Cracking Down on Real Estate Speculators
For the past two months most of Canada has been speculating on the changes that Finance Minister Jim Flaherty was potentially going to make to the mortgage lending regulations. Interestingly enough, little media attention seemed focused on one of the plans biggest changes: those of real estate speculators.
According to this article, speculators and investors want to use their real estate purchase as an investment – either to flip or to purchase a multi-unit property, such as a small apartment building – in an attempt to make as much money as possible in a short amount of time. In addition, they want to be able to put down as little money as possible.
However, the new rules for real estate investors require that they have a down payment of 20 per cent, which is up substantially from 5 per cent. The idea is to discourage speculating and hopefully bring housing prices down to a more affordable level for buyers who actually want to live in the houses that they buy.
Obviously, it might be difficult to weed out all of the investors and flippers, but the move should cool the market enough for prices to come down to slightly more affordable levels.
