Home sales dropping because of higher interest rates

[BC Landlord]

Sales are down and prices are down YoY.

Not sure where you saw good news.

MoM increase in sales ain't that special.

Bear in mind, this month's YoY stats are compared to the absolute peak of a red-hot market last year. For example, last month's (March) YoY benchmark trend was -14.3%, so the negative trend is melting down rapidly. I would say, by Jul-Aug it will be back in the positive territory again. Same applies to sales. You just can't compare anything to the last year's frenzy.
In my opinion, the market is just going back to a moderate to strong growth from a super-heated state. Hardly a doomsday.

[BC Landlord]

It is comical how the same people who were absolutely adamant that month over month stats meant absolutely nothing 6 months ago think its the cats *bleep* now and are calling a bottom.

And where is that "hard dropping from the peak" claim of yours now? This month's YoY is exactly the difference from the last year's peak. Nowhere near some 20-ish % that you bombastically claimed. So, in the face of hard numbers, would you retract that claim, or not? Or is it just a "dead cat bouncing" now, as you put it? Not sure how to refute that . How long does that "cat" need to be "bouncing" for you to concede defeat? Give us a number please, and I'll mark it down in my calendar.

Obviously, the interest rates have not swayed consumers interest away from the market that much.

[DoDo1975]

It is comical how the same people who were absolutely adamant that month over month stats meant absolutely nothing 6 months ago think its the cats *bleep* now and are calling a bottom.

And where is that "hard dropping from the peak" claim of yours now? This month's YoY is exactly the difference from the last year's peak. Nowhere near some 20-ish % that you bombastically claimed. So, in the face of hard numbers, would you retract that claim, or not? Or is it just a "dead cat bouncing" now, as you put it? Not sure how to refute that . How long does that "cat" need to be "bouncing" for you to concede defeat? Give us a number please, and I'll mark it down in my calendar.

Obviously, the interest rates have not swayed consumers interest away from the market that much.

What hard number are we looking at? Down 9% magical benchmark? Down 12% average? Down 14% median? Down sales? Down realtor commissions? Poor affordability? You are ready to call party on at the first sign of a normal and expected suckers rally.

What hasn't changed is that there is a very small number of families that can afford to enter this market, and there is an even smaller number of renter families that can afford to pay a landlord enough to make an investment at these prices look good.

I have told you several times, corrections take years to play out and affordability will improve with a combination of price drops and income gains.

[BC Landlord]

What hard number are we looking at? Down 9% magical benchmark? Down 12% average? Down 14% median? Down sales? Down realtor commissions? Poor affordability? You are ready to call party on at the first sign of a normal and expected suckers rally.

As far as prices go, benchmark is the only metric that matters to determine market trends. It's the industry standard, not some "magic". That's the hard numbers that I was referring to, so could we please stay focused on that? Realtor commissions are irrelevant, and "affordability" is a meaningless term in this context.

[BC Landlord]

Interest rates are still low historically, ...

You can still get a mortgage at about 4.7% nowadays, but estimates within financial circles are that over the next couple of years, the rates at lenders level will go down to about 3.5%.

[Mazdatruck]

How is this legal?

Banks are bending over backwards to ensure that mortgage payments stay low by allowing mortgage amortizations to go beyond 70 years. It's better for banks that housing prices remain high so borrowers take out larger mortgages with higher payments rather than causing a correction that risks mortgage payers walking away from their mortgages and scaring customers away from taking additional mortgages.

Who is paying off a 70-90 year loan?

[Catsumi]

How is this legal?

Banks are bending over backwards to ensure that mortgage payments stay low by allowing mortgage amortizations to go beyond 70 years. It's better for banks that housing prices remain high so borrowers take out larger mortgages with higher payments rather than causing a correction that risks mortgage payers walking away from their mortgages and scaring customers away from taking additional mortgages.

Who is paying off a 70-90 year loan?

Had one of these been a successful applicant for the 70-90 year loans, just maybe they’d make it under the wire



https://en.wikipedia.org/wiki/List_of_t ... est_people

[BC Landlord]

How is this legal?

Banks are bending over backwards to ensure that mortgage payments stay low by allowing mortgage amortizations to go beyond 70 years. It's better for banks that housing prices remain high so borrowers take out larger mortgages with higher payments rather than causing a correction that risks mortgage payers walking away from their mortgages and scaring customers away from taking additional mortgages.

Who is paying off a 70-90 year loan?

I'll call you out on that. There are no "70+ years" amortization mortgages in Canada. Nowhere near that long. Maximum amortization you could get is 30 years on low-ratio mortgages (20% down payment), and 25 years on high-ratio ones (less than 20% down).
Please, stop making things up.

[Mazdatruck]

Inflation still coming in hot.

Historically speaking, inflation has never gone away until the interest rate exceeds peak inflation.

[Mazdatruck]

I'll call you out on that. There are no "70+ years" amortization mortgages in Canada. Nowhere near that long. Maximum amortization you could get is 30 years on low-ratio mortgages (20% down payment), and 25 years on high-ratio ones (less than 20% down).
Please, stop making things up.

Private lenders. There are 90 year amorts now in Canada.

75% of variable mortgages in Canada have hit their trigger rate.

Please follow Ron Butler on Twitter he's moreless ***the*** Canadian mortgage expert.

https://twitter.com/ronmortgageguy

https://twitter.com/ronmortgageguy/stat ... 1459391488

We see posts on Twitter all the time showing 60 yr, 64 yr, 70 yr amortizations on screen shots of mortgage statements

Worst I saw: 92 years How can this happen?

Simple example: back in Feb 2022 a Variable Rate Mortgage might have a 1.45% rate: payment of $2K per month

Let's say 30 year contract amortization $400 of the $2K payment to interest $1600 to Principal

Fast forward to now same $2K payment 5.7% Interest Rate $1975 to Interest $25 to Principal because so little Principal being paid the original amortization of 30 years can't be met and the theoretical time needed to pay off the mortgage balloons out many years.

There is also potential for the mortgage interest to EXCEED the payment and the mortgage balance starts to GROW. The Trigger Point may be when the mortgage begins to grow or at a specific point the mortgage grows past a specific loan to value. Bottom line is 80% of Variable Rate Mortgages DON'T fully increase payments when Prime Rate goes up. Here's the Sad Truth part: at least 50% of these mortgage holders don't know the eventual outcome.

They don't really understand at Renewal because 30 yr amortizations revert to 25 yr and the payments must rocket upwards even if rates are less than today Here's the true evil: today although the Borrower feels relieved that the high payment can has been kicked down the road however the the horrible result is people giving up on the idea that a mortgage is ever paid off and to own a home outright.

We have drifted into the hellacious world of full financialization

Debts are NEVER paid off only rolled into the future.

"You will own nothing and be happy"

[BC Landlord]

Inflation still coming in hot.

Historically speaking, inflation has never gone away until the interest rate exceeds peak inflation.

That's a different issue. You claimed earlier that Canadian banks are offering 70+ years mortgages. Show us one example of that, please!

[Mazdatruck]

Was talking to a realtor today.

They were reminiscing how back in 2012 they helped a young couple that both worked at Tim Hortons buy their first house.

That's all gone now.

[Glacier]

https://youtu.be/V0orOe2Y2xM

[Even Steven]

They were reminiscing how back in 2012 they helped a young couple that both worked at Tim Hortons buy their first house.

That's all gone now.

We bought a place in 2011 right after the financial crisis. Everybody told us we're nuts because prices couldn't go any higher and it's a Ponzi scheme. And "it's all gone now".

Good times.

[Mazdatruck]

Everybody told us we're nuts because prices couldn't go any higher and it's a Ponzi scheme. And "it's all gone now".

Good times.

They were right back then, just to a lesser degree.

This province/country is so screwed.

Mostly everyone is so dependant on real estate. An out-in-the-open ponzi just dont call it a ponzi because literally most Canadians are in on it so everyone gets pouty about it. The extending of amorts that is going on is shameless it's just a shell game that's going on now. 55% of all Canadian mortgages will renew in the next 2 years and right now the bank of Canada is 140% off target on inflation and housing is <rocketship>.

Bank of Canada now has to really smash things or by August we'll have rents up 60% in 18 months in places like Victoria and Calgary and 300,000 over asking price bidding wars on tear downs moldy crack shacks while we have food banks lined up across the country on a scale never seen in Canadian history.

I think they'll raise rates again.

Rent and housing costs have decoupled so much from peoples wages that there is this entire wall and the drag on the economy when people making high 5 figures are paying out 80% of their income to rent and taxes. I know people with 1200 dollar mortgages on 4 bedroom houses on sizable lots and people paying 2200/month plus internet for a basement suite. Jobs and schooling have nothing to do with any of their situations.