Canadian Market "Correction"?

Question

Hey BiggerPockets,

What are everyone's thoughts on the recent mortgage rules being rolled out?

http://www.canadianrealestatemagazine.ca/news/mort...

http://www.canadianrealestatemagazine.ca/news/genw...

Some thoughts:

Are we headed for a market price "correction"?

If it is harder for the general population to get mortgages, is rental demand going to increase?

Would it be wise to hold off purchasing for a few months and see if a correction takes place and then buy some properties as they drop value?

What do you think BP?

Ming Lim · Answer

Well, I'm happy to see them enforce the capital gains tax rules. I've always maintained that we didn't need new taxes, just needed to enforce existing laws.

As for the new qualification, I think it will have an impact to the market. I'm expecting it to have an impact on two of my properties which are currently going up for sale. They're student rentals, so I was already anticipating buyers to have mortgage qualification issues, and now the stricter rules will certainly make it more difficult to find a buyer. For me, this will mean either a lower selling price or a longer time to sale. Either way, I think this is what the government was after - it's a "cooling" of the market.

As for timing the market, I've never really believed in timing the market. I look at properties and see if the numbers work. I of course add buffers in for changes in rates and prices, but for me real estate is a long game - mortgage pay down with appreciation as icing on the cake.

It's not about timing the market, it's about time in the market.

Cheers,

Ming