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Actually no, because you still need a place to live. So it doesn't really matter if your home is worth $!M or $100K because it would cost you the same to move s
by empressplay 5y ago
Actually no, because you still need a place to live. So it doesn't really matter if your home is worth $!M or $100K because it would cost you the same to move somewhere else. As such reducing home prices across the board isn't that problematic, because there's no loss in 'value'. You can still sell your apartment in Vancouver and buy a 5-bedroom in Saskatoon.
The issue becomes people with existing outstanding mortgages. If we considerably reduce house values, would outstanding mortgages need to be reduced pro-rata? Who would 'eat' that cost? The government? The bank?
- deleted 5y ago[deleted]
- AzzieElbab 5y agoMost common scenario is to sell your Toronto home for 2m and retire to a 500k condo in Florida. And no, neither banks nor government would absorb the delta between mortgage value and current property evaluation. Banks are probably covered by some form of government insurance which people would have to pay up through taxes
- heyitsanewacco 5y agoThere is another option. I believe Japan went through it in the 90s. So lets follow their example and do nothing about the real estate bubble too.