How many owners on the Westside of Vancouver are banking on the ability to sell their houses at enormous gains in future years? A lot, we think. How will these owners respond to prices dropping 10%, then 20%? We believe that many will be sellers into a falling market. -vreaa
siddelly at greaterfool.ca 17 Mar 2010 10:33 pm -
“This week I’m helping my stepmom get her home in West Point Grey ready for a spring sale. I’ve been trying to impress on her the need to hurry up and de-clutter. A smaller home than hers on the same street just sold last week for 1.8 million and I think hers should do the same if not better. Whenever I mention “Bubble” she usually responds with “Rich Asian Investor” and claims there is no rush and she could always wait till next year. Will there always be rich folks wanting to buy in Point Grey or are they the same as everyone else in believing in a falling market that a much better price is just around the corner, so why be in a hurry? I just don’t know what to think anymore about Vancouver prices.”
I have a question in regards to the new mortgage rules and how they may effect prices…
Many of the SFH listings I look at mention a “mortgage helper” suite…
When the rules change, and a $1000/month rental income will only allow you to borrow an extra $40,000 instead of the current borrowing power it affords of $185,000…will this have an effect on the selling price of homes?
Have there been a lot of first time buyers in the last 5-10 years that have inflated prices by borrowing on rental income?
Have there been sellers who have sold their homes for a price which factored in the amount the buyer could conceivably borrow on the existing rental suite?
Just curious…but if several FTB’s have purchased at prices that included this extra borrowing option…and they want to sell to FTB’s who no longer have this option…and who don’t have rising incomes that can make up the difference, then wouldn’t they have to sell at the lower price that the average wage would actually qualify for without the extra $140,000 “mortgage help” factored in?
Tanya, your implications are correct, this will apply downward pressure to prices.
They haven’t been called ‘mortgage helpers’ for nothing.
Note, too, that you are framing the whole issue in the correct fashion: compare with the people saying: “Hey, I better hurry and buy, so that I can still apply the full rent from the mortgage helper suite to my income, and thus qualify for a larger mortgage!”