4 big changes to Canadian mortgages

Why some think new rules are a 'drag' on the market

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Sep. 7, 2012

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Even Sotheby's survey of homes over $1 million reported the listings in the Great Toronto area rose 31 percent from 6,193 homes to 8,105.

"We know from long experience, the first thing that happens when a market cools is fewer people buy homes," Soper said. "The next thing that happens is there are those people who have been sitting on the fence and when they see the market slipping away toss their house onto the market hoping to catch the peak. Inventories are rising."

All the indicators were pointing toward a rapidly cooling market, Soper said. "The government introduced the change to be a clear drag on activity. I call it kicking a guy when he's down. It was unneeded and ill-timed."

McCredie doesn't think so. "Mostly, there is a lot of media talk about the housing bubble in Toronto, and from my perspective it concerns me when you see as many cranes as you see right now," he said. "But, we are dealing with a massive influx of immigrants. 33,000 people immigrated to Canada from Egypt alone. 100,000 people are moving into the city of Toronto. There is a huge demand for housing."

Obviously, Soper doesn't see it that way.

So, I asked him why the finance ministry made the change.

"I think what happened was, it really wanted to get back to 25-year amortization, which is the long-term norm of this country," he said. "They were worried if the market cooled and went into a couple of years of flat or potentially declining unit sales, they would have missed their window. It was labeled an anti-debt move, but, in fact, it was driven by a more fundamental policy change. And it was ill-timed."

Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com.

Contact Steve Bergsman:
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