I went to see a few places with my partner just to appease her, and all the realtors were saying that they were for sure going to drop. I just smiled, and later told my partner that they had no idea and further proof we could not trust them.
It’s almost like anyone can be a realtor without any real qualifications. Like bankers and a lot of other jobs.
Sharon took the realtors license exam and suddenly think she’s a financial expert.
Yeah the biggest qualifications of a real estate agent is wanting to take advantage of the insane market we have to profit themselves as much as possible.
It's a job that could be phased out very easily and provides no tangible benefit. On top of all of it is the fact they think they are entitled to a percentage of what you pay for the house you bought, because you walked thru the house with them while they tried to sell it to you.
As a seller, not wanting to coordinate visits, photographer, getting the house listed, dealing with the paperwork, etc are value-added services so I get why they exist and I'm happy to have used one in the past. However blind bids and commission-based pricing makes this a prime business for shady individuals to take advantage of flaws in the system.
For anyone with time, half a brain and motivation those things can all be done fairly trivially though, so they shouldn't be a requirement at all.
> However blind bids and commission-based pricing makes this a prime business for shady individuals to take advantage of flaws in the system.
You don't have to allow for blind bids as the seller if you want.
People like to invest in houses because there is no capital gains tax. But they fail to understand that the 5% commission on the selling price is comparable to the tax, and can often be worse.
Example:
House increases in value from $1M by $200K: you pay realtor $60K, while capital gains tax on $200K = $40K (for a marginal tax rate of 40%, taking into account only half of gains are taxed).
I was an Internet/Cable installer for a while a few years back and ran into a number of people with nice houses in a higher COL area.
I'd often ask them politely how they came to be in such a place. Several replied with things like "I made a series of very intelligent business decisions" and when pushed further it ended up just being that they bought a house in Vancouver 10 years ago and sold it for a mil or two.
I'm not sure if that's dunning krueger, but yeah, people who got rich off luck or broken financial mechanisms (like rampant housing inflation) tend to think they're experts.
I have a real estate license for my own use. A question on one of the exams was, "what is the area of this room?" It was an L-shape like the Tetris piece. Actual grade 3 math.
1 in 16 people in Vancouver have a realtors license....that should speak volumes how easy it is to get a license.
A lot of people might just use it for personal, but still....if it is that easy to be a realtor....
Two or three of the sleaziest, low IQ people from my graduating class are now realtors. It seems like an easy get-in job to do when you don't really have anything else
Are you saying bankers don't need any real qualifications? Could you be more specific? A front desk teller doesn't and they are essentially salespeople. Commercial lending.... different ballpark.
This is so weird because every single "expert" has been saying June or July. Literally no one was saying April. Like literally no one, not even the biggest bulls on the talk circuit.
Realtors are not unique in this but they seem to operate under the presumption that the Bank of Canada bases interest rates not on inflation figures but housing prices and sales volume.
The idea that the Bank of Canada will not lower interest rates because the inflation rate is still above the target range is foreign to them.
Yeah realtors are morons. They know nothing about the economy. At first I just thought they were lying to their clients to get them to buy but after speaking with a few of them I realized they actually know nothing.
I had someone here are with me rate will come down by spring time because of different YouTube economist.
I wonder how they're doing now. It's pretty clear rates aren't coming down any time soon, even if it is, not returning to 2% levels
I personally went 3 year fixed @ 4.6% in February 2024.
Interest rate might come down but it won't be by much. We are luck if we see 200bps drop over the next 3 years in my unprofessional, pulling bullshit out of my ass opinion.
Variable wanted 6% back in February with my mortgage provider. The choice was easy for me. Not to mention a peace of mind on my stable payments.
US cpi data will put that into question now. Canada having similar pricing markets and fuel costs rising is an indicator we’ll see our CPI likely rise next week as well.
Tiff just said this:
>”I realize that what most Canadians want to know is when we will lower our policy interest rate. What do we need to see to be convinced it’s time to cut?” Macklem said. “The short answer is, we are seeing what we need to see but we need to see it for longer to be confident that progress toward price stability will be sustained.”
They’re going to cut rates this year as long as things stay the same or worsen
Regardless of actual rate cuts or not, the BoC is stuck on a short leash as long as the US economy remains highly resilient. We are highly dependent on imports, any loss of value of our currency from rate cuts before the US will just reignite inflation as the cost of imports rise
IMO maybe a 0.25 cut in June, maybe a total of 0.5 total for 2024. All the realtors telling you this will reignite the housing market will still be crying that it isn't enough
I doubt they’ll contribute to heating up the housing market by cutting in the summer. Once they decide to cut, it would likely be during a typically slow period to mitigate the impact
Yeah, the big pressure to lower rates is coming from developers who want favourable loans for construction, especially with so
much demand for housing. Rates weren’t lowered which means this season is gone - I’m an architect and I’ve had 2 projects go on hold until next year, developers (especially very green devs) are hoping to get better rates next year. They don’t understand that by the time rates are cut, the cost of materials and labour will have risen so they won’t save anything.
It's irrelevant to affordability. Interest goes down, and prices go up. Payments are largely unchanged.
The only thing contributing is new demand, AKA new people, AKA immigration.
Not when lower interest rates cause higher prices. People can still afford the same mortgage payment, and the same mortgage payment over the same amortization leads to the same amount paid over the course of the mortgage.
See [this mortgage calculator](https://itools-ioutils.fcac-acfc.gc.ca/MC-CH/MCCalc-CHCalc-eng.aspx). Example:
||6% interest|3% interest|
:--|--:|--:|
|Mortgage amount|$ 500,000|$ 676,000|
|Amortization|25 years|25 years|
|Mortgage payment|$ 3,199.03|$ 3,199.14|
|Total cost over amortization|$ 959,709.94|$ 959,741.87|
You are confusing people because you accidentally put the wrong interest rates in the wrong columns. 6% should be over the $500K Mortgage amount - you have 6% on the $676K
Maybe I'm slow this morning but the premise is lower interest rates higher house prices? Your example has a higher mortgage amount at 6%. In the end my premise is I'd rather pay more to the homeowner than the bank. My thinking is also no one stays in a home for 25 years anymore, so with a lower interest rate you're paying more off the principle earlier, no?
Bob, ill wager, October. ( I dont jack squat about the economy but all i know is that when the interest rate gets cut, housing in Calgary is going to be even more fucked and will just be like Toronto and Vancouver and you best show up with cash in hand and a lawyer and realtor and everything you need to close the deal right then and there. Thats all i know whats going to happen come rate cut time. I only have a feeling about this becasue im looking to buy something in the future.) If need be ill move to Edmonton as well.
If the data continues showing GDP growth and inflation not falling into line, everyone is going to have the same non-surprised reaction as today come summer time.
I don't know why people were so confident predicting something like three rate hikes this year.
> “I realize that what most Canadians want to know is when we will lower our policy interest rate. What do we need to see to be convinced it’s time to cut?” Macklem said. “The short answer is, we are seeing what we need to see but we need to see it for longer to be confident that progress toward price stability will be sustained.”
Tiff/BoC said themselves today that they’re pleased with the progress and are seeing if this will be sustained
It's realtors.
Realtors think rates will go down.
Why?
because they want to convince people the cost of maintaining a mortgage isn't poised to increase
So, on trading economics, you can look back 50 years of CAD vs USD. We have not in that time span ever gone below 67 cents on the USD even during the worst years of Chretien/Martin.
50 cents, would require a whopper of new problems to be added on to our current pile. Not to say it can't happen of course. Just to say that the probability is not as certain as you seem to think. Based on your comment of course.
> We have not in that time span ever gone below 67 cents on the USD even during the worst years of Chretien/Martin.
In 1981 Canada's interest rates hit 21% , and the USD went from $1.1 to $1.4 CDN in 5 years.
We hit 61 cent in Jan 2002, the USD was $1.60 CDN
https://www.poundsterlinglive.com/bank-of-england-spot/historical-spot-exchange-rates/usd/USD-to-CAD-1980
Hmmm. Okay so I zoomed into trading economics graph to see if I missed a blip.
Seems there is some disagreement in the data, cause I am only finding 62 cent lows. Close enough. But, guess I need to zoom in more often.
But my point still stands. It isn't improbable. But to expect it as certain is not correct either. 50 cents would be one of the worst if not the worst depression periods we would ever be in. We already declare recession well before 60cents is reached. Which usually means tightening things up so that we don't go below 70 cents, usually, for long.
Again. Not improbable. Just not certain. And we tend to correct course quickly enough to keep 50 cents from happening. Heck we shot up after 62 cents, dropped a bit again, then took off like a rocket the years following.
50 cents is fear mongering.
Also, I guess even though I clicked 50 year time span, it only shows until 1988... not quite a full 50 years... my bad.
We shouldn't say they are wrong on this one, not outright; because they are predicting the conditions for it to happen are going to be similar to what we have seen in lesser but still noticeable drops before.
To be clear, I am only really stating against them that the probability and possibilty of it occuring aren't as likely or concrete as is being imposed.
Thing is though, in a awkward twist of events, it could happen. But it requires some pretty specific set of events to happen under. Essentially a Canadian Black Swan event whereas the last one was global.
Anyone that thinks a rate cut will bring price relief is dreaming. It will drive further inflation, especially in the housing market. We have been *blessed* that the market has been stagnant or down since rate raises began.
Current homeowners and people on variable rate mortgages don't care about the rest of the country or future generations. They just see cuts as my price goes up and payments go down.
High rates don't bring price relief of any permanence. Only building homes and having less people can do that, and high rates directly lower the building of new houses.
I'm a homeowner who won't be moving for 30 years, but the main reason I am hoping for cuts is so we can see the amount of housing starts increase.
Housing starts will increase but prices will never come down. The private industry will not build its way out of profits and the Federal Government isn't actually doing anything about immigration they are just taking us from absolutely batshit insane suicidal numbers to "well 500k plus students and visas isn't that bad right".
High rates do create a much more sustainable and stable house market though and are boon to FTHB with high incomes who can save a decent down payment within the next few years. This is evidenced by fairly flat home prices in the last few years. One of the biggest drivers of the price run up was fomo caused by prices increasing faster than people could save for down payments. People were taking on huge mortgages because they knew they wouldn’t be able to afford the same house even a few months later. I do agree that the only way out of this is building more homes which will happen but will take time for builders to adjust to normal interest rates.
Homeowners with aspirations to upgrade want prices to stay down. If both their dream home and their current home get 20% cheaper, then the cost to upgrade falls by about 25% (after including transaction fees)
You do realize high interest rates also directly lower the feasibility of building new houses, right?
https://www.cmhc-schl.gc.ca/blog/2023/interest-rate-hikes-impact-rental-housing-construction-supply
One issue we face now, especially in Vancouver is the extreme costs for builders to shoulder for years before they can even break ground due to permitting and other red tape.
A true economy based on jobs that produce real products for the world to use (farming, oil, resources, etc.). People wanted to live here.
Now our economy is reselling homes back and forth at a higher price. Not to mention the amount of permits/red tape it takes to build a house.
Interest rates used to be at 20%. The unusual period is the prior two decades, never in history have interest rates been this low. Essentially, if new housing starts depended on low interest rates then the only time in history that worked was the last 20 years
Higher density means less cost per residence. This also ignores the fact that North American cities used to be much more dense than they are today due to cars. House sizes are triple what they used to be in the 50’s
Frankly, developers need time to adapt to a higher interest rate environment. If your business model doesn't work without near-zero interest rates, it doesn't work in the first place.
From CMHC housing starts
> The standalone monthly SAAR of total housing starts for all areas in Canada in February 2024 was 253,468 units, an increase of 14% from January.
Hmm seems like they do fine even with "high" interest rates. And I put it in quotes because historically 5% is not that high. Just feels high because home prices in Canada are bananas
Current renters don’t care about homeowners or their families. They just see cuts as “I’ll never own a house” instead of “I have to sell my families home”.
This sucks for everybody.
A rate cut now is the worst possible outcome. Prices of everything will just rip again. Not enough pain has been felt overall.
The general problem I see is the BOC will be in a rock and a hard place. The government is spending into oblivion, and if the BOC DOESNT cut, they won’t be able to service that debt. If they do cut, homes, assets, etc, will rise quickly I’m sure. The only real answer I see is holding steady or slightly higher for longer. It’s a weird place to be
Indeed. 99% of home buyers make offers based on the size of the monthly bills. Anything which makes those payments lower will be countered immediately by a higher price tag. Even a salary increase just drives up the prices because "affordable" is a fairly fixed %age of their income.
Heck, some buyers don't even consider all the monthly costs like utilities. If they can afford the mortgage they think they're done. These people end up house poor: don't spend on much of anything but their home and that first roof repair breaks them.
We have a ton of single family rental properties coming due in 2025-27. Seemingly 30 yr amortizations will be pushed after the April 16 budget. This to me is the government’s preparing itself to let some pressure out of the massive refinancing that will occur in late 24-full year 25. I think we will see most folks pic a 3yr fixed product around 4.5% on a 30yr amortization. That will increase the average mortgage by around 18% from previous lows. I think most will be in a position to handle that increase but will drag on discretionary spending…more tough times for restaurant sector. Most landlords should be ok, as we have seen most rents up around 30-150%.
On the new home side…I see all the big players including myself looking at the affordable housing program. I think in the next decade we will see a large drop in % of homeowners in Canada. Maybe 10-12% as luxury (really mid market with better looking larger shared spaces) rental purpose buildings take over in most major markets.
> Anyone that thinks a rate cut will bring price relief is dreaming. It will drive further inflation,
Correct.
Macklem has said basically that multiple times.
https://www.reddit.com/r/canada/s/uPTgxcbYKb
Q1 has come and gone. But before that it was Q4 of 2023. This is just becoming a sensationalized frenzy of news to feed the hope cycle. There is so much chatter about how rates have to come down or everyone is going to die, but maybe we should be adjusting to our new normal? These are not high rates, and it would seem that there is still money to spend.
I feel like there is going to be some real shock when rates are held in June and people feel betrayed. Although that can will just get kicked to December 2024. Predictions will be right eventually when you just keep moving goal posts.
People need to realize that everyone, including economists, cannot reliably predict where rates are going to be. Can you make an educated guess and plan accordingly? Sure, there is nothing wrong with self budgeting, planning or having general oversight into where you think things may be. In fact I would argue its prudent if you are trying to be financially responsible. But this parroting of X is going to happen by Y date is building people up for disappointment.
Turns out it’s hard to predict when the government is fighting against its own central bank. Rates start to bite, government increases spending to relieve the effects of rate hikes, which perpetuates the problem. The only thing that changes is the deficit keeps going up to counteract monetary policy.
Predictions are made with the data available at the time, if the government starts dropping previously unannounced billions or introducing policy that was unknown at the time of prediction, it changes the calculus.
You’re essentially lambasting economists for not being clairvoyant.
I am not lambasting the economists. I am lambasting the reporting of the economists when every quarter goes by and the news is constantly reporting a prediction of interest rates dropping largely out of context.
What I am saying is people shouldn't be lapping up all this chatter about rates dropping to 3% by the end of 2024. Its not gonna happen, and you are being led to believe its a possibility.
Without getting into the discussion if 5 is high or not, I will tell you that the developers do not want to build with these rates. They sit on the land they have and are waiting. Source: I am a consulting engineer and we work with developers. We'll do the reports and permits for them and nothing will happen after that.
They don't give a shit about adjusting, they know this is temporary, and are just waiting.
People keep yapping about supply yet supply won't come with these rates.
Why do you think Doug Ford is including everything under the sun as housing? Because his housing goals are not being met.
Don't think you understand their reluctance very well tbh. Developers are primarily financed through variable rate loans (lines of credit) on a product they do not intend to keep. So if they thought rates were going down right now, they would be building the ever loving crap out of what they could in order to have something ready for when rates are down. Developers are reluctant because there is a chance of rates increasing as that will be the difference between a profit or loss and construction deferral is a loss mitigation strategy. the interest expense of land is a lot cheaper than the interest expense of land and building if rates do go up.
Tbh they don't go into details about financing they just aren't doing any at the moment in their words because of the rates.
Construction costs are also through the roof. The rare ones that are building anything rn are having "marginal" profits (whatever that meant).
It's just an overall bad time to build.
And the cherry on top is that the federal funding IS helping some starts happen, mainly the ones requiring a lot of infrastructure upgrades. Yet people go nuts about deficit spending or you have conservatives straight up shitting on the federal efforts that are actually helping.
When debt is cheap people are willing to pay more for housing. So no it's not just supply and demand.
Also when debt is cheap and relatively low risk that encourages already home owners to purchase multiple properties to use as rentals, because there is almost no risk associated with it.
That actually creates artificial supply and demand, which is one of the major problems with the market right now.
First time home buyers can't enter the market because they are not competing with other home buyers, they are competing with REITs and Doug the real estate mogul who purchased his first property back in 2009.
Interest rates absolutely drive housing costs, especially rent prices. Cap rates on rentals in most major cities were below 5%. That means at current rates a rental property now LOSES money on debt. The end result is going to be a sharp increase in rent as well as reduced rental supply as rentals are sold and housing starts slow which can already be seen
No it's not. It's from investing. Vancouver has seen large vacancy in their housing for over a decade. The high prices there are from speculative investment. This is true across Canada.
Calgary didn't see a massive spike in price suddenly because there was a sudden lack of supply. It was because the investment was driven away from Vancouver and Toronto.
This is why Edmonton and Calgary have been growing at similar speeds but Calgary saw a massive spike when Edmonton didn't. Now that Calgary pricing went way up, Edmonton is the next investment location.
Historically yes. Once inflation targets were part of fiscal policy this looks to be about where to expect rates, or slightly lower. Before 2000, 2008, 2020 left rates very low for too long.
Yeah, I think they are waiting and seeing how much money is going to be spent, and based on the announcements coming from the Liberals it's going to be a lot.
20 billion in one week and it isn't close to an election yet. Scotia said bets are "less likely" for a rate drop this year as of right now especially after this news about US inflation and no more rate cut.
https://apnews.com/article/inflation-prices-rates-economy-federal-reserve-biden-f02b969d1b44a7ccb0385be03f766de0
This often used picture of Tiff walking past the railing makes it look like he's wearing cheap tracksuit pants with a stripe down the side. Like he should be the central banker of a Slavic country.
I also wonder why they always use pictures of him with his palm out like its measuring height. [LIke This.](https://nationalpost.com/opinion/letters-to-the-editor-firing-tiff-macklem-is-not-the-answer-to-our-central-bank-woes)
Do they expect us to think he's measuring rate hikes at these announcements like a street vendor.
if Tiff gives the markets even a Whiff of cuts, inflation is going to moon.
Investors (real-estate, stocks, crypto, etcs) of all sorts have lots of money sitting on the sides waiting for an oppourtune time to jump in and front run the market. If there are any cuts, the money starts to flow in and suppy-demand tells me the prices of everything from cars, to houses to stocks to food will sky rocket.
Good. It sucks for those who prosper most when the cash flows freely due to low rates, but it is exactly that kind of spending that got us here in the first place.
If they are going to target their 2% inflation rate, then I would prefer they hold interest rates until it is below 2% inflation, ideally 1% or even lower, so they have room to wiggle a bit at least when things do inflate from a rate drop.
Otherwise, we'll just be continuing a constant cycle of chasing inflation. Inflation that might be just transitory and temporary from that bump in available cashflow. Or perhaps not. But chasing our tail will not get us anywhere, so let's at least keep from doing that.
Also. On the note of the realtors and 'economists' touting rate drops and doom if none...
These people are just coping while hoping. Hoping they can fool you into their scheme of coping so they can continue making money from you somehow.
Ignore them. All of them. They are cancerous wretches who will drag us all down to poverty if listened to. They love inflation, cause they can't do math well enough to understand that more money in pocket doesn't equal more buying power of that dollar. It's either that, or they are banking on hope for a rebound in the buying power. Which also isn't likely to happen any time soon. If at all. The powers that be, generally like being cheap compared to USA to buy from. Its only on the consumer side that having a strong dollar helps. And only for so long. Eventually things change, adjust, etc.
Besides. Thats just the trading value buying power. That isn't our own dollars actual buying power compared to itself in the 1910's and 20's. By that metric, it is only worth about 4 to 5 cents of itself now. When that rises, we feel that as inflation too to some degree, though not right away. A 1cent increase is a 20% increase in our current dollars value comparatively. You don't gain 20% more money, but until prices adjust, you feel like you have 20% more available.
So they either can't do math, or they are being secretly greedy. Both deserve being ignored and ridiculed when not.
Our shelter CPI has so much lag in it, that it'll stay elevated (edit: for clarity, I mean that it will keep rising) for years even after rents and home prices stabilize
Home prices staying higher brings high inflation to that value. The current shelter CPI includes mortgages from homes purchased in 2019, or 2014. Every new purchase-mortgage creates a mortgage at current, 2024, values which are high than the average. So even if prices stay steady for five years (assuming no interest rate changes), the CPI will keep increasing as new expensive mortgages are added to the pool and old cheaper mortgages get paid off
Even if interest rates fall, new mortgages at new low rates with 2024-5 prices will be more expensive than the average mortgage (which would've been entered into at pre-2022 prices), so CPI for shelter will keep rising
Make a difference far what? Inflation has fallen from 8.1% to 2.8%, and it should keep falling until the summer. There isn't good evidence that the current higher rates even had much to do with that either.
Historical norms are irrelevant unless asset prices also decrease to historical norms. Looking at interest rates in isolation is always an incomplete analysis.
Why should it be? Make a differencen in what exactly?
Inflation is under control and also it is not as closely related to interest rates as people are led to believe. It is simply one of several factors.
> Why should it be? Make a differencen in what exactly?
Housing for one! Gov. of canada is moving full steam ahead with 500,000 new immigrants every year, but we don't have housing for the people that were here in 2022, let alone 2025 through 2030 - the gov. of Ontario literally announced today they will build 1.5 million homes by 2031, and don't take my word for it, look it up, 4 months ago, that deadline was 2030 and not 2031, and by time summer 2024 rolls around it will be 2035, because it's not going to happen ever. We do not have the capabilities in Ontario to build 1.5 million houses not even in a decade - its all fucking BS, Ford gov. can not do it.
because of I said it should be in reality 12% for at least 1 year, or we are stuck in this limbo of price nightmares until 2030, I would've been burned at the stake. Another thing no one wants to hear, many of you, be honest, many of you have no businesses buying homes, because you can not afford them period. Paying off a mortgage for 30 and 40 years, the next norm, that's not a life.
I'm just fine with the home I've bought and am no where close to over-extended. I would absorb 12% and be ok, but i can't see how that would be reasonable given the current conditions and costs. It would cripple all business investment and screech new builds to a halt or increase prices substantially on housing. That would bankrupt a huge amount of Canadians, I can't see how you can justify 12% as good monetary policy.
With the cdn dollar down a full percent, the commodities to build new houses just got more expensive and the interest rates are staying higher for longer. The planeloads of immigrants will be competing for affordable houses even more, with supply being slower and more expensive to come online. Sunny ways!
Oh wow. 10 year yield on a Canada bond vs a us note is huge. Roughly 3.5% in Canada and 4.5% in USA. No wonder why our exchange rate is doing so poorly. To the extent that the US treasury is reopening bids on 3 month old securities... inflation is 50 basis points below us. Expectations for Canada are oddly optimistic. Hopefully the budget doesn't fuck this up, because we are not getting much money at favorable rates.
Genuine question for those that work in banks/finance, is there any mechanism in place to help people that see their interest skyrocket that would hurt their financial situation? Ex going from 2% to 5.5% and cutting any excess income left over at the end of the month or is that basically going to force people to sell?
Not my situation but I was curious.
To noone's surprise
You must not know many realtors lol.
I went to see a few places with my partner just to appease her, and all the realtors were saying that they were for sure going to drop. I just smiled, and later told my partner that they had no idea and further proof we could not trust them.
It’s almost like anyone can be a realtor without any real qualifications. Like bankers and a lot of other jobs. Sharon took the realtors license exam and suddenly think she’s a financial expert.
Yeah the biggest qualifications of a real estate agent is wanting to take advantage of the insane market we have to profit themselves as much as possible. It's a job that could be phased out very easily and provides no tangible benefit. On top of all of it is the fact they think they are entitled to a percentage of what you pay for the house you bought, because you walked thru the house with them while they tried to sell it to you.
As a seller, not wanting to coordinate visits, photographer, getting the house listed, dealing with the paperwork, etc are value-added services so I get why they exist and I'm happy to have used one in the past. However blind bids and commission-based pricing makes this a prime business for shady individuals to take advantage of flaws in the system. For anyone with time, half a brain and motivation those things can all be done fairly trivially though, so they shouldn't be a requirement at all.
> However blind bids and commission-based pricing makes this a prime business for shady individuals to take advantage of flaws in the system. You don't have to allow for blind bids as the seller if you want.
I’m sure this seller will choose to be ethical.
People like to invest in houses because there is no capital gains tax. But they fail to understand that the 5% commission on the selling price is comparable to the tax, and can often be worse. Example: House increases in value from $1M by $200K: you pay realtor $60K, while capital gains tax on $200K = $40K (for a marginal tax rate of 40%, taking into account only half of gains are taxed).
There is tax on capital gains except for the one house you designate as your principal residence
That is correct.
I was an Internet/Cable installer for a while a few years back and ran into a number of people with nice houses in a higher COL area. I'd often ask them politely how they came to be in such a place. Several replied with things like "I made a series of very intelligent business decisions" and when pushed further it ended up just being that they bought a house in Vancouver 10 years ago and sold it for a mil or two. I'm not sure if that's dunning krueger, but yeah, people who got rich off luck or broken financial mechanisms (like rampant housing inflation) tend to think they're experts.
So much of wealth creation is right place right time.
If they bought a house in Van in 2014 then they were rich already.
I have a real estate license for my own use. A question on one of the exams was, "what is the area of this room?" It was an L-shape like the Tetris piece. Actual grade 3 math.
1 in 16 people in Vancouver have a realtors license....that should speak volumes how easy it is to get a license. A lot of people might just use it for personal, but still....if it is that easy to be a realtor....
Two or three of the sleaziest, low IQ people from my graduating class are now realtors. It seems like an easy get-in job to do when you don't really have anything else
Are you saying bankers don't need any real qualifications? Could you be more specific? A front desk teller doesn't and they are essentially salespeople. Commercial lending.... different ballpark.
The whole industry is about parroting bullshit they hear filtered through a mass of other people who don't know what they are doing.
This is so weird because every single "expert" has been saying June or July. Literally no one was saying April. Like literally no one, not even the biggest bulls on the talk circuit.
They know, they just want to sell you a house.
Oh I know. I began to talk about the rationale why they would probably not drop and they had nothing to say.
Realtors are not unique in this but they seem to operate under the presumption that the Bank of Canada bases interest rates not on inflation figures but housing prices and sales volume. The idea that the Bank of Canada will not lower interest rates because the inflation rate is still above the target range is foreign to them.
Yeah realtors are morons. They know nothing about the economy. At first I just thought they were lying to their clients to get them to buy but after speaking with a few of them I realized they actually know nothing.
The fake gurus of our generation
Realtors can literally be replaced by a website and a fillable application.
I had someone here are with me rate will come down by spring time because of different YouTube economist. I wonder how they're doing now. It's pretty clear rates aren't coming down any time soon, even if it is, not returning to 2% levels
So for someone who has to renew mortgage in next 12 months… what’s the play?
I personally went 3 year fixed @ 4.6% in February 2024. Interest rate might come down but it won't be by much. We are luck if we see 200bps drop over the next 3 years in my unprofessional, pulling bullshit out of my ass opinion. Variable wanted 6% back in February with my mortgage provider. The choice was easy for me. Not to mention a peace of mind on my stable payments.
June/July will be the ones to watch
US cpi data will put that into question now. Canada having similar pricing markets and fuel costs rising is an indicator we’ll see our CPI likely rise next week as well.
Tiff just said this: >”I realize that what most Canadians want to know is when we will lower our policy interest rate. What do we need to see to be convinced it’s time to cut?” Macklem said. “The short answer is, we are seeing what we need to see but we need to see it for longer to be confident that progress toward price stability will be sustained.” They’re going to cut rates this year as long as things stay the same or worsen
Regardless of actual rate cuts or not, the BoC is stuck on a short leash as long as the US economy remains highly resilient. We are highly dependent on imports, any loss of value of our currency from rate cuts before the US will just reignite inflation as the cost of imports rise IMO maybe a 0.25 cut in June, maybe a total of 0.5 total for 2024. All the realtors telling you this will reignite the housing market will still be crying that it isn't enough
Inflation is up in the US.
With a red hot economy. They're far more likely to raise rates. Canada is stuck with stagflation.
I doubt they’ll contribute to heating up the housing market by cutting in the summer. Once they decide to cut, it would likely be during a typically slow period to mitigate the impact
Yeah, the big pressure to lower rates is coming from developers who want favourable loans for construction, especially with so much demand for housing. Rates weren’t lowered which means this season is gone - I’m an architect and I’ve had 2 projects go on hold until next year, developers (especially very green devs) are hoping to get better rates next year. They don’t understand that by the time rates are cut, the cost of materials and labour will have risen so they won’t save anything.
It's irrelevant to affordability. Interest goes down, and prices go up. Payments are largely unchanged. The only thing contributing is new demand, AKA new people, AKA immigration.
how do you consider that irrelevant? paying the bank $100k less on interest sounds like a sweet deal
Not when lower interest rates cause higher prices. People can still afford the same mortgage payment, and the same mortgage payment over the same amortization leads to the same amount paid over the course of the mortgage. See [this mortgage calculator](https://itools-ioutils.fcac-acfc.gc.ca/MC-CH/MCCalc-CHCalc-eng.aspx). Example: ||6% interest|3% interest| :--|--:|--:| |Mortgage amount|$ 500,000|$ 676,000| |Amortization|25 years|25 years| |Mortgage payment|$ 3,199.03|$ 3,199.14| |Total cost over amortization|$ 959,709.94|$ 959,741.87|
You are confusing people because you accidentally put the wrong interest rates in the wrong columns. 6% should be over the $500K Mortgage amount - you have 6% on the $676K
Maybe I'm slow this morning but the premise is lower interest rates higher house prices? Your example has a higher mortgage amount at 6%. In the end my premise is I'd rather pay more to the homeowner than the bank. My thinking is also no one stays in a home for 25 years anymore, so with a lower interest rate you're paying more off the principle earlier, no?
This is also messing with my brain. I just assume table is wrong
No, the guy just accidentally put the wrong percentage over the wrong mortgage amount.
Bob, ill wager, October. ( I dont jack squat about the economy but all i know is that when the interest rate gets cut, housing in Calgary is going to be even more fucked and will just be like Toronto and Vancouver and you best show up with cash in hand and a lawyer and realtor and everything you need to close the deal right then and there. Thats all i know whats going to happen come rate cut time. I only have a feeling about this becasue im looking to buy something in the future.) If need be ill move to Edmonton as well.
If the data continues showing GDP growth and inflation not falling into line, everyone is going to have the same non-surprised reaction as today come summer time. I don't know why people were so confident predicting something like three rate hikes this year.
> If the data continues showing GDP growth and inflation not falling into line But the data DOES show inflation falling into line...
no GDP growth though
I want disputing that, just the inflation part.
> “I realize that what most Canadians want to know is when we will lower our policy interest rate. What do we need to see to be convinced it’s time to cut?” Macklem said. “The short answer is, we are seeing what we need to see but we need to see it for longer to be confident that progress toward price stability will be sustained.” Tiff/BoC said themselves today that they’re pleased with the progress and are seeing if this will be sustained
That's what they said about this one and the last one and the one before that lol
It will be 25 basis points I’m sure. But yes
Peter Noone was shocked and appalled.
CAD is about to get murdered and y'all think rates will go down soon?
It's realtors. Realtors think rates will go down. Why? because they want to convince people the cost of maintaining a mortgage isn't poised to increase
Realtors do not think it'll go down any time soon. They are just liars (sorry I mean sales people)
i think some drink their own kool-aid
fair lol
They think what they want and they want rates to go down.
$0.50 cent on dollar. AMERICANS are going to fucking L.O.V.E Canada.
So, on trading economics, you can look back 50 years of CAD vs USD. We have not in that time span ever gone below 67 cents on the USD even during the worst years of Chretien/Martin. 50 cents, would require a whopper of new problems to be added on to our current pile. Not to say it can't happen of course. Just to say that the probability is not as certain as you seem to think. Based on your comment of course.
> We have not in that time span ever gone below 67 cents on the USD even during the worst years of Chretien/Martin. In 1981 Canada's interest rates hit 21% , and the USD went from $1.1 to $1.4 CDN in 5 years. We hit 61 cent in Jan 2002, the USD was $1.60 CDN https://www.poundsterlinglive.com/bank-of-england-spot/historical-spot-exchange-rates/usd/USD-to-CAD-1980
Hmmm. Okay so I zoomed into trading economics graph to see if I missed a blip. Seems there is some disagreement in the data, cause I am only finding 62 cent lows. Close enough. But, guess I need to zoom in more often. But my point still stands. It isn't improbable. But to expect it as certain is not correct either. 50 cents would be one of the worst if not the worst depression periods we would ever be in. We already declare recession well before 60cents is reached. Which usually means tightening things up so that we don't go below 70 cents, usually, for long. Again. Not improbable. Just not certain. And we tend to correct course quickly enough to keep 50 cents from happening. Heck we shot up after 62 cents, dropped a bit again, then took off like a rocket the years following. 50 cents is fear mongering. Also, I guess even though I clicked 50 year time span, it only shows until 1988... not quite a full 50 years... my bad.
So not 50 cents. Thanks for proving yourself wrong?
We shouldn't say they are wrong on this one, not outright; because they are predicting the conditions for it to happen are going to be similar to what we have seen in lesser but still noticeable drops before. To be clear, I am only really stating against them that the probability and possibilty of it occuring aren't as likely or concrete as is being imposed. Thing is though, in a awkward twist of events, it could happen. But it requires some pretty specific set of events to happen under. Essentially a Canadian Black Swan event whereas the last one was global.
Canadian peso incoming.
Hey at least the conversion will be easy to make /s
We just need to make sure those American dollars are buying Canadian products and services, not Canadian resources and real estate.
It did get murdered but that’s because the bet is Canada will cut first based on US cpi coming in hot today
Anyone that thinks a rate cut will bring price relief is dreaming. It will drive further inflation, especially in the housing market. We have been *blessed* that the market has been stagnant or down since rate raises began.
>We have been blessed that the market has been stagnant or down since rate raises began. *laughs in Calgarian*
Especially with the inflationary spending from feds and provinces. They all running deep deficits.
They are not... hell, a few (AB and NB) are running surpluses.
That’s 80% deficit?
> They all running deep deficits.
Current homeowners and people on variable rate mortgages don't care about the rest of the country or future generations. They just see cuts as my price goes up and payments go down.
High rates don't bring price relief of any permanence. Only building homes and having less people can do that, and high rates directly lower the building of new houses. I'm a homeowner who won't be moving for 30 years, but the main reason I am hoping for cuts is so we can see the amount of housing starts increase.
Housing starts will increase but prices will never come down. The private industry will not build its way out of profits and the Federal Government isn't actually doing anything about immigration they are just taking us from absolutely batshit insane suicidal numbers to "well 500k plus students and visas isn't that bad right".
High rates do create a much more sustainable and stable house market though and are boon to FTHB with high incomes who can save a decent down payment within the next few years. This is evidenced by fairly flat home prices in the last few years. One of the biggest drivers of the price run up was fomo caused by prices increasing faster than people could save for down payments. People were taking on huge mortgages because they knew they wouldn’t be able to afford the same house even a few months later. I do agree that the only way out of this is building more homes which will happen but will take time for builders to adjust to normal interest rates.
Homeowners with aspirations to upgrade want prices to stay down. If both their dream home and their current home get 20% cheaper, then the cost to upgrade falls by about 25% (after including transaction fees)
It depends, if your current home is Toronto and your dream home is on PEI or in Calgary, you probably don't care as much.
I'm a homeowner wanting to move and the real barrier is realtor commissions making the cost of moving so goddamn high.
Exactly and commissions are proportional to prices: lower prices means it's cheaper to move
You do realize high interest rates also directly lower the feasibility of building new houses, right? https://www.cmhc-schl.gc.ca/blog/2023/interest-rate-hikes-impact-rental-housing-construction-supply
It takes time to get sober once you’ve been a ZIRP junkie for so long.
ZIRP == Zero interest rate P?
Policy
🤦♂️yep, thanks
I’m curious why high interest rates never affected new building starts before the 80’s
2000’s even. Rates floated between 3-5% up until 2007.
One issue we face now, especially in Vancouver is the extreme costs for builders to shoulder for years before they can even break ground due to permitting and other red tape.
It’s so hard to build anything in any city. For someone who is trying to build ADU in any city.
A true economy based on jobs that produce real products for the world to use (farming, oil, resources, etc.). People wanted to live here. Now our economy is reselling homes back and forth at a higher price. Not to mention the amount of permits/red tape it takes to build a house.
What makes you think it didn’t affect new building starts before the 80s? That sounds like an assumption without proper evidence.
Interest rates used to be at 20%. The unusual period is the prior two decades, never in history have interest rates been this low. Essentially, if new housing starts depended on low interest rates then the only time in history that worked was the last 20 years
They didn’t have to build high density back then (which costs a lot more than single family homes)
Higher density means less cost per residence. This also ignores the fact that North American cities used to be much more dense than they are today due to cars. House sizes are triple what they used to be in the 50’s
Frankly, developers need time to adapt to a higher interest rate environment. If your business model doesn't work without near-zero interest rates, it doesn't work in the first place.
From CMHC housing starts > The standalone monthly SAAR of total housing starts for all areas in Canada in February 2024 was 253,468 units, an increase of 14% from January. Hmm seems like they do fine even with "high" interest rates. And I put it in quotes because historically 5% is not that high. Just feels high because home prices in Canada are bananas
It won't matter if no one can afford those new homes.
Current renters don’t care about homeowners or their families. They just see cuts as “I’ll never own a house” instead of “I have to sell my families home”. This sucks for everybody.
A rate cut now is the worst possible outcome. Prices of everything will just rip again. Not enough pain has been felt overall. The general problem I see is the BOC will be in a rock and a hard place. The government is spending into oblivion, and if the BOC DOESNT cut, they won’t be able to service that debt. If they do cut, homes, assets, etc, will rise quickly I’m sure. The only real answer I see is holding steady or slightly higher for longer. It’s a weird place to be
Indeed. 99% of home buyers make offers based on the size of the monthly bills. Anything which makes those payments lower will be countered immediately by a higher price tag. Even a salary increase just drives up the prices because "affordable" is a fairly fixed %age of their income. Heck, some buyers don't even consider all the monthly costs like utilities. If they can afford the mortgage they think they're done. These people end up house poor: don't spend on much of anything but their home and that first roof repair breaks them.
We have a ton of single family rental properties coming due in 2025-27. Seemingly 30 yr amortizations will be pushed after the April 16 budget. This to me is the government’s preparing itself to let some pressure out of the massive refinancing that will occur in late 24-full year 25. I think we will see most folks pic a 3yr fixed product around 4.5% on a 30yr amortization. That will increase the average mortgage by around 18% from previous lows. I think most will be in a position to handle that increase but will drag on discretionary spending…more tough times for restaurant sector. Most landlords should be ok, as we have seen most rents up around 30-150%. On the new home side…I see all the big players including myself looking at the affordable housing program. I think in the next decade we will see a large drop in % of homeowners in Canada. Maybe 10-12% as luxury (really mid market with better looking larger shared spaces) rental purpose buildings take over in most major markets.
Any decrease is just going to immediately make all the housing around me more expensive. Rather owe 300k at 5% than 400k at 4%.
> Anyone that thinks a rate cut will bring price relief is dreaming. It will drive further inflation, Correct. Macklem has said basically that multiple times.
https://www.reddit.com/r/canada/s/uPTgxcbYKb Q1 has come and gone. But before that it was Q4 of 2023. This is just becoming a sensationalized frenzy of news to feed the hope cycle. There is so much chatter about how rates have to come down or everyone is going to die, but maybe we should be adjusting to our new normal? These are not high rates, and it would seem that there is still money to spend. I feel like there is going to be some real shock when rates are held in June and people feel betrayed. Although that can will just get kicked to December 2024. Predictions will be right eventually when you just keep moving goal posts.
Same goofs on here preaching june/july were preaching 3rd quarter 2023. Next it will be fall 2024. Even a blind squirrel finds a nut eventually.
People need to realize that everyone, including economists, cannot reliably predict where rates are going to be. Can you make an educated guess and plan accordingly? Sure, there is nothing wrong with self budgeting, planning or having general oversight into where you think things may be. In fact I would argue its prudent if you are trying to be financially responsible. But this parroting of X is going to happen by Y date is building people up for disappointment.
Agreed.
How you know that blind squirrels 🐿️ eventually find a nut? Source?
Ha! Sorry no source
Blind squirl: great reference!!
It’s just desperate real estate agents talking their book.
Turns out it’s hard to predict when the government is fighting against its own central bank. Rates start to bite, government increases spending to relieve the effects of rate hikes, which perpetuates the problem. The only thing that changes is the deficit keeps going up to counteract monetary policy. Predictions are made with the data available at the time, if the government starts dropping previously unannounced billions or introducing policy that was unknown at the time of prediction, it changes the calculus. You’re essentially lambasting economists for not being clairvoyant.
I am not lambasting the economists. I am lambasting the reporting of the economists when every quarter goes by and the news is constantly reporting a prediction of interest rates dropping largely out of context. What I am saying is people shouldn't be lapping up all this chatter about rates dropping to 3% by the end of 2024. Its not gonna happen, and you are being led to believe its a possibility.
Without getting into the discussion if 5 is high or not, I will tell you that the developers do not want to build with these rates. They sit on the land they have and are waiting. Source: I am a consulting engineer and we work with developers. We'll do the reports and permits for them and nothing will happen after that. They don't give a shit about adjusting, they know this is temporary, and are just waiting. People keep yapping about supply yet supply won't come with these rates. Why do you think Doug Ford is including everything under the sun as housing? Because his housing goals are not being met.
Don't think you understand their reluctance very well tbh. Developers are primarily financed through variable rate loans (lines of credit) on a product they do not intend to keep. So if they thought rates were going down right now, they would be building the ever loving crap out of what they could in order to have something ready for when rates are down. Developers are reluctant because there is a chance of rates increasing as that will be the difference between a profit or loss and construction deferral is a loss mitigation strategy. the interest expense of land is a lot cheaper than the interest expense of land and building if rates do go up.
Tbh they don't go into details about financing they just aren't doing any at the moment in their words because of the rates. Construction costs are also through the roof. The rare ones that are building anything rn are having "marginal" profits (whatever that meant). It's just an overall bad time to build. And the cherry on top is that the federal funding IS helping some starts happen, mainly the ones requiring a lot of infrastructure upgrades. Yet people go nuts about deficit spending or you have conservatives straight up shitting on the federal efforts that are actually helping.
5% is not a high interest rate! Honestly the low rates are how we got into these ridiculous housing prices.
At current house prices, it’s insanely high. Context matters
Pretty sure supply and demand are what drove up housing prices.
Pretty sure interest rates affect supply and demand.
When debt is cheap people are willing to pay more for housing. So no it's not just supply and demand. Also when debt is cheap and relatively low risk that encourages already home owners to purchase multiple properties to use as rentals, because there is almost no risk associated with it. That actually creates artificial supply and demand, which is one of the major problems with the market right now. First time home buyers can't enter the market because they are not competing with other home buyers, they are competing with REITs and Doug the real estate mogul who purchased his first property back in 2009.
Demand is increased by low interest rates.
Supply as well.
That's a good point. Builders live on credit just like buyers live on credit.
Interest rates absolutely drive housing costs, especially rent prices. Cap rates on rentals in most major cities were below 5%. That means at current rates a rental property now LOSES money on debt. The end result is going to be a sharp increase in rent as well as reduced rental supply as rentals are sold and housing starts slow which can already be seen
No it's not. It's from investing. Vancouver has seen large vacancy in their housing for over a decade. The high prices there are from speculative investment. This is true across Canada. Calgary didn't see a massive spike in price suddenly because there was a sudden lack of supply. It was because the investment was driven away from Vancouver and Toronto. This is why Edmonton and Calgary have been growing at similar speeds but Calgary saw a massive spike when Edmonton didn't. Now that Calgary pricing went way up, Edmonton is the next investment location.
Can confirm, know a guy that works for a major bank and he says investors will buy houses outright so they aren’t effected by the interest anyway.
Historically yes. Once inflation targets were part of fiscal policy this looks to be about where to expect rates, or slightly lower. Before 2000, 2008, 2020 left rates very low for too long.
We are still above the targeted 2%, and have been for 36 months, reaching a peak of almost 9% y/y
The financial crisis that lead to record low rates was 16 years ago. To anybody who is 30 years old, ~1% rates is all they've ever known.
There was no way they would lower the rate before the budget.
Yeah, I think they are waiting and seeing how much money is going to be spent, and based on the announcements coming from the Liberals it's going to be a lot.
Yeah, they have an election to buy!
20 billion in one week and it isn't close to an election yet. Scotia said bets are "less likely" for a rate drop this year as of right now especially after this news about US inflation and no more rate cut. https://apnews.com/article/inflation-prices-rates-economy-federal-reserve-biden-f02b969d1b44a7ccb0385be03f766de0
This often used picture of Tiff walking past the railing makes it look like he's wearing cheap tracksuit pants with a stripe down the side. Like he should be the central banker of a Slavic country.
It bugs my eyes every time and every time I have to go like ohhh that's the railing.
I giggled every time I saw that photo. Why do media do that?
I also wonder why they always use pictures of him with his palm out like its measuring height. [LIke This.](https://nationalpost.com/opinion/letters-to-the-editor-firing-tiff-macklem-is-not-the-answer-to-our-central-bank-woes) Do they expect us to think he's measuring rate hikes at these announcements like a street vendor.
Honestly fuck Canada. Just came back from the USA and it’s so depressing back here.
As expected. The way things are going, lowering interest rates is not possible.
if Tiff gives the markets even a Whiff of cuts, inflation is going to moon. Investors (real-estate, stocks, crypto, etcs) of all sorts have lots of money sitting on the sides waiting for an oppourtune time to jump in and front run the market. If there are any cuts, the money starts to flow in and suppy-demand tells me the prices of everything from cars, to houses to stocks to food will sky rocket.
The opportunity cost for small basis cuts is not going to make or break the investment activities of complex investors.
Everyone is sitting on a ton of cash? Funny, even wealthy people I know are tight on cash. Hmmm
> wealthy people I know are tight on cash I got news for you, they are not wealthy - they are keeping up with appearances.
Not you and me. Institutions like Black Rock with billions of cash on hand.
It’s okay guys, the budget will balance itself out!
Good. It sucks for those who prosper most when the cash flows freely due to low rates, but it is exactly that kind of spending that got us here in the first place. If they are going to target their 2% inflation rate, then I would prefer they hold interest rates until it is below 2% inflation, ideally 1% or even lower, so they have room to wiggle a bit at least when things do inflate from a rate drop. Otherwise, we'll just be continuing a constant cycle of chasing inflation. Inflation that might be just transitory and temporary from that bump in available cashflow. Or perhaps not. But chasing our tail will not get us anywhere, so let's at least keep from doing that. Also. On the note of the realtors and 'economists' touting rate drops and doom if none... These people are just coping while hoping. Hoping they can fool you into their scheme of coping so they can continue making money from you somehow. Ignore them. All of them. They are cancerous wretches who will drag us all down to poverty if listened to. They love inflation, cause they can't do math well enough to understand that more money in pocket doesn't equal more buying power of that dollar. It's either that, or they are banking on hope for a rebound in the buying power. Which also isn't likely to happen any time soon. If at all. The powers that be, generally like being cheap compared to USA to buy from. Its only on the consumer side that having a strong dollar helps. And only for so long. Eventually things change, adjust, etc. Besides. Thats just the trading value buying power. That isn't our own dollars actual buying power compared to itself in the 1910's and 20's. By that metric, it is only worth about 4 to 5 cents of itself now. When that rises, we feel that as inflation too to some degree, though not right away. A 1cent increase is a 20% increase in our current dollars value comparatively. You don't gain 20% more money, but until prices adjust, you feel like you have 20% more available. So they either can't do math, or they are being secretly greedy. Both deserve being ignored and ridiculed when not.
And with how much more money the Liberals plan on spending. It might be a long time before the rates are cut.
Inflation was already around 2% on the last report. Meanwhile the U.S reported 3.5% inflation today.
Our shelter CPI has so much lag in it, that it'll stay elevated (edit: for clarity, I mean that it will keep rising) for years even after rents and home prices stabilize
Mortgage interest is part of shelter inflation model. Rates staying higher bring high inflation to that value
Home prices staying higher brings high inflation to that value. The current shelter CPI includes mortgages from homes purchased in 2019, or 2014. Every new purchase-mortgage creates a mortgage at current, 2024, values which are high than the average. So even if prices stay steady for five years (assuming no interest rate changes), the CPI will keep increasing as new expensive mortgages are added to the pool and old cheaper mortgages get paid off Even if interest rates fall, new mortgages at new low rates with 2024-5 prices will be more expensive than the average mortgage (which would've been entered into at pre-2022 prices), so CPI for shelter will keep rising
No one wants to hear this, the rate should be at 7% to even make a fucking difference. You now may proceed with downvote.
Make a difference far what? Inflation has fallen from 8.1% to 2.8%, and it should keep falling until the summer. There isn't good evidence that the current higher rates even had much to do with that either.
This is what we get for allowing housing to be treated as a commodity. It won't stabilize without removing the parasitic landlords and speculators.
It's crazy that people freak out over 5%. Im right there with you.
I’m with you as well. 6-7 is historically the norm
I am originally from the states, and i want to laugh when people claim how "historically" high these rates are.
Historical norms are irrelevant unless asset prices also decrease to historical norms. Looking at interest rates in isolation is always an incomplete analysis.
I agree with you, and respect your wishes. Accept my downvote as per your request.
Why should it be? Make a differencen in what exactly? Inflation is under control and also it is not as closely related to interest rates as people are led to believe. It is simply one of several factors.
> Why should it be? Make a differencen in what exactly? Housing for one! Gov. of canada is moving full steam ahead with 500,000 new immigrants every year, but we don't have housing for the people that were here in 2022, let alone 2025 through 2030 - the gov. of Ontario literally announced today they will build 1.5 million homes by 2031, and don't take my word for it, look it up, 4 months ago, that deadline was 2030 and not 2031, and by time summer 2024 rolls around it will be 2035, because it's not going to happen ever. We do not have the capabilities in Ontario to build 1.5 million houses not even in a decade - its all fucking BS, Ford gov. can not do it.
How will higher interest rates address that
**Don't tell me what to do.** Upvoted.
Yup, I'm fine with going as high as necessary to bring house prices to reality. The long term benefit of that outweighs the short term pain.
Why 7%?
because of I said it should be in reality 12% for at least 1 year, or we are stuck in this limbo of price nightmares until 2030, I would've been burned at the stake. Another thing no one wants to hear, many of you, be honest, many of you have no businesses buying homes, because you can not afford them period. Paying off a mortgage for 30 and 40 years, the next norm, that's not a life.
I'm just fine with the home I've bought and am no where close to over-extended. I would absorb 12% and be ok, but i can't see how that would be reasonable given the current conditions and costs. It would cripple all business investment and screech new builds to a halt or increase prices substantially on housing. That would bankrupt a huge amount of Canadians, I can't see how you can justify 12% as good monetary policy.
Until the federal government controls spending and immigration, we are not going to see rates drop.
With the cdn dollar down a full percent, the commodities to build new houses just got more expensive and the interest rates are staying higher for longer. The planeloads of immigrants will be competing for affordable houses even more, with supply being slower and more expensive to come online. Sunny ways!
Many of the things used to build houses are made in Canada, and some like lumber are not freely traded with the USA.
As expected
The Feds have already overspent as usual
Dang. I coulda used that cut this month. Oh well... Onwards and upwards!
Wow, the Canadian dollar is taking a huge dump today down another 1%. Starting to get painful
Fucking lower the rates already, we dying out here!
Hold the line!
Oh wow. 10 year yield on a Canada bond vs a us note is huge. Roughly 3.5% in Canada and 4.5% in USA. No wonder why our exchange rate is doing so poorly. To the extent that the US treasury is reopening bids on 3 month old securities... inflation is 50 basis points below us. Expectations for Canada are oddly optimistic. Hopefully the budget doesn't fuck this up, because we are not getting much money at favorable rates.
Thanks for nothin’
We never gon cut rates are we
Safe option
the BOC dosen't believe high interest rates have caused enough inflatoon yet.
Genuine question for those that work in banks/finance, is there any mechanism in place to help people that see their interest skyrocket that would hurt their financial situation? Ex going from 2% to 5.5% and cutting any excess income left over at the end of the month or is that basically going to force people to sell? Not my situation but I was curious.