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As long as people continue to buy up housing as an investment, without even trying to earn rental income, we’re going to see this crisis continue. Higher intere
by chongli 3y ago
As long as people continue to buy up housing as an investment, without even trying to earn rental income, we’re going to see this crisis continue. Higher interest rates put the squeeze on ordinary Canadians with mortgages but investors are just buying housing with cash. It’s brutal!
- mitthrowaway2 3y ago> investors are just buying housing with cash That seems unlikely. Investors are, if anything, the most rate-sensitive, both in terms of borrowing costs and opportunity costs (they will move their cash out of housing and into bonds, if the bond yield is higher than what they'll earn on rent and price appreciation). Ordinary residents will buy even at the peak, risking loss, because they need a place to live, but investors don't buy housing because they need it. They can't rely on other investors being the bigger fool, and so in a rising-rate environment they either buy if they can raise rents high enough, or else they will put their cash elsewhere.