Increase of 2nd, 3rd, 4th mortgages out-pacing 1st mortgages ? | Page 2 | Mortgages | Discussion forum

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Increase of 2nd, 3rd, 4th mortgages out-pacing 1st mortgages ?
October 25, 2021
11:56 pm
Loonie
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October 21, 2013
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Norman1 said
The developers or investors aren't out to win the bidding on the houses at any price. The purchase price has to make sense in the context of the rent from the resulting two units.

If the developer was that one mentioned, who was planning to create a new rental units out of the basements, then the highest bid would likely be about $74,000 more than would make sense for the rent from the resulting two units.  

I foresee this particular block eventually being developed into high or low rise units, with the house being torn down, so a developer would be interested for the longer term. Like the individual buyer, he has his acceptable price point and, in normal times, that would be the deciding factor.

However, you may be assuming too much rationality in this process. The competition for houses is so fierce in the area right now that even a developer doesn't necessarily win the bidding war even when conditions otherwise seem suitable. All the offers, and there were quite a few, were above asking price, which was a fair one. Both the developer and the owner-occupier are looking at what they imagine will happen down the road in terms of the value and utility of the property. They are both guessing.

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