Quote:
Originally Posted by Enoch Root
I don't entirely agree with this.
People save to have the downpayment money - once they have it, they have it.
What matters - to most people - is monthly expenses/cash flow. Raising their mtge from $2,500 to $3,500 per month is a big deal to most people.
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This is true when the real estate levels are in line with the market. When you have things like foreign investors, generational wealth transfers, etc... the prices fall out of line with the actual market. The bidding wars then become based on who can/will put together the most capital up front. Detached housing is not being proportionally bought, even in Calgary, in relation to people's incomes. It's largely people inheriting large amounts of cash from their parents and people coming in from already more expensive markets that are driving the current boom.
It's not middle class families who are scrimping together down payments. These are the types of people who are affected the most by interest rates. These are also the types of people that "cooling" the market is supposed to help, but a massive negative affect of increasing interest rates is that these people get driven out of the market.