Dave, thanks for posting this. I am sure that many of us heard this news throughout the day with mixed reaction.
Let`s begin a discuss and outline some of our reactions to this news...
For instance,
1) What impact will this new legislation have for real estate investors?
2) Is this move just for `optics` and a method to gain more votes?
Thanks everybody. Looking forward to your thoughts.
Best Regards,
Neil
Let`s begin a discuss and outline some of our reactions to this news...
For instance,
1) What impact will this new legislation have for real estate investors?
2) Is this move just for `optics` and a method to gain more votes?
Thanks everybody. Looking forward to your thoughts.
Best Regards,
Neil
QUOTE (NeilUttamsingh @ Jul 9 2008, 05:13 PM) 1) What impact will this new legislation have for real estate investors?
2) Is this move just for `optics` and a method to gain more votes?
It was interesting news, I think for point #1 it may make it hard for some investors as it could affect their cash flow on new purchases. The forty year mortgages allowed slightly higher cash flow. The opposite side to this is it may actually increase the amount of renters out there as the fringe buyers get pushed out of the market and have to continue renting for a while.
This could increase cash flow over the next year (at least in Alberta where we can raise rents as much as the market comfortably supports) and balance out the forty year payments into thirtyfive year payments.
For point #2 it seems like more of a political move. If they addressed this early on in Alberta`s boom it would have been to slow down the substantial growth which would have been a good thing as it would have grown slower, but over a longer term. Since they waited until most of the country is on a backwards slide (or really stopping to catch it`s breath), it may lead to an even longer slide as buyers are removed from the market.
Still no word from any of the other mortgage insurer`s as to what their plans are, so people may just move to the other players in the game to access longer amortizations. Also, this doesn`t take affect until October, so it may spur a very short term rush to take advantage of it before it`s gone. Of course that will make for even better headlines as the backwards slide afterwards when we head into the slow winter months will be even more pronounced! That`s my take so far!
2) Is this move just for `optics` and a method to gain more votes?
It was interesting news, I think for point #1 it may make it hard for some investors as it could affect their cash flow on new purchases. The forty year mortgages allowed slightly higher cash flow. The opposite side to this is it may actually increase the amount of renters out there as the fringe buyers get pushed out of the market and have to continue renting for a while.
This could increase cash flow over the next year (at least in Alberta where we can raise rents as much as the market comfortably supports) and balance out the forty year payments into thirtyfive year payments.
For point #2 it seems like more of a political move. If they addressed this early on in Alberta`s boom it would have been to slow down the substantial growth which would have been a good thing as it would have grown slower, but over a longer term. Since they waited until most of the country is on a backwards slide (or really stopping to catch it`s breath), it may lead to an even longer slide as buyers are removed from the market.
Still no word from any of the other mortgage insurer`s as to what their plans are, so people may just move to the other players in the game to access longer amortizations. Also, this doesn`t take affect until October, so it may spur a very short term rush to take advantage of it before it`s gone. Of course that will make for even better headlines as the backwards slide afterwards when we head into the slow winter months will be even more pronounced! That`s my take so far!
QUOTE (DaveRhydderch @ Jul 9 2008, 03:02 PM) A little FYI
http://www.reportonbusiness.com/servlet/st...y/Business/home
I think it is great ! It will create more tenants and will not lead people to a home purchase that they should not do in the 1st place: if you need 0 down and 40 year amortization to buy a home then you should not buy one !
A VERY prudent proposal !
http://www.reportonbusiness.com/servlet/st...y/Business/home
I think it is great ! It will create more tenants and will not lead people to a home purchase that they should not do in the 1st place: if you need 0 down and 40 year amortization to buy a home then you should not buy one !
A VERY prudent proposal !
QUOTE (thomasbeyer2000 @ Jul 9 2008, 10:29 PM) I think it is great ! It will create more tenants and will not lead people to a home purchase that they should not do in the 1st place: if you need 0 down and 40 year amortization to buy a home then you should not buy one !
A VERY prudent proposal !
How does it create MORE tenants? If they haven`t CURRENTLY bought, then they are CURRENTLY renting. Where does the MORE come from?
A VERY prudent proposal !
How does it create MORE tenants? If they haven`t CURRENTLY bought, then they are CURRENTLY renting. Where does the MORE come from?
Boomer,
If you find "more tenants" confusing think about it in the following way:
Less people will purchase a home in the next year compared to the number of people who would purchase a home if Ottawa didn`t tighten mortgage rules. (because less people will qualify)
Therefore (in other words), next year there will be more tenants than there would be had Ottawa not changed mortgage rules.
So you are right, when we say more tenants we do not mean immediately, we mean in the near future compared to no change in rules. However, one can say while there is no immediate change in number of tenants, there is an immediate affect on rents as present values in economics are affected by things like new rules, future expectations etc..
Regards,
Neil
If you find "more tenants" confusing think about it in the following way:
Less people will purchase a home in the next year compared to the number of people who would purchase a home if Ottawa didn`t tighten mortgage rules. (because less people will qualify)
Therefore (in other words), next year there will be more tenants than there would be had Ottawa not changed mortgage rules.
So you are right, when we say more tenants we do not mean immediately, we mean in the near future compared to no change in rules. However, one can say while there is no immediate change in number of tenants, there is an immediate affect on rents as present values in economics are affected by things like new rules, future expectations etc..
Regards,
Neil
QUOTE (investmart @ Jul 10 2008, 02:45 AM) Boomer,
If you find "more tenants" confusing think about it in the following way:
Less people will purchase a home in the next year compared to the number of people who would purchase a home if Ottawa didn`t tighten mortgage rules. (because less people will qualify)
Therefore (in other words), next year there will be more tenants than there would be had Ottawa not changed mortgage rules.
So you are right, when we say more tenants we do not mean immediately, we mean in the near future compared to no change in rules. However, one can say while there is no immediate change in number of tenants, there is an immediate affect on rents as present values in economics are affected by things like new rules, future expectations etc..
Regards,
Neil
exactly ..
If you find "more tenants" confusing think about it in the following way:
Less people will purchase a home in the next year compared to the number of people who would purchase a home if Ottawa didn`t tighten mortgage rules. (because less people will qualify)
Therefore (in other words), next year there will be more tenants than there would be had Ottawa not changed mortgage rules.
So you are right, when we say more tenants we do not mean immediately, we mean in the near future compared to no change in rules. However, one can say while there is no immediate change in number of tenants, there is an immediate affect on rents as present values in economics are affected by things like new rules, future expectations etc..
Regards,
Neil
exactly ..