He thinks the normal is sub 4%, but I remember in highschool the news were talking about how we hit sub 2.99% for the first time in history in 2012/13

https://www.ratehub.ca/5-year-fixed-...e-rate-history

JDMDreams You seem to have no idea what’s going on in the world at all.

https://www.wsj.com/articles/ecb-cal...on-11655279740

This will be interesting...

TLDR: interest rates up, government borrowing costs up, weak countries may go bankrupt. Central bank needs to intervene. A precursor to what we might expect here?

I gotta agree with Westopher on this one about curbing inflation and its effect on the real estate market.

JDMDreams, curbing inflation in Canada, the US, in western countries is not EASY.

We are at over 6 percent inflation in Canada now. The highest inflation rate in Canada since 1991. The US inflation rate is at 8.58%.

I would wager that many people in RS now were just toddlers, kids in 1991 hhaa.

It's much more complicated than doing what you propose. A) Lockdown for a month. B) Unsanction Russia.

We live in a global economy now. What happens in one country has a huge effect on inflation in Canada.

One big factor that some people can overlook is the bottle neck in supply chain logistics that is happening across many industries now for many countries.

The lack of movement of goods in large ports such as Shanghai and Los Angeles creates this huge bottle neck of goods. A scarcity of goods such as microchips, electronics good, and cars for example.

Inflation is going up for sure when many goods are scarce in supply. Prices go up as transport costs are increasing with oil prices at a record high now.

How EASY would it be for our PM Turd or President Biden to just ask the Chinese President Xi to get the Shanghai port open? There are literally hundreds of shipping containers at the Port of Shanghai that are being delayed in shipment or being re routed to other Chinese ports because of the Covid lockdown.

Again the price of goods are gonna go up with delays in transport, and the increase in transport costs because of the oil price increase.

Shanghai just slowly emerged out of its lockdown.

How EASY would it be for Biden to ask the Saudi Arabian crown prince MBS
(Mohammad Bin Salaam) to increase Saudi oil production so that oil prices go down in order to curb inflation?

Although Biden is going overseas on a trip to visit the Saudi prince, his discussions with the prince are gonna be complicated given the US previous position of condemning the Saudi government.

Why? The US suspects that the prince set a team of hit men to kill, and dismember a reporter Khashoggi in response to that reporter's criticisms of the prince.

Good luck to sleepy Joe to ask, probably beg, the Saudi prince to increase oil production. The President is concerned about his approval rating and the Democrats' situation given that many Americans blame him and the Dems for the increase in gas prices.

When economic and political factors are taken into consideration, curbing inflation is not an EASY task at all for any politician or government.

Geopolitical situations make it pretty complicated for governments to curb inflation. The world that we live in now is complex and changing quickly.

US just raised interest rates by 0.75%

https://www.cnn.com/2022/06/15/econo...une/index.html

I was just talking to my wife last night about how our mortgage payments (dollar amounts) have increased by ~10% now, compared to the lowest amount we were paying before rate hikes started. And then when I woke up this morning, I saw the US Feds raising rates by 75 pts.

I was expecting BoC to do another two 50 pts hikes by the end of the year. I think the US is seeing higher inflation than we are here, but with the US Feds doing a 75 pts hike now, I suspect we're gonna see more than an overall 1% hike by the end of the year now... FailFish

I thought that was largely due to gas companies gouging because they can't waste a good crisis.

And look where we're at now? Theres no other options but to beg. The Western world has soured our relationship with our biggest trading partners, remember banning tik tok, arresting the Huawei lady? Banning Huawei 5g? Tariffs for car parts and walls for Mexican immigrants? Maybe they shouldn't have cancelled the key stone XL. Make America great again?

Instead of handing out money to Ukraine for their war how about we use those resources to shore up our oil production? Where's that vaccine factory? Do things that maybe help the tax payers?

Instead of relying on rate hikes and blaming other countries how about do some policies that encourages production efficiency?

Won the title of 3rd worse port in the world:ahwow:

https://dailyhive.com/vancouver/port...ays-bottleneck

https://www.worldbank.org/en/news/pr...t-in-the-world

As per my last post, it's a complicated geo political situation.

Good luck with us regular folk trying to convince our PM, this Liberal government, of putting forth new policy to encourage production efficiency in the Canada economy. :lawl:

Heck, how long does it take our provincial NDP government and various civic levels of government to get anything done to benefit the general public?

Examples: Infrastructure projects from Translink. Covid vaccine manufacturing in Canada

Broadway skytrain expansion.

A gondola to SFU

Some people think that we can just produce our own Covid vaccine in Canada?

Yes we can. Eventually. 2024 at the earliest hahaha.

https://pm.gc.ca/en/news/news-releas...ses%20annually

It is much easier for a person to provide suggestions than any level of government in Canada to actually do something quickly for the greater good of Canadians.

....Anyways, here's an interesting article on a report about money laundering in BC and real estate prices.

-from the article:

An unprecedented volume of illicit cash was laundered through B.C. casinos over the course of a decade, but money laundering has not been the main cause of rising home prices in the province.

Those are some of the key findings from former B.C. Supreme Court Justice Austin Cullen as his final report and recommendations of British Columbia’s public inquiry into money laundering are released to the public.

https://vancouver.citynews.ca/2022/0...dering-public/

Your thoughts about this report?

As for how money laundering has influenced home prices in B.C., Cullen finds it has not been the main driver in rising real estate prices.

In his report, he writes low supply, high demand and low interest rates are the drivers of housing unaffordability, not money laundering



This is the former BC Supreme Court Justice's full report: https://cullencommission.ca/files/re...eport-Full.pdf

I'm not bothering to read this report. It's 1831 pages long.

It would be silly to say that money laundering is the MAIN driver of rising real estate prices lol. It definitely contributed, but if someone was expecting it to be the MAIN driver then that person is just drinking their own koolaid.

In Canada, we're very good at conducting inquiries and producing detailed reports from those said inquiries. On the other hand, the only goddamn thing these inquiry reports can do is to make recommendations, and those recommendations are exactly just that -- recommendations that have absolutely zero legal binding power to compel any level of government to actually do anything.

From something as small as OPCC's recommendations towards the VPD's VI malpractice, to the military sexual assault reports, to the indigenous inquiries... unless somebody gets sued and loses, with the judge ordering some sort of penalty and the requirement to fix things, hardly anything ever gets done out of these reports and recommendations. :(

It's just a guess - I'm making some assumptions that gov't banks aren't as hardline on 2% inflation as they say they are b/c the consequences of getting there quickly outweigh the benefits of 2% inflation. At some point there's a compromise that 2% is a medium-long term objective rather than a 2023-2024 objective. Gov't banks don't answer to politicians but they also know the goal is to create conditions for a robust economy and, at some point, chasing 2% quickly is just too painful so they chase after it as a 2027-2030 goal which softens the interest rate hikes.

I think we're still in an era where cheap money is needed for a robust economy - maybe it won't be as cheap as it has been the last few years but I'm not sure we can reset fundamentals that quickly when the horses have left the barn. As things like mortgage renewals show up and billions (trillions?) of dollars end up being redirected towards mortgage payments there will be some give that shows up. Homeowners will have to eat some shit but if they eat too much then everyone else will end up eating some shit too.

Maybe a simpler translation is that we've created a bit of a Ponzi scheme and, as we all know, the gov't will bail out the Ponzi scheme if the scheme is big enough to bring the economy down.

US Guidance is 1.75%, not 100% sure but I think expectations from analyst was as high as 3.00% to curb the inflation.

Yeah, if one feels strongly about it, they should go and be the change they want to see. Otherwise the microstrategy for the common normie like me is to just figure out how to make more money.

Having high inflation is dangerous though, if I know inflation is 3.5-8+% in 2023 to 2030, I'll buy out all the goods, gold and securities. Don't hold any cash minus emergency fund because it'll be worth less each year. All that increase in spending will jack up prices as demand inflates and supply can't keep up.

On goods that are low supply like hybrid cars, imagine holding Priuses into the next year just to keep up with inflation and a little more.

what's worse is if it average 6% over the next 8 years. Your $100 bill today will be $67ish dollars in 2030. $100K Salary > $67K salary.

Don't disagree there - high inflation (like the 8% we're seeing now) is a dangerous thing. I just suspect that if we get down to 4% that the pressure eases a bit and it's not a rush to 2% b/c at that point the downsides of chasing 2% from 4% are not worth rushing (whereas going from 8% to 4% is pretty important) and the bank says "We'll get to 2% in the next 36-48 months" (rather than in the next 6-12 months).

There's going to be some balance to be found as we get closer to 2% as the chase to it will lead to a lot of other costs and those costs increase as we get closer to 2%. Stagflation would SUCK.

yeah that's what I don't understand from some of the posts here. It seems that people actually think that sub 4% is some sort of "normal" interest rate or something, instead of viewing it as historic lows

Were people too young to remember what it was like before 2008 and the significance of 2008? And now the pandemic?

While I agree 4 to 2% could be slower, the different between 4% and 2% inflation is the value of money getting halved in 25 years (4%) vs 50 (2%) years.

So 4% is still really bad from a financial point of view across all aspects.

I was 18 in 2013, so all we've ever known were rates that ranged from 0.99% - 3%, 4 - 6% doesn't even exist in our world. That's why a majority of the younger crowd think that 4% isn't normal.

4% - 5% is low, 6-8% is normal based off of the last 50 years. Yet everyone is acting like the world is fucked up that the rates are now as high as 4 to 5% interest. I think the people who make such comments doesn't have a solid understanding on how our financial systems work. But they never taught you in school. What's even worse is if you try to learn and fall into those conspiracy traps, you just end up hating the government and start complaining how this or that can be better but you don't do anything yourself to change it.

Agree on that - I'm just saying that going from 4 to 2 in 3-4 years rather than in 1-2 years is probably ok considering the likely consequences of doing it in 1-2 years.

Hey man! I'm an old fart (46). I just don't think the last 10-15 years of interest rates are going away anytime soon and that historical norms won't apply. Same for stuff like expected rate of return on investments - I think expecting 8-10% like we use back in the day are gone, a 5-6% return is more likely now. Breaking the addiction of being in a Ponzi scheme is really, really hard.

https://dailyhive.com/vancouver/vanc...june-high-2022

https://images.dailyhive.com/2022061...CC3B1B8B4.jpeg

If you're short on your mortgage payments, it's time for a roommate(s). :pokerface:

Note that prices did drop like crazy in 2020.

Rent was always $2,000 for a 1BR / $2,600 2BR in Burnaby / Metro / Burnaby

Getting awfully close to my trigger rate at another 1% so hopefully it stops there.

My first mortgage was a 5-year fixed at 4.99% 15 years ago. I would contest the notion that >%5 interest rates are a recent phenomenon. We have had almost a generation of low interest rates.

At the end of the day, the majority of homeowners will weather the storm and keep their homes. Detached properties are endangered in BC and their numbers will continue to decline as an overall share of all property types. If you own a detached property today, chances are that you will be fine in the long run, even if you bought at the peak.

Time will tell if the Redditors living in rent-controlled homes will take their earnings from meme stocks and crypto and become homeowners themselves at some point over the next 12-24 months.

We're all talking about the effect of interest rates on consumers, but what about the effect of interest rates on our government? Our government binged on debt while rates were at record lows. How will the government pay down/refinance its debt as rates continue to increase?

^^ brace your cheeks

Just when you thought Covid was the most fun you’ve had here comes 3-5 years of shit