RE:RE:RE:RE:RE:RE:RE:HOME PRICES DON'T MATTER TO HCG'S BUSINESSlol when you can't win an argument with facts....
I have done thorough research on the US housing market and all the data shows it is exactly what I mentioned that contributed to the GFC. Spend less time on forums and more time educating yourself. You have been on this forum posting EVERY SINGLE DAY..kinda sad for someone that has over 15 years of capital markets experience.
Tater78 wrote: Please read the NBER paper on the us housing market pre-GFC. You're repeating a narrative that is shown to be false by the data.
WBuffett1 wrote: You are oversimplifying the US collapose. The US borrowers pre-GFC were 300% levered with adjustable rate mortgages. They were paying teaser rates giving them the illusion they can afford the mortgages.
This is not the case in the heavily-regulated Canadian market.
Tater78 wrote: Price declines were the driver behind the US collapse. The stats are pretty clear on that.
Your example isn't the one that is concerning. Its where the borrower also borrowed 25% from a second for the DP.
In that scenario, after 2 years, the balance is more like 680 between the 2 lenders and market is 600k. Then what?
You have to ask yourself, who are these borrowers who can put together 2 or 300k for a DP, but can't qualify for a mortgage with a bank? Why can't they show an NOA with income that supports that level of savings? Here's a hint: they didn't save that money. They borrowed it. They can make the payments because rates are super low and if they can't they've been able to sell the house. Once prices stop going up, they're done.
WayneH5565 wrote: Quick Math:
$750k house
30% down for 25 year @ 5% 2 year term
Balance after 2 years with home cap or equitable: $502,796
If prices fall 20%, resulting value is $600k
503/600 = 84%
After 2 yeras, go to the big banks and refinance with improved credit. I can guarentee the banks will fiddle with reality and apprasials to get a mortgage without insurance (magically, the appraisal comes back at $650k!). Worst Case, they get mortgage insurance or stay with home cap or equitable for another year or two.
I think that there is always risk with financial institutions, but the reality is far from a whole housing collapse. You need unemployment to trigger that.... to me it seems that the economy is booming.