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In the 80's we had a major housing boom where the banks were financing insane speculation. The part that interests me is multi-residential housing. People were buying multi-residential housing on the belief that their assets would be worth more tomorrow than today. The business aspect of multi-residential housing was a distant second. Banks went to the cleaners on multi-residential mortgages when the housing bubble burst.

Today we are in the same predicament with a big change. Banks have put the lid on speculation in the multi-residential housing industry. Not only that, but over the last 5 years it looks to me like the requirements for mortgages have become stricter, not looser.

In general, we try to keep our finger somewhat on the multi-residential housing market because we own one. Because we are interested in buying we have been sampling listings from across the country. Currently multi-residential prices are workable, if not great business investments, and given the restrictive lending practices of the banks, that is unlikely to change. The only exception to this is in Victoria and Vancouver where building prices are high enough that they do not work as a business. It is not clear to me if the banks are loaning more money there (I kind of think not.) or if there is a lot more money available for purchasing - more money down.

A second area that seems similar to what Jerome a Paris is talking about is insurance. Part of that is the insanely low rates people on the shoreline of the Gulf pay. Our insurance company raised our rates substantially over a few years to cover hits on the re-insurance (according to their claim) market. Interestingly we were able to get substantial savings on our rates by changing to a small local mutual company.

My thought is that if the banks try to pass on losses to the consumer - as they did when they started charging for all their services - that there still are alternatives to the major banks. It's why I bank at our local grocery store.


aspiring to genteel poverty

by edwin (eeeeeeee222222rrrrreeeeeaaaaadddddd@@@@yyyyaaaaaaa) on Thu Nov 30th, 2006 at 10:17:09 AM EST

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