Canadian property bubble nears systemic failure

Re:Canadian property bubble nears systemic failure by Waterluvian on Sunday March 28, 2021 @09:59AM (#26610460)

I think there's a significant difference, yes. But I don't think it comes anywhere close to accounting for all of it.

Also the house in question doubled in value in just the last number of years alone when rates were already basically zero.

Low rates are quite something. My mortgage is fixed at under 3%. As a result I'm actually discouraged from paying off my mortgage because all my index fund investments return way above that.

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Re:Canadian property bubble nears systemic failure by voisin on Sunday March 28, 2021 @12:09PM (#26611478)

I did some math. Assuming 12x increase in prices as you suggest, starting with $50k and now $600k, 15% interest in the 80’s, and 1.5% today. Also assumes interest rates are steady in both scenarios. Obviously it is preferable to start high with greater odds of declining, vs start low and can only go up.

Total payments over 25 year amortization:

$50k —> $192,125 $600k —> $719,885

So yeah, interest rates don’t explain it. We are paying too damn much up front!

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