4 ms·

I live in Toronto, 10 years ago a house in the suburbs may have been affordable for someone like me, now they are hugely over priced. I could make a 5% downpaym

• dragonwriter 11y ago
  I'm not saying that people aren't priced out of the market, I'm saying that decreases to the general price of money cannot explain people being priced out of the market. > I could make a 5% downpayment and have a mortgage till the day I die, but that doesn't seem reasonable to me. Right, but if the only price increase was attributable to the lower price of money, you'd have a mortgage just as long and with just as much burden now as before the decrease in the price of money -- you'd just pay a higher nominal purchase price on the house, and lower interest and fees associated with the loan. If, instead, you've been priced out of the market, that means something other than a general decrease in the price of money is involved, because the increase in the prices is out of line with the decrease in the price you would pay for financing. If it is cheaper money driving the price, its money that has gotten cheaper for some other class of potential buyers than it has for you.
  • randomgyatwork 11y ago
    I agree that there is something more beyond the cheap money, however it is possible that the cheap money, combined with a few bad actors has driven up the prices. Say one or two houses sell way over market value, that drives up the price of all the houses in the neighbourhood. If that happens a few times you have massive price increases fueled by easy access to money.