Quote:
Originally Posted by Claeren
What?
IF you bought for $450k and the house is now worth $390k (The house across the street started at $469k 9 months ago and is now down to $379k with no takers...) the bank needs an EXTRA $60k from you before you are allowed to sell. Since 70% of new Calgary buyers were using 0 down and/or more than 25 year mortgages to buy in the past year that means the small downpayment MIGHT washout the realtor fees and such.
People are literally trapped in their homes if they bought in the last year or two with less than ~10% down (and likely to push those who put ~20% down within the next 2 years).
IF you couldn't come up with 10% ($45k on a $450k home) you certainly can't come up with $60k while making massive mortgage payments?
The power of leverage works both ways and this is why so many people lose more when the market goes down then what they gained on the way up. (Because too many people spend what they don't have, so a small downward leveraged movement hurts more than a large upward movement benefits them.)
The only exception (and what i think you were trying to get at) is that the spread between housing classes tends to narrow in absolute numbers during a downward trending market which does favour people who want to move-up from a paid off smaller house to a now cheaper larger house -- but that does not apply in this scenario.
Claeren.
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yep, I think that is what he/she is trying to get at. Basically going longer real estate while it's down. Similar to buying more shares in something when the price goes down.