What are you gonna move into?

Us went up by another 0.75% Sadge

Take it with a grain of salt, but word in the financial sector is that we're suppose to go up another 1.25 until EOY. Sept 0.5, Oct 0.5, Dec 0.25

The guesses seem to be all over the place but the feeling I get is none of the banks want more rate hikes right now.

https://www.marketwatch.com/investin...countrycode=bx

Peaked at 3.5% and has slowly tumbled down to 2.8%

Those buying in aren't even close to celebrating yet though. Cost to buy at higher rates > prices still.

There's no parity yet. Wish I didn't love my unit so much that I would've listed in Jan / Feb 2022, would be sitting pretty now :drunk:

Olympic village looks to be at an all time high. Avenue One close to 700K with no parking might be keeping the asking prices of everything else in the area up. Plus that place is too close to Marguerite Ford Apartments, trouble.

My old unit in Richmond, near garden city blundell just sold for $510K, about $80K over assessment, and $50K over what I sold it for last year. It was sitting for almost 4 months and just sold last week. The market is everywhere

The one agent that ultimately convinced me to list my place mentioned that this is potentially the last group of pre-approved buyers at lower interest rates. There might be some desperation for those buyers to close asap on a place due to this. Once this group dries up is when we'll see listings really stagnate

The buyer for my place asked for a quicker close because time was running out for her financing so I guess there is some merit to it. She offered full ask but couldn't come up any higher so her agent reduced her commission by more than half to sweeten the deal.

How much say do the banks have over whether the rate hikes will continue though? I'm sure BoC will consider their input in the decision making process, but ultimately BoC's goals are different than what the banks want.

It takes 90 days for a rate lock to expire and new rates to go into effect for most buyers.

I've been hearing people wanting to close sooner before they can't afford the new interest rates. Makes me think you shouldn't buy at all. :pokerface:

Officially I think the banks have no say, but I am sure there's some push and pull as the relationship between the 5 major banks and BoC are close and sometimes the BoC might want something from the banks that they don't have direct influence over.

For this particular bit about rate hikes though, BoC's stance seems pretty strong.

Some people take the plunge and max out their payments hoping for employment gains in the future. That's what we did. From when we bought the house last year till now I make 35% more. Granted my payments have gone up 35% :pokerface:

It's not about shouldn't buy it's their buying power is cut by a lot due to the stress test, it's not only rates are higher. IE $500k @30y 3.5% = $2245 a month, $500 5% = $2685, you are paying $440 more a month for nothing. 3.5% + 2% = you qualify at 5.5% stress test, 5% + 2% = you now have to qualify at 7% stress test. So basically you can't qualify to borrow as much as before + your payments are now higher at market rates.

This is why I don't know why there isn't a huge fuss about it by the renter's + first time home buyers, basically everyone's borrowing power for slashed and it will keep dropping as rates continue to go up, so how can we not be in a recession.

Because our economy doesn’t completely revolve around real estate? It’s close but not completely lol.

Unemployment certainly isn’t up… no recession in sight.

IMO, stats for unemployment doesn't quite line up with with what's going on. We're heading into or already in a recession and the job market is booming?

https://www.thebeaverton.com/2022/07...-already-made/

i <3 beaverton articles

Underemployment is probably higher than we’ve seen in our lifetime. We absolutely don’t need for people to be out of a job to see it all come crashing down for a massive portion of the population.

For the dumb dumbs out there like me, I'll save you the google search. I didn't even know this was a thing but it makes sense to me.

Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being used in terms of skills, experience, and availability to work. People who are classified as underemployed include workers who are highly skilled but working in low-paying or low-skill jobs and part-time workers who would prefer to be full-time. This is different from unemployment in that the person is working but not at their full capability.

Lots of skilled immigrants end up in this situation - they're doctors, nurses, engineers etc in their home country but Canada won't recognize their credentials so they become cab drivers and line cooks instead. Sometimes the union gets in the way too - my dad was a senior airline mechanic in HK and when he came here to Canada he was told he had to start at the bottom.

Banks have 0 input on rate hikes, Banks are publicly owned by me and you through stocks or indirectly through pension funds and ETFs. The banks like RBC and BMO has nothing to do with the Bank of Canada and monetary policies. We can open a bank ourselves if we know how to bypass the red tape.

RBC borrows from the BoC and the interest rates set out by Bank of Canada should be seen as Cost of Goods (lending) for a bank. The spread on that borrowing is the profit they make on lending. I wouldn't be surprised if BoC gets bribed from any top execs from Big 5 Banks though for insider info on hikes.

It baffles me how a majority of folks think BoC operates like RBC / BMO lol. Or the opposite.

I wonder which jobs are booming and not booming.

I know that tech is mostly on a freeze at the moment, but the overall market itself is still hot. Lots of jobs ranging in medium to extremely high pay.

Finance and Accounting jobs are booming because all the boomers with CPA/CFA combos are all retiring. Nobody wants to go to school for 6 years anymore when they can go into STEM and make $60 - 100K in 3 years. I saw all the 3 years of experience jobs that used to range from $55 - 75K for senior roles to $75 - 100K + bonus in the last 2 years.

Retail is on fire, minimum pay is close to $17.5 - $22/hour based off of postings at the mall in Lower Mainland / Kelowna.

To be fair in BMO's case it used to do a lot of what BoC does now. Like print money.

BoC's mandate is to control inflation. It doesn't give a fuck about home prices, mortgage rates, indebtedness of the average Canadian. As it should, if inflation gets out of hand we're all fucked.

No bueno Canazuela

Ramblings.

Fact that many still think a recession is not coming don't worry. It's coming.

I spent thousands of dollars on economy 101 to summarize the following:
Interest rate rises
- People save more. Eg. Gee! My savings account is getting 3%, my GIC is at 4.5%, I'm going to put money in there instead of spending it.
- Interest payments increase. Eg. Damn, I have to spend more on mortgage costs. I need to watch my wallet, can't spend so much money on dinners at Elisa or weed.
- Credit, new mortgages, business loans, etc. are harder to access. Eg. I can't get a loan for that house now because they're looking harder at my financial situation. Eg. Business don't invest/expand as rapidly due to high borrowing costs.

"That doesn't mean there's a recession."
Have you heard tech companies freezing hiring? Shopify cutting 10% of staff? and that House prices are quickly falling almost everywhere else except Vancouver or other sought after areas?

Companies laying off staff is self-explanatory, less workers earning money = less workers spending, less traveling = less profit for businesses eg. restaurants and these businesses.
These businesses because of decreased profits, hire less workers or cut staff, reinforcing the cycle.

With real estate, there's something called a real estate cycle. You might've heard of business cycle but yes there's also something called a real estate cycle. It's linked with interest rates because when rates rise, land prices/development slows due to the above. (loans hard to get, interest payments go up, and house prices/real estate prices fall).
Well what kind of developer wants to build at a loss or mediocre profit for a lot of risk? Not many, so they cut back development and cut workers. And you've heard the above, cut workers = less spending = cycle again.

So yeah, we're headed there. Look at the new housing graphs, sold graphs, etc. Liquidity is drying up. Everyone and their grandmas are starting to hold off buying homes because they EXPECT prices to fall. This expectation also adds to the turmoil with less buying and selling, realtors make less monies hence cutting back costs because they've got to weather this storm.

Regarding the FED
Remember when the FEDs said inflation is transitory? Well look where we are at now. Now when they're preaching economy is good? Look out below.
Their job is to say things to keep everyone from panicking. Their whole idea right now in order to rein in inflation is to increase rates and force a recession. That way they can restart back from square one and they can lower rates again. If they didn't start increasing rates, where could they have fallen? Below zero? No, so they're gathering fuel to light a fire when it becomes winter.

Final comments
This isn't a doom and gloom post, in fact it's the contrary. Recessions are a time of opportunity if you play it right. Keep your job, build up your savings and capital. Bide your time and when it all goes to shit and no one wants assets anymore, that's when you buy. Duh buy high sell low amiright?

Truth be told, this is going to hurt. A lot. There is going to be a lot of people affected yet Vancouver appears to be extremely insulated from everywhere else. But if you take a look around the world. There's going to be a lot of pain for the poor. If you don't have capital in this world, it's really really really fucking tough. If you have capital though, you just need to time it right and your money will make money for you.

Some fun reading: Author is Fred Foldvary, a late economist who published a prediction in 2017 that the global financial crisis were to happen in 2008-2010 with a probable start date of 2008... well guess where that went? This is article 1.
Article 2 is making a prediction in March of 2012 yes, 2012 that a recession is coming in 2024-2026. Guess where we are now? 2 years before 2024, and with no end in sight for rising interest rates.
Take it for what it is, it's an article, critically analyze it, don't have to believe it as gospel but most of the things make sense. I believe broken clocks are right twice a day, but how he calls it years in advance with such accuracy with understanding of the principles? Well, I'm preparing for it.
1. https://papers.ssrn.com/sol3/papers....act_id=1103584
2. https://www.progress.org/articles/th...ession-of-2026