Borrowing costs going up soon
The Bank of Canada has announced that they are keeping the overnight rate at the record low of .25% for now but sent a strong message that rates will be going up sooner rather than later. Expectations that the Bank will raise rates on June 1st have sent the Loony up even higher, surpassing the US dollar.
The dollar jumped 1.58 cents to $1.0012 (U.S.) as investors bet interest rate increases in Canada will outpace those in the United States, where the Federal Reserve shows no signs of boosting rates any time soon.
With the timeline for a rate hike nearly set in stone, investors and economists are turning their attention to how fast rates will move.
Policy makers will end this year with a lending rate of 1.5 per cent, many economists believe, moving to between 2.5 and 3.5 per cent by the end of next year.
The level that most economists consider “neutral” is 4.5 per cent.
If you’ve got a variable rate mortgage now might be a good time to lock in. If you’re over-extended now might be a good time to sell. I suspect “neutral” rates won’t have a neutral effect on Vancouver house prices at this level.
April 24th, 2010 at 12:51 pm
Alexcanuck ,Purp, Ultraman, Híppos Purrós, McLovin, vomitingdog, Casanova, Newcomer,
I realize the anonymity, but still how do you face yourselves.
How can you legitimize the garbage this pumping Re peddler spews?
How can you not find arguing with Rob, not demeaning to your logic, honesty?
WTF is wrong with you?
April 22nd, 2010 at 9:51 am
The important thing to remember about rising interest rates is that it does not only affect the cost of debt. The overall cost of capital is increasing too…Yes, even the cost of equity.
Literally about 80% of people on the street do not realize that equity has a cost too.
April 22nd, 2010 at 6:58 am
@VanRod:
We only do predictions here.
Speculation we leave to the dipshits buying real estate.
April 21st, 2010 at 11:39 pm
Today's listings minus sales is actually 152 for the day according to paulb. However, total tally today from yesterday only increased by 83. Does this mean there are many expired listings?
April 21st, 2010 at 11:17 pm
@me: "pretty soon, 100 sales will be an anomoly (by fall)"
pure speculation. You could say the same thing about listings and have the same credibility.
April 21st, 2010 at 10:39 pm
@Vansanity_: They were processed today, and the sales occurred some maybe today, some maybe a few days ago, some maybe a week ago.
April 21st, 2010 at 10:12 pm
@paulb fan: oops I goofed. Sorry, I dint read the full quote properly. My bad.
April 21st, 2010 at 10:12 pm
@Peepers:
Peepers, to some extent I agree with you. Having a family, a dog and the freedom that ownership brings is very important, and we all want to be there (well at least I do).
That said, Wifey and I have saved up the downpayment, but it's just too stupid to jump in now (or the last 4 years IMO).
I told her I'd rather rent for $2000 than pay that much on a mortgage for the next year at least, since we'd be screwing ourselves.
April 21st, 2010 at 10:12 pm
@me:
Its 83 as the final listings tally is 16388, up from 16305.
April 21st, 2010 at 9:57 pm
Hey Paul,
Good to see you back. Are these sales for today? Or are they processed today and were finalized some time pre-today? Or is there no way of knowing?
I knew we went over this in 2008, but I don't remember what you said about it.
Cheers!
April 21st, 2010 at 9:53 pm
we added 48 net listings since inventory's 8:31pm update
not bad
not a 500 listing day though
wonder if sales are petering out, slowly…..
paulb, betcha we have a 500+ day yet this month, and won't see a stronger sales day than today for a while.
pretty soon, 100 sales will be an anomoly (by fall)
holy shit, this is real
real good that is
April 21st, 2010 at 9:51 pm
@paulb: So who the hell is BUYING today?
April 21st, 2010 at 9:49 pm
@Peepers: I agree on the pet issue – we've definitely put off having a dog until we can buy. Or until the rental churn calms down a bit.
I also know it has been a more limited and unstable market on the lower end during this boom, in part due to flipping, construction, boomboxes, and gentrification of traditionally cheaper neighbourhoods or buildings, and so I'm pretty clear that not every price range or community has experienced the boom in the same way. So I do hear you that there's been a boom-time cost to renting that's not necessarily reflected in the average rental prices: that it's been a more vicious rental market, in some ways.
Although I must say I'm not sure how getting in the market would be better or even doable, because equivalent rent to mortgage gives you a fairly big monthly whack of cash for rent, and if you have enough dough, there's stability. You can rent for dogs and space and yards and whatever.
That said: I've got a friend who's been moved along 2ce in this bubble due to the home being sold/reno'ed; I've been moved once; and my mom has been moved once and had to give up her cat to find a new place she could afford. And each time, there's been a lot more work to find a place than when I first came and found apartments with a walk 'round the neighbourhood I wanted to live in.
So I'm definitely not about to get a dog!
April 21st, 2010 at 9:48 pm
@Peepers: "So then the whole theory of renting being better is flawed."
It's no flaw. It's your personal preference. These days, based on the number of rental listings, landlords can't be as picky. The current game of reverse musical chairs ensures someone gets the dope fiend with the mutt.
Having a dog is more risk from the landlord's POV so IMO you should be prepared to pay more for rent.
April 21st, 2010 at 9:21 pm
That's about it.
New Listings 481
Price Changes 157
Sold Listings 329
16,388 all in all, solid day. 2 days in a row with 480+ listings.
April 21st, 2010 at 9:10 pm
Kids are not such a big problem when renting, as long as they don't behave hyper active on a first floor, i.e. they have some manners.
As for a small pet, I know many people who have a clandestine pet…
Dogs are a real issue though (and I speak as a tenant AND as a landlord).
Overall, having 2 kids and a cat did not have any weight on our decision to rent, and renting (not ranting…) forever is not a problem: we could then adapt the size of our home(s) to the growing, then shrinking, needs of our family.
April 21st, 2010 at 9:01 pm
Yes, rents are coming down, but it has been tough, VERY tough for people to find places to live in Vancouver. Sensible friends of mine bought because it was cheaper than renting (long term, not a good idea). I agree with so much of the posts on here, but I feel like on this issue, there are so many people out of touch. Just because something is listed on craigslist doesn't make it real. Go out and actively look for something decent to live in. It wasn't pretty, and if you throw a pet or a baby in the mix, you are hooped. I have been told here before that "well of course you are going to get dinged for having a dog". Uh, what? So then the whole theory of renting being better is flawed. If I can't just live my life because I am waiting for a crash so I can buy in order to have a dog or family, then I am more trapped than the people that spend everything on a mortgage. Dunno, that's just my thoughts. I tapped out on all of it and went coop though.
April 21st, 2010 at 8:52 pm
The flow of listings is astonishing. This is a complete debacle, there is an incredible rush to the exits. Everybody wants to sell.
I really wonder how buyers can justify their purchases, but i guess time will be a gentleman and will show us who was right.
April 21st, 2010 at 8:47 pm
New Listings 470
Price Changes 157
Sold Listings 329
Still coming… 500 lets go!
April 21st, 2010 at 8:36 pm
@Inventory:
Only a net gain of 40 inventory today?
I'm outraged!
April 21st, 2010 at 8:31 pm
Apr 19, 2010 = 16,088
Apr 20, 2010 = 16,305
Apr 21, 2010 = 16,340**8:30pm
April 21st, 2010 at 8:16 pm
@Absinthe: (Of course, we have very good credit and no criminal background and don't smoke. We do have a cat and kids, which did take some quick talking. I agree that there was competition out there, and that landlords were picking on lifestyle considerations more than they can afford to now – not that many of them have noted this.)
April 21st, 2010 at 8:14 pm
@freedom: I got the top two floors of a house for $1400 last summer. There weren't tons of options, but I certainly wasn't looking at moldy basements, and I capped my search at $1500 and it had to be IN Vancouver.
Plus, I was doing extensive market research the year before on behalf of advocacy work and finding all sorts of inventory below $1800. If you're really constrained to location (ie: Dunbar), you might have a hard time – but even still, we looked at a place in Dunbar for $1650; main floor of a Vancouver special (tenants upstairs, but nothing underground) because I'd hoped utilities might be all in.
April 21st, 2010 at 8:12 pm
thanks paulb
my take is that listings are still trailing in from last weekend and will all week
also, lots of fools still trying to cash in their low rate pre approved rates, will keep sales strong, but on a downtrend
listings – i expect more 500+ days ahead
17000 next week
April 21st, 2010 at 8:01 pm
New Listings 431
Price Changes 157
Sold Listings 329
Listings are unstoppable! Huge sales day also.
April 21st, 2010 at 7:53 pm
Patriotiz You can rent a freaking house for that kind of money"
Yeah right now, when the house collapse is in full force.
Where have you been the last 15 years when you had to provide even DNA to the landlord in order to secure rental in the City? Been there done that. It was not pretty.
April 21st, 2010 at 7:46 pm
patriotz But you also need “willing”. The government could be throwing money off the back of trucks, but if people refused to pay inflated prices for houses, prices could not become inflated.
Ohh well Patriotz, with media and banking pimps around it is not that difficult to create the “willing” crowd. At least on this board we are all aware of this.
patriotz “given % of their income in Canada than in almost any place in Europe or Japan”
I don’t agree. That is very broad generalization. Canada cannot even compare with very broad social net that exists in Europe that allows affordable housing for average family. Been there, lived there, worked there and you don’t have to convince me otherwise.
April 21st, 2010 at 7:44 pm
@freedom:
You can rent a freaking house for that kind of money:
Over 1000 3br+ properties, including houses, for $1800 or less
Anyone who's been around this city for some time can tell you that rental affordability is no worse than it was decades ago, and that's what the stats say too.
April 21st, 2010 at 7:26 pm
VancouverGuy “Patriotized is right that from a rental standpoint housing is not unaffordable here.”
When young family has to pay $1500-$1800 for moldy, lightless east Van basement suite to live under the ground surface like raccoons then that is far away from what it is considered affordable and decent living.
It could help if you and Patriotzed remove your rose colored tinted glasses.
VancouverGuy “Having freedom does not mean we make the right policy decisions. You are confusing freedom with perfect policy.”
You are confused. We don’t have a FREEDOM to CHANGE any policy. It does not have to be perfect policy because we do not live in the perfect world but we have to have the freedom to CHANGE A POLICY. Why is that difficult to understand? It is because you live and think through the banker’s paradigm.
VancouverGuy “The fact that Americans are on food stamps is not a result of a lack of freedom, but rather a result of policy intervention, or lack thereof.”
Americans thought that they had a FREEDOM to make a CHANGE in the last election. What happened with that “Change we can believe”? It did not happened. One corrupt establishment changed with another one. So where is you freedom for change?
April 21st, 2010 at 7:25 pm
@freedom:
That's the "able" part of "people are able and willing to pay too much". But you also need "willing". The government could be throwing money off the back of trucks, but if people refused to pay inflated prices for houses, prices could not become inflated.
And no, I wasn't trying to compare rental affordability in Vancouver to London or Tokyo. I said that people get more rental accommodation for a given % of their income in Canada than in almost any place in Europe or Japan, right across the board from small towns to big cities. Anyone who's visited these places could tell you that.
April 21st, 2010 at 7:14 pm
@VancouverGuy:
The majority of people haven't profited at all, in fact they are worse off. The reason is simple – without CMHC it would be cheaper to buy a house.
The only owners who have profited from CMHC intervention in the market are the people who have bought low and sold high – i.e, the successful speculators, and they are greatly outnumbered by the people who in the end will not sell for a higher real price than what they paid, not to mention the people who have bought high and will end up selling (or being foreclosed) low.
And that's not taking into account the damage to the general economy from the misallocation of resources to housing, and the potential loss of government services or increased taxation if the government has to bail out CMHC.
April 21st, 2010 at 7:11 pm
Give it some more time and it will be, Selling three. Husband selling three. Where are the buyers?
April 21st, 2010 at 6:54 pm
CMHC be damned! Buy tree husband buy tree!
April 21st, 2010 at 6:50 pm
Paulb, does this mean 155 price reductions?
April 21st, 2010 at 6:41 pm
Paul's Daily,
Macho Gracious Amigo!
RBR.
April 21st, 2010 at 6:35 pm
New Listings 361
Price Changes 155
Sold Listings 293
This day is for Kite
April 21st, 2010 at 5:59 pm
@Best place on meth: I must not talk about it anymore but the spin is very simple.
Why would you invest in any city of this world?
Do you think Average Joe is the only human being in this world to travel to London and New York?
It will only take 10k to travel to those cities with minimize risk and bothration but investing there for long term or life time would be very joyful.
Do you even understand what epic centre or economy centre means to the bad peoples?
April 21st, 2010 at 5:40 pm
@Kite towards moon:
Kite,
I really enjoyed your work in 1993 as the Iraqi Information Minister when the Americans were closing in on Baghdad. You were absolutely hilarious and well deserving of your nickname "Comical Ali".
But don't you think you've gone a little too far this time with your outlandish statements about Vancouver and its real estate?
April 21st, 2010 at 5:38 pm
Just an idea for the 17k listing party…
We should have an Award Ceremony:
My nominees are:
RE Pimp of the Year:
Bill Good
Phil Soper
Cameron Muir
Re Prostitute of the Year
Rob
Rennie
Larry (man can this guy talk from all 4 sides of his mouth)
Rockie Slut of the year:
Aaron
Maggie
Please have your nomination in soon, 17k is not too far away
April 21st, 2010 at 5:23 pm
@JR:
It's my understanding that deals had to be firm (having removed all subjects, not complete) by the 19th to avoid the new rules. Then for the paperwork to be turned into the board etc. it should only take a few days for all of those sales to be reported.
I verified the lack of evidence for any backlog yesterday when I saw multiple daily sales that had been on the market (DOM) for 0 days any backlogged sales would surely get posted first right? Therefore, no backlog. Then if the theory is correct that the April 19th deadline played a major role in boosting the March/April market, we should see sales decline significantly in a matter of days.
April 21st, 2010 at 5:11 pm
@averagejoe: Hong kong and tokyo have disadvantage of international language,New York and London are too congested and those cities are vulnerable for attacks.Who is going to bother paying millions over there when you can't sleep in the night and stay under suspicions in the day time.Karam for those cities dragged them down and Canadian Karam's earn lots of appreciation for Vancouver.In the bussiness language "KARMA" would be equal to future investments.
April 21st, 2010 at 5:11 pm
Paul B. Question for you. If indeed there was a rush to beat the April 19th deadline, and I'm not sure I buy into this, wouldn't that be reflected long after the 19th? I ask because my understanding is sales aren't recorded until subjects are removed whereas the deal could have been consummated days or possibly weeks prior. Yes?
April 21st, 2010 at 4:51 pm
Responsible Saver's rate of return
Minus
Consumer Price Index
———————–
= Theft?
April 21st, 2010 at 4:37 pm
Freedom: Patriotized is right that from a rental standpoint housing is not unaffordable here. In addition, while I think that the policy of CMHC support of the housing market is a terrible one, it is likely popular with the majority of people who have profited from the policy and do not understand the long-term implications.
Do Canadians really want to change our banking system? Personally, I would like to change our banking system, but it seems at the moment everyone is relatively proud of the stability Canada maintained during the financial crisis. I think the reason why lobbying for a change in banking regulation would not get far is that most people do not have a problem with the current system.
When I noted that we have benefited greatly by tying our foreign policy to that of the United States, I meant in the sense that we have not had to dedicate a massive proportion of our GDP to defence and have still maintained the same effect, which has been relative security from an international perspective. That is a significant financial benefit. Copying policies has nothing to do with foreign policy; I was responding to your point about not having an independent foreign policy, not about copying the domestic policy of others.
Fractional reserve banking is an extremely logical concept that one utilizes consistently in all businesses. If I on-lend money that I have borrowed from someone else, then that is fractional reserve banking, because I do not need to hold cash reserves to cover my debts. The only difference with banks is that they are lending out money that is borrowed on a demand basis, and therefore they face a liquidity risk if borrowers demand repayment simultaneously. A system where you had to hold all deposits as cash would be just as ridiculous, because deposit-holders do not require such a system; that is not a free-market system.
I believe we have freedom. Having freedom does not mean we make the right policy decisions. As I said, I disagree with many of the policies of our government, but I am indifferent enough that I do not dedicate my life to changing those policies. You are confusing freedom with perfect policy. The fact that Americans are on food stamps is not a result of a lack of freedom, but rather a result of policy intervention, or lack thereof.
April 21st, 2010 at 4:34 pm
@auditnerd: I have heard many people from china coming to Vancouver and calling it a town. They have came from city's of 25 mill. I guess people who calls Vancouver have never been to London, New York, Hong Kong, Tokyo, etc, etc. Must be a marketing ploy by Cameron and Bob R.