this post was submitted on 23 Nov 2023
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But hurting when interest rates go up would happen wether your house is now $300k or $600k.
If you bought your house for $600k you should hopefully be prepared to pay that $600k over time, whether or not interest rates go up.
Yes the collateral is an issue, but if it tanks it's not like the bank is getting their money back any faster by kicking people out and foreclosing. That would only be an issue if they can't make the payments anymore.
Unfortunate reality is sometimes rates jump, predicting 10 years out what your income will be, and how interest rates change is sort of impossible. IMO a lot of this uncertainty on the part of the buyer is mitigated by history, while the banks only have to take that risk in 5 year chunks (idk if there are longer renewal periods).
short googling seems like people tend to declare bankruptcy first in canada. It all around seems like a terrible situation -- and not one we'd want to encourage, hence: we probably shouldn't actively lower existing housing prices to pandemic or 2010 prices.
Well perhaps we should be trying to reform our banking and mortgage sector regulations so that lowering housing prices would be possible without destroying people's livelihoods.
Because house prices need to come down. And if we don't make it safe for it to happen it will eventually whether it's convenient or not.
I think I favour building lots of (hopefully well made) public housing, and taxes on non primary dwellings. I'm not in any way an expert though.
I don't really understand why the statements in your second paragraph are true.