When Finance Minister Jim Flaherty changed the mortgage rule for the fourth time in as many years last July, it was seen as bad news for home buyers and investors alike. It was going to become harder to get a mortgage, whether you were trying to obtain one for your own residence, or your income property. But for the different type of investor, the smart investor, these changes were good news – and they still continue to be.
This is because when those changes first went into effect, property sales plunged almost immediately, with September of 2012 seeing one of the biggest drops in real estate sales this country had seen in a couple of years. That continued throughout most of the winter, which actually hampered the private mortgage investor slightly, because with lower prices it also means that lower interest rates are available to be collected on them. This of course, is where the private mortgage investor’s bread and butter lies, and so some took a slight hit during this time.
But now, prices are edging back up. Perhaps not to the highs that we saw in the spring of 2012, when property owners were getting away with asking astronomical prices for their homes and commercial properties. But there’s still much more money to be made with these types of investments than there were even just a few months ago.
Home prices are still down when you make year over year comparisons. With sellers attaching ridiculous price tags to their properties at that time, they would almost have to be. But the market has gone through the majority of the correction it’s going to see, and has now come back into a much better balance. Prices are once again seeing increases when you compare them month over month. That means profit for the private mortgage investor, who makes more profit in interest charges the bigger that initial price is.
When real estate prices go up, it’s good news for a select group of people. Of course buyers aren’t happy, because it means that they must pay more. But when we’re looking at economic growth for the country, and the strength of our housing market, rising prices indicate a healthy market that’s moving at the same pace of inflation (and hopefully not too much more.) And for the private investor, it means that there are even wider profit margins to be made.