Quote:
Originally Posted by Weitz
I don't really understand what you are saying here? Rates should be kept artificially low so prices continue to rise? Because I may need to sell down the road and I should make money on my investment?
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Haha, no I am not saying that. First of all, why do you say rates were "artificially" low? From a monetary policy perspective, rates reflect the price of money and since the lower rates did not result in any inflationary pressure its an indication that they were appropriate. In fact in US dollars, real estate prices were relatively stable over the last few years. As a particular example in Toronto, the 30% increase in real estate pricing was almost exactly in parallel to the Canadian dollar depreciation.
The danger is that all these methods of tightening up access to financing at the same time could result in an over correction. For example, if you were active in the US real estate market in 2010-2011 you could have seen the banks had gotten so tight with loans that even people who could afford it were sidelined from entering the market. They had over corrected resulting in a deeper valley in the market.
In the case of Canada, the foreign buyer restrictions, the increase in the interest rates, and the buyer qualifications changes all at the same time might just be too much. So really without even approaching a US style crash(yet) the government has gone much further in Canada because the US government never considered the foreign buyer tax that they implemented here.
Certainly, being frugal and patient allows the ability to position yourself(a strategy i pursue myself) to take advantage of these valleys by buying low and the that can certainly be applauded, but characterizing it as a great policy that may drive some our neighbours into bankruptcies is not appropriate(which seemed to be the tone of your original post).
Yes, long winded reply, I think I will leave it at that.