Bye Bye any mortgate over 25 years.

[HiTempguy1]

^^^ I was just going to say, next year, I will be 24 and buying a condo. If interest rates get up to 8%, there goes that idea

[KrisYYC]

If interest rates go up to the point where most people can't afford to buy, then the price of houses will come down. The market will balance it out.

What will really kill the market for Gen Y will be if government, or banks decide you need minimum of 15% or 20% down on anything. This is a generation that can't even save the cash to buy a TV, nevermind $40,000 for their first property.

Soon the baby boomer bank will run dry (especially if dependant on equity) and Gen Y will wake up to a stark new reality.

I welcome it

[tpurcell4]

^^

Whoa! Who is saying rates are going up to 8% next year?

I have my issues with the new rules and the fact they don't seem well thought out and if you read the actually report released a lot of the reason as to why the government says they are implementing these changes and what the changes will actually accomplish are somewhat contradictory (and completely hypocritical compared to the statement they released in February/March regarding why they were not going to meddle with the mortgage rules further at that time).

The government is simply trying to stilt or slow down the heating economies in Canada, not kill them and then empty the rest of their clip into its head just to be sure it's dead.

It's not the best solution, but it is what is it is, and just like the last time they made changes, Canada will adapt, and no one will really remember this after several months anyway.

The real answer is education, and education that is simply lacking/non-existent to most Canadians, which is not something that can be solved by shortening the leash the government has on its citizens. Maybe a choke collar would work better, but that would be met with greater opposition, I think.

[tpurcell4]

^^
that was meant to be direct to HiTempguy1's comment.

[tpurcell4]

Originally posted by KrisYYC
If interest rates go up to the point where most people can't afford to buy, then the price of houses will come down. The market will balance it out.

What will really kill the market for Gen Y will be if government, or banks decide you need minimum of 15% or 20% down on anything. This is a generation that can't even save the cash to buy a TV, nevermind $40,000 for their first property.

Soon the baby boomer bank will run dry (especially if dependant on equity) and Gen Y will wake up to a stark new reality.

I welcome it

You're comments on Gen Y are very true. An increase of the minimum down payment to 10% could very well rattle the economy more than the decrease in Amortization. But this is not a blanket assumption, in fact many of my current Gen Y clients are putting 10, 15 or 20% down, the rest are travelling Europe, having parties and not really thinking about buying a house right now.

The scary part is is that it is not necessarily Gen Y relying on the 5% down. Its the 35-45 year old that has been renting their entire life, and has decided its time to buy a house and has $0 saved for a down payment. This is a very common scenario, much more common than in the mid to late 20's buyers I am seeing right now, who just finished school, stayed at home a couple extra years, paid off their debts and saved significant down payments.

Again, my opinion based on what I see day to day. I have more faith in our generation. It all comes down to the education we are getting, or lack there of!

[msommers]

Originally posted by tpurcell4

The scary part is is that it is not necessarily Gen Y relying on the 5% down. Its the 35-45 year old that has been renting their entire life, and has decided its time to buy a house and has $0 saved for a down payment. This is a very common scenario, much more common than in the mid to late 20's buyers I am seeing right now, who just finished school, stayed at home a couple extra years, paid off their debts and saved significant down payments.

Again, my opinion based on what I see day to day. I have more faith in our generation. It all comes down to the education we are getting, or lack there of!

I'm pleasantly surprised (extremely actually) to hear that. That's not to say that my generation are all responsible, but it's nice to hear once in awhile that some of us have our shit together instead of us all getting labelled lazy and demanding.

[Mibz]

Originally posted by msommers


I'm pleasantly surprised (extremely actually) to hear that. That's not to say that my generation are all responsible, but it's nice to hear once in awhile that some of us have our shit together instead of us all getting labelled lazy and demanding.

Every young generation gets labeled as lazy, demanding, unappreciative, entitled and generally rude. Then the accusers grow up and stop caring while the young generation grows into the new generation of accusers. The cycle of "Kids these days" continues.

[KrisYYC]

Originally posted by tpurcell4


You're comments on Gen Y are very true. An increase of the minimum down payment to 10% could very well rattle the economy more than the decrease in Amortization. But this is not a blanket assumption, in fact many of my current Gen Y clients are putting 10, 15 or 20% down, the rest are travelling Europe, having parties and not really thinking about buying a house right now.

The scary part is is that it is not necessarily Gen Y relying on the 5% down. Its the 35-45 year old that has been renting their entire life, and has decided its time to buy a house and has $0 saved for a down payment. This is a very common scenario, much more common than in the mid to late 20's buyers I am seeing right now, who just finished school, stayed at home a couple extra years, paid off their debts and saved significant down payments.

Again, my opinion based on what I see day to day. I have more faith in our generation. It all comes down to the education we are getting, or lack there of!

But where are they getting their 15%-20% downpayments? Most of my mothers clients or friends/colleagues around my age (31) are getting it from their parents (baby boomers). If the baby boomer bank runs dry for whatever reason Gen Y and a lot of Gen X is in real trouble (not all of them of course).

[benyl]

An analysis I heard was that they wanted cool the housing market without affect other parts of the economy.

In order to cool the market, they could have raised interest rates, but that would cause the Canadian Dollar to rise and stiffle the export / manufacturing sector causing other issues.

By changing the amortization term, they effectively raised rates by 1% without raising rates.

The analyst also suggested that this will have little to no effect on Calgary and Edmonton and this has been done to slow down downtown Toronto and Vancouver.

The reality is that only 11% of mortgages in Canada are affected by this legislation. It isn't as pervasive as you might think.

[jdmXSI]

Well this is quite interesting... I wonder how this is going to effect me and the gf? We currently own our condo which the tax assesment was $215k (could maybe sell for $220k) and owe $206k. Now this is where it gets interesting, the AGM was held a couple weeks ago and there is a building envelope issue that could potentially cost each unit approximately $35-40k in a speicial assesment. So, if i understand this properly we would need to come up with about $40-50k ($220x 80%= 176,000 would be the maximum amount to refinance if the market stayed stagnent for 3 years plus the balance of the mortgage and the total of the special assesment) on the renewal or am i missing something here?



Half of me is thinking of getting the F outta here but the other half is saying, if there is another "boom" that we might be better off holding out another year or so before we sell.


If anyone wants to chime in, all thoughts and comments are welcome

[Go4Long]

Personally I'm ok with the changes for now. If they negatively effect the value of my home I'll be a little disappointed, but we didn't buy the house relying on it to go up in value, that was just supposed to be a perk.

As for the CMHC not covering mortages over $1 million? good, if you are buying a million dollar house you should be able to come up with a downpayment, if not, buy a cheaper house. Not that I pay them, but I would think this should mean less insurance premiums for the CMHC folk.

[ExtraSlow]

Will be interesting to see if this distorts the market right around the $1 million mark. I think you'll see a disproportionaley high number of sales just under $1 million and very few just over that.

Guess that'll be handy when I buy my next "move-up" house. Unless things go horribly wrong, I don't see a problem coming up with the 20%.

[tpurcell4]

Originally posted by KrisYYC


But where are they getting their 15%-20% downpayments? Most of my mothers clients or friends/colleagues around my age (31) are getting it from their parents (baby boomers). If the baby boomer bank runs dry for whatever reason Gen Y and a lot of Gen X is in real trouble (not all of them of course).

My market may be slightly biased since I started my schooling in the Engineering department at UofC, so now many of my old friends there have good paying jobs, a couple years under there belt, and saved 10-15%, and for some their parents are helping them to avoid CMHC, so offering the additional 5%. Others saved the 20% on their own. And we receive referrals of similar home buyers that these people work with, so it is a matter of finding like minded people, and there are a lot of them.

Now I do also have many clients who are gifted their down payment, or borrow it, or only have the 5% down. But you'd be surprised by how many young people have good heads on their shoulders.

Cheers,

Todd

[tpurcell4]

Originally posted by jdmXSI
Well this is quite interesting... I wonder how this is going to effect me and the gf? We currently own our condo which the tax assesment was $215k (could maybe sell for $220k) and owe $206k. Now this is where it gets interesting, the AGM was held a couple weeks ago and there is a building envelope issue that could potentially cost each unit approximately $35-40k in a speicial assesment. So, if i understand this properly we would need to come up with about $40-50k ($220x 80%= 176,000 would be the maximum amount to refinance if the market stayed stagnent for 3 years plus the balance of the mortgage and the total of the special assesment) on the renewal or am i missing something here?



Half of me is thinking of getting the F outta here but the other half is saying, if there is another "boom" that we might be better off holding out another year or so before we sell.


If anyone wants to chime in, all thoughts and comments are welcome

If your AGM has already announced the special assessment, it is your debt and will have to be paid prior to the sale, or at least pro-rated somehow. And it will be next to impossible to find a lender who will finance a purchase in a building with a special assessment just announced of that size. I would ask a realtor, but you may be stuck there until after the assessment and all builder leans have been removed from title and condo plans.

[dj_patm]

20% on a $200,000 seems like an aboslutely ridiculous amount of money to save for a single income without help. Especially if it's a new grad.

I will be doing 5-10% when I move out as I will not be getting any help from my parents and I simply will not be able to save 40 K on my own for a long time... I don't want to be 25 or 26 living at home and I don't want to rent. Ever. I'd rather be paying off my bigger morgatge then paying basically the same amount and not having anything to show for it.

I don't think that makes me some idiot kid. I won't be over extending myself in payments and I don't plan on moving any where else for probably 10 years. Yeah my income/morgatge ratio will be pretty skewed at first but if I plan on living there long term, that should quickly change if everything goes okay careerwise... and even if it doesn't, the salary I make now seems like it should be enough to get me through any rough spells.

[arian_ma]

^^^ In Calgary right now, rent is much much cheaper than a mortgage. It would be silly for you to make yourself house poor just because you don't like seeing a few hundred dollars go into someone else' pocket for a year or two while you save and decrease your income/debt ratio significantly. If you have a roommate, you can find apartments in the beltline for ~$700 per person. You are saying that you are going to get a mortgage for "basically the same amount" as that? Not a chance. And this is in or close to downtown. If you want a house in the NW with 3 roommates you can knock that number down to ~$500.

Think about it. You pay $700 rent for 24 months. That's a grand total of ~$17k you've paid in rent, but in the mean time you have saved (if you are disciplined) ~$20-30k which means less of a mortgage (calculate how much interest you pay over 30 years on that extra $30,000 that you didn't save by buying) and then tack on CMHC fees onto that, and all this is not considering the $ you will have to pay for damages, repairs, and the like. It will absolutely cost you more than ~$17k to buy a house without 20% down.

[Disoblige]

Originally posted by tpurcell4

Its the 35-45 year old that has been renting their entire life, and has decided its time to buy a house and has $0 saved for a down payment. This is a very common scenario, much more common than in the mid to late 20's buyers I am seeing right now, who just finished school, stayed at home a couple extra years, paid off their debts and saved significant down payments.

I'll agree with that 100%. Most of the people I work with in my part-time job is in this scenario. The apartment I live in also has a ton of people who've been living there for a looong time, way more of them in the building than young people.

[stefan15]

It's awesome.. just speculating, but I think this will ensure the rates stay low. Govt is watching the housing market very carefully so you can be sure they won't want to disrupt current trends too much.

[ercchry]

if you cant save $40k in under 2 years living off your parents you cant afford a house. the mortgage is only a part of your new expenses...

[dj_patm]

I'd rather live at home then live with a room mate. I despise the idea of a room mate.

But actually when you put it that way, I could afford to save 40 in 2 years no problem but my hand is being kind of forced by my parents moving so I don't know if I have two years.