Vancouver Real Estate – Affordable Steam
Posted September 21st, 2009 in Real Estate, Sharing the Experience | 
Down the Line
RBC’s Senior economist Robert Hogue signals a red flag in his September economic report entitled ‘Housing Trends and Affordability’ in which he says that the “restorative phase of the affordability cycle is likely running out of steam.” His reason – “the decline in mortgage rates and the drift down in prices — appear to have reached turning points.” He contends that “More likely the period ahead will be marked by a certain levelling off in affordability.”
Whistle Blowers
Hogue may be onto something. Royal Lepage’s recent survey of its 1100 agents found that “only 61 percent thought the housing market’s current strength was sustainable.” The “doubters claim that mortgage rates will rise.” Tom McFeat of the CBC refers to Sebatian Lavoie, economist at Laurention Bank Securities who joins this choir chiming a “warning that the central bank may eventually be hiking rates big time”. McFeat quotes Lavoie who said “the tightening will not likely begin before the third quarter of 2010″.
Missed Stop
Tipping his hat at Vancouver Hogue notes that “the earlier huge market slack appears to have now
vaporized and prices are moving up again.”
You have to wonder what train Hogue is on. That price climb station passed a few months ago.
On the Siding
Affordable! Really! Have we become complacent in our thinking that affordable means young people buying their first home are saddled with a 35 year mortgage? Did the mail bag holding ‘letters of understanding’ get delivered to the wrong station? Do buyers and does Hogue really get it? Mortgage brokers and bankers aren’t saying, but anecdotal evidence points to a number of cases where the impact of that mortgage term means they will be paying approximately three times the purchase price in interest alone. Is that what Hogue’s affordable means?
Forget about Vancouver’s rain. If the accumulated total interest to be paid isn’t enough to shock reason, then consider the certainty that interest rates will rise – adding to that burden. Left is Hogue’s steam as a reflection of what once was as it condenses in un-affordable foreclosure droplets.
