The scary part is even on the surface, a meaningful reduction in housing prices would have pretty rough consequences for us economically. We’ve spent 40 years building our entire financial system to the point where the majority of the median citizen’s net worth is in their home’s equity. Seeing any short term devaluation of housing in a significant way would effectively be reducing the median citizens ability to retire.
Probably the best we can hope for is price stagnation and modest but consistent decreases in housing prices while we decouple our economy from the false growth of real estate.
Eh. A lot of that gain has come since 2019. It’s unrealized. Many homeowners bought before the run up and are gonna make bank when younger Canadians try to get into the market.
The longer prices stay inflated, the more of a problem we’ll have.
Everyone needs one house. When you sell your house, you have to buy (or rent) another one. If the value of your house drops by the same amount as everyone else’s, then you lost nothing.
In fact, you probably gained because if you plan to buy a more expensive house, you have to pay less.
The only people for whom the fall of housing prices would be negative are those that plan on having less houses. That is, you have multiple, and want to sell some.
If you still have a mortgage on your home, you’ve lost a lot because you may no longer have equity to cover your mortgage. Which, probably not a huge deal if you actually plan to live in it and not treat it like a medium-term investment. But there can be a tangible loss there.
You have to pay that mortgage, it doesn’t matter if your house can cover it or not.
What are you gonna do? Sell your house to pay off your mortgage? And then where do you live?
If you own a single house, the synchronized raise/fall of house prices only affect the speed at which you can “upgrade” to a more expensive home. So prices going down benefit you.
My wife and I bought to get on the ladder. You can never save enough, at some point you need to hop in.
We’re 2 years in on a house that doesn’t suit our needs because if we didn’t buy, we would keep getting priced out. If prices drop, we’ll be stuck in this house. It wasn’t an investment, it was building equity for when it’s time to move.
At least we have a house, so many others aren’t as lucky.
If my house price fell by 50%, I would owe more on my mortgage than the house is worth.
This would affect me negatively in multiple ways, not the least of which may mean me losing my home as the bank would not want to renew my mortgage.
I agree that housing prices need to fall, and actually by more than 50% but it needs to happen over time or it will literally crash the entire economy.
The scary part is even on the surface, a meaningful reduction in housing prices would have pretty rough consequences for us economically. We’ve spent 40 years building our entire financial system to the point where the majority of the median citizen’s net worth is in their home’s equity. Seeing any short term devaluation of housing in a significant way would effectively be reducing the median citizens ability to retire.
Probably the best we can hope for is price stagnation and modest but consistent decreases in housing prices while we decouple our economy from the false growth of real estate.
Eh. A lot of that gain has come since 2019. It’s unrealized. Many homeowners bought before the run up and are gonna make bank when younger Canadians try to get into the market.
The longer prices stay inflated, the more of a problem we’ll have.
Everyone needs one house. When you sell your house, you have to buy (or rent) another one. If the value of your house drops by the same amount as everyone else’s, then you lost nothing.
In fact, you probably gained because if you plan to buy a more expensive house, you have to pay less.
The only people for whom the fall of housing prices would be negative are those that plan on having less houses. That is, you have multiple, and want to sell some.
The median citizen is no real state investor.
If you still have a mortgage on your home, you’ve lost a lot because you may no longer have equity to cover your mortgage. Which, probably not a huge deal if you actually plan to live in it and not treat it like a medium-term investment. But there can be a tangible loss there.
You have to pay that mortgage, it doesn’t matter if your house can cover it or not.
What are you gonna do? Sell your house to pay off your mortgage? And then where do you live?
If you own a single house, the synchronized raise/fall of house prices only affect the speed at which you can “upgrade” to a more expensive home. So prices going down benefit you.
My wife and I bought to get on the ladder. You can never save enough, at some point you need to hop in.
We’re 2 years in on a house that doesn’t suit our needs because if we didn’t buy, we would keep getting priced out. If prices drop, we’ll be stuck in this house. It wasn’t an investment, it was building equity for when it’s time to move.
At least we have a house, so many others aren’t as lucky.
This concept is simply false.
If my house price fell by 50%, I would owe more on my mortgage than the house is worth.
This would affect me negatively in multiple ways, not the least of which may mean me losing my home as the bank would not want to renew my mortgage.
I agree that housing prices need to fall, and actually by more than 50% but it needs to happen over time or it will literally crash the entire economy.
That and make wages catch up with inflation. Deflation causes all sorts of problems but driving wages up just makes people wealthier.
We’ll just have to get used to bigger numbers.
That’ll take decades in a lot of areas.
In the meantime, you’re gonna have a lot of angry young Canadians spending lots of money on rent, and failing to save for retirement.
Indeed - stagnate prices and drive wage increases until the ratio is back down.