like this would ignore those people.
What i said originally:
I think there might be a balance here that's hard to strike...
Was in response to:
In all seriousness, all levels of government are moving too slowly on housing affordability. They should be trying to reduce prices to prepandemic levels, or, even better 2010 levels.
This policy would ignore anyone in a house. That also seems shitty
I policy like this may ignore them, but housing prices can reduce on their own without any government intervention...
I've sold at a loss twice. It sucks. But that's a risk of ownership. I could have avoided that risk by renting.
Your house is only worth however much the next person will pay for it. They are under NO obligation to pay you more than you paid.
Artificially reducing building supply while people cannot afford to rent or purchase is pretty fucking shitty. "Oh hi Bob, it really sucks that you are spending 60% of your income on a place to live; but the ethereal value of this thing I bought keeps going up, and I would love for it to continue going up, even though the future is completely speculative and the whole thing could go tits up and skyrocket again no matter what we do; so I'm going to keep supporting policies that keep the line going up"
Bonus point for undertaxed homes, and suburban regions that survive on pushing the ponzi scheme further out or leeching on city core taxes; for LVT is a whole other kettle of fish.
I policy like this may ignore them, but housing prices can reduce on their own without any government intervention...
This is all i was saying, it is not a simple thing, as the original post said
In all seriousness, all levels of government are moving too slowly on housing affordability. They should be trying to reduce prices to prepandemic levels, or, even better 2010 levels.
Makes it sound like "hey it's simple we just fuck 65% of people in canada" is not a winning political strategy.
Stagnation might be the only reasonable solution. I'm all for taxing home speculation by companies, and raising taxes on secondary/rentals. Hell, i'd be for a subsidies for buying houses even to the poorest people. I want to live in a pleasant place, part of that means everyone lives and works comfortably.
Artificially reducing building supply while people cannot afford to rent or purchase is pretty fucking shitty
I don't know who's doing this or how it relates to the original post
I've sold at a loss twice. It sucks. But that's a risk of ownership.
Presumably prices were also cheaper when you bought in that market, so there's some
Bonus point for undertaxed homes, and suburban regions that survive on pushing the ponzi scheme further out or leeching on city core taxes; for LVT is a whole other kettle of fish.
I don't know anything about this
Fine. New policy.
We restrict the sale of new cars. We can make car zoning, so only SUVs can be purchased in some places, only trucks in another. Maybe in some small areas we'll allow sedans. Well Make sure that auto manufacturers can build the cars people want, or on the numbers they want them. Want a bicycle instead? Too bad, only cars are allowed here. People are walking? We'll just replace sidewalks with more road for cars.
Sure cars will become way more expensive, bit everyone who already owns a car can watch the value of their car go up!
I've been in my house for 2 years. Based on housesigma.com my valuation is already up $150k. I could care less if it tanks. Something is severely fucky when they have no idea if/what work I've done and my valuation is up that much after 2 years.
It's unfortunate you can't just transfer a mortgage to a new home.
If you could, then it wouldn't matter if the market tanked.
Yes you would still have your $600k mortgage, but if you sold that $300k house and moved to a different $300k house or a $250k or $350k one (since the market tanking would bring the value of all houses down), then you aren't in any worse of a situation than before.
The way it is now though, I believe, is you would have to sell the house, be in debt, and not be able to get a new mortgage for another house.
Selling and purchasing aren't the only time you'd feel it. Any time interest rates go up you'd also feel it (now you get to pay more on large amount). With very large principals you'd be paying it for longer. Anytime the mortgage goes up for renewal no bank would want to touch you, or maybe they'd love you, just with really unfavorable terms (idk much about banks).
Having a large mortgage when the asset tanks can be thought of having a big debt where the collateral for that debt is suddenly with way less.
But hurting when interest rates go up would happen wether your house is now $300k or $600k.
If you bought your house for $600k you should hopefully be prepared to pay that $600k over time, whether or not interest rates go up.
Yes the collateral is an issue, but if it tanks it's not like the bank is getting their money back any faster by kicking people out and foreclosing. That would only be an issue if they can't make the payments anymore.
If you bought your house for $600k you should hopefully be prepared to pay that $600k over time, whether or not interest rates go up.
Unfortunate reality is sometimes rates jump, predicting 10 years out what your income will be, and how interest rates change is sort of impossible. IMO a lot of this uncertainty on the part of the buyer is mitigated by history, while the banks only have to take that risk in 5 year chunks (idk if there are longer renewal periods).
faster by kicking people out and foreclosing
short googling seems like people tend to declare bankruptcy first in canada. It all around seems like a terrible situation -- and not one we'd want to encourage, hence: we probably shouldn't actively lower existing housing prices to pandemic or 2010 prices.
Well perhaps we should be trying to reform our banking and mortgage sector regulations so that lowering housing prices would be possible without destroying people's livelihoods.
Because house prices need to come down. And if we don't make it safe for it to happen it will eventually whether it's convenient or not.
I think I favour building lots of (hopefully well made) public housing, and taxes on non primary dwellings. I'm not in any way an expert though.
I don't really understand why the statements in your second paragraph are true.
I bought for 750k. There is no logical reason why my house would now be worth 900k. So yes, it can tank. By tank I mean stop appreciating at the ridiculous levels we've seen the last 10 years.
If housing prices were to completely stagnate or depreciate by 10% tomorrow I would still be even or ahead.
Stagnation is way different then reduction, I'd also be fine with that, as i suspect would be other home owners.
Tank "to suffer rapid decline, failure, or collapse" is different from stagnate. The OP said:
In all seriousness, all levels of government are moving too slowly on housing affordability. They should be trying to reduce prices to prepandemic levels, or, even better 2010 levels.
This jives with tank, but not with stagnate.
TouchΓ©
any politician who lowers the current value of property will have to deal with upsetting that category of voters
We should hold politicians to a higher standard.
Bad policies have encouraged Canadians to tie their savings to unproductive investments like real estate. Coincidentally, we have declining productivity. If our quality of life was improving, I wouldn't care, but that's declining too.
Politicians should do what's good for the country, in the long term. If they have to make unpopular decisions, they need to dress them up appropriately.
And if we are excusing our politicians for being self serving assholes, then they should consider that there's a large contingent of people upset that they can't afford to buy a house, either to get onto the real estate treadmill, or to move when their circumstances change.
A higher standard means ignoring voting citizens?
That seems unfair
It's a question of long-term prosperity. Home prices are unsustainable and an unproductive investment. Our quality of life is suffering because of this bubble.
At the same time, there's a large contingent of the electorate that's incredibly angry about being locked out of home ownership. By focusing on home owners, we're ignoring them.
See my original comment:
I think there might be a balance here that's hard to strike
This is the best summary I could come up with:
In the Fall Economic Statement (FES), the Liberal government unveiled an initiative it callsΒ the Canadian Mortgage Charter.
The Finance official told CBC News that most of the measures existed already, but may have been unclear or difficult for consumers to find.
The other new addition is the requirement to give insured borrowers a pass on the stress test when changing lenders at the time of their mortgage renewal.
The Canadian Bankers Association (CBA) uses data from the major banks to determine the number of mortgages that are in arrears each month going back to January 1995.
The Finance official told CBC News that borrowers who are not offered the affordability measures outlined in the mortgage charter can file a complaint on the FCACΒ website.
The FCAC website says it investigates complaints involving federally regulated financial institutions, including banks, federal credit unions, authorized foreign banks, insurance companies and trust and loan companies.
The original article contains 695 words, the summary contains 150 words. Saved 78%. I'm a bot and I'm open source!