Re:How housing became the world’s biggest asset class
by jdashg on Wednesday January 22, 2020 @02:31PM
(#22121120)
Margin calls are the primary difference. (InteractiveBrokers and Robinhood have pretty good margin rates: <=3.05% and ~5% respectively)
Being forced to sell at during a temporary low is the major threat, whereas most people who kept their house during 2008-2009 are doing fine today.
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Re:How housing became the world’s biggest asset class
by refurb on Wednesday January 22, 2020 @08:37PM
(#22124021)
That's true for the US market, but what I learned is a "margin call" is a potential scenario in Canada.
Unlike the US, mortgages typically have 5 year terms (can range from 1 to 10). The amortization period is still 25 years (on average), but you refinance every 5 years.
If you put 20% down on a house, which then loses 10% of it's value, you can't refinance without coughing up enough cash to have the loan be 80% of the appraisal.
As you said, at least in the US you can choose to ride out a crash if you have a 30 year fixed mortgage.
Re:How housing became the world’s biggest asset class
by astura on Thursday January 23, 2020 @08:35AM
(#22127378)
During the housing crisis in the US a lot of mortgages were ARMs, which are basically the same thing as your describing.
https://www.cbsnews.com/news/adjustable-rate-mortgages-make-...