Quote:
Originally Posted by Muta
Where is all this investment money coming from? With an increasing amount of Canadians being priced out of home ownership, is it rich foreign nationals / very wealthy Canadians? How is there so much money out there / the ability to just casually drop six or seven figures each on multiple properties?
Real estate seems to be a game for the 1% in this world, and moreso everyday.
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For most people the biggest issue is the down payment. As Jason14H stated, the actual mortgage qualification isn't that difficult. Then you can find a place with a rental suite in the basement to help you with monthly payments.
As far as the down payment goes, a lot of people are getting help from their parents who own their own homes, now worth $2+million. The parents simply take out an easily attainable mortgage and gift (or "loan") the kids $200-500k. Many people are even getting their parents to co-sign on mortgages for them. These are "children" in their late 30s and early 40s.
Help from parents is common enough that the bank found it very unusual that when I purchased my house my parents weren't somehow involved.
There definitely was a time when foreign investment was a very significant contributor to real estate prices in Canada. Now, the main driving force is local buyers taking advantage of ultra low interest rates and transfer of generational wealth.
The system really is different in places like Vancouver/Toronto over Calgary. In Vancouver you can rent a basement suite for $2,000/month fairly easily. Over time, that rent goes up and your mortgage goes down. If you can get through the first 5-10 years, you are generally coming out way ahead. There are so few remaining detached homes in Vancouver that there will never be a huge crash, and over time the property will go up in value. The only time people get stung is if their economic circumstances change to the point they can no longer afford the property, or they were planning to flip and got caught in a 20-30% adjustment and don't have the cash flow to hold the property for a few years while it climbs in value again.