Unless you’ve been sequestered in your condo’s windowless “flex room” for the last 48 hours doing nothing but basking in the glow of your own self-appreciation, you’re well aware that the feds popped a cap in the ass of the 40-year amortization and the zero-down loan. With this decision carried out by the government to minimize the risk of a “U.S.-style housing bubble” happening in Canada, the threshold to borrow moves higher. And as such, the pool of potential home buyers grows smaller. Could this be the bullet that kills B.C.’s real estate bull for good?
While the media and the experts are far from waving the white flag, it’s impossible to interpret their analysis as positive in tone. In fact, the Sun’s sensational front-page story about the new mortgage rules is probably the most negatively toned story related to B.C. real estate since the leaky condo crisis of the 1990s. What’s sad is that the current story isn’t actually very negative — it only appears so in comparison to the euphoric “Vancouver real estate is hotter than sex with Angelina Jolie” coverage of the past five years.
The disconnect between public opinion and media opinion on the B.C. real estate issue is growing. When Cameron Muir took questions on Thursday’s Bill Good Show, many callers expressed serious concerns about mortgage lending and approval practices. I was struck by the technical nature of the questions. They seemed to catch Muir a little off-guard, forcing him to fall back to broad key messages about the “strength” of the Canadian banking system as a safeguard against bad lending.
Like everyone, I watch and wait with great anticipation. We have the makings of a meltdown. The heat is on.