The banks are to Blame for Our Housing bubble. No Really, there is no one else to blame. You could throw the government in there too but mostly the banks. You can blame Realtors for driving up market price. You can blame Owners for jumping on the band wagon and demanding bidding wars. You can blame foreigners bringing their yen or rupees here. You can blame the high demand and low amount of housing all you want.
Its the banks that have created this supposed bubble and now they are scrambling to find a way to put a cap on it before they get screwed with a bunch of foreclosures like ten years ago down south.
The reason why they keep coming up with stupid regulations every few months is that for the last few years, they realize they cannot cap this freight train too fast because that would completely screw them over. Pulling back too much would lower prices so fast, people would walk away from their mortgages.
The way they created this mess was to get involved in a low interest battle among themselves. This was to combat what happened to the US market in 2008. While we did have a market that did slow down, they didn’t want it to become what happened in the US, so they lowered and lowered the interest rates.
The next thing they did was allow foreign buyers to use their money to buy houses with loopholes. (They since have changed those rules)
The banks also allowed people to use the equity in their house to purchase second and third properties, and become landlords. CMHC helped a lot of people buy these properties. (These regulations have been tightened as well)
What the banks did was to finance home renovations, and home renovation companies. This allowed everybody who watches HGTV to become all of a sudden brilliant and renovate a home, then then they could hide behind the CRA tax codes. The banks also allowed foreigners to use their money to do this as well. Not just domestic companies. (These rules have been tightened as well)
After all of their helping out the housing market, and record profits, they started to do some analysis, and started to realize that while the prices of housing has shot through the stratosphere, their liability is up there as well. So now they are coming out with reports and reports, and news articles, and new regulation after regulation to try to calm this bull down. The problem is, bulls down go down easy, and neither will this one. Run too slow or fast and you’ll get the horns. Either way, its their fault for being greedy and blaming other factors, but that seems to be the normal thing to do now.
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