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Bank of Canada increases overnight rate target to 1 per cent

bankofcanada.ca

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Re: Bank of Canada increases overnight rate target to 1 per cent

#111

Post by acchow »

refurb wrote: post #80
tostitos1979 wrote: post #74

Earlier quoted context omitted.

Sorry. Your info doesn't match the same reality I live in. As the parent said, sales went down (don't know about mix). Prices for detached homes have not. We were seriously putting offers in March and got outbid for INSANE sums. e.g. 720K offer in Milton .. property went for 100K over. In Mississauga, homes listed for 850K went for 950K-1million. I am looking at data now and it has slowed but not gone down yet.

Real estate is local. I've seen multiple listing in the Toronto area, SFH, that haven't sold and are delisting at 20-30% below comparables from 3 months ago.

You got some examples of this?

Re: Bank of Canada increases overnight rate target to 1 per cent

#112

Post by graeme »

kitcar wrote: post #51
dmix wrote: post #43

The commonwealth countries are all facing a property bubble (Canada, New Zealand, Australia, etc). The household debt levels and property prices didn't taper off nearly as much following the 2008 US housing crisis and has pretty much continued unabated: http://www.huffingtonpost.ca/stephen-punwasi/real-estate-bub... Which is fascinating to consider that the Bank of Canada, et al, have let this happen for so long and…

I believe the official stance of the bank of Canada is inflation is below target hence the low rates being acceptable for so long. What I don't understand (and I hope someone can shine some light on!) is the basket of goods they use to measure inflation doesn't seem to be very impacted by low interest rates - therefore how will the low rates increase inflation? i.e. banks will only lend to me at below 5% if I'm buyin…

In past times, business expansion lowered the unemployment rate, which raised wages, which raised prices.

The first part happened. The last two don't seem to be happening, which is puzzling. Central banks are having to consider that the old model may not hold anymore. No one's really sure what to do.

Consumer tendencies weren't really supposed to enter into it, as far as I know.

Re: Bank of Canada increases overnight rate target to 1 per cent

#113

Post by 52-6F-62 »

tostitos1979 wrote: post #67
akgerber wrote: post #10

Relatedly, the Toronto housing market that kept shooting up even as the US hit its 2008 housing crisis now have hit their top: https://www.bloomberg.com/news/articles/2017-09-06/toronto-h...

Toronto's property market is insane. I am still seeing condos (e.g. Gibson near North York center) being priced at 600K+ for 1+1 and larger units well over 1 million dollars. Not sure who can afford this. Places as far as Vaughan and Milton are expensive. We're talking decent detached houses (slightly above starter home) for over 1 million.

It's just as bad or worse downtown. I rent in Liberty Village (paying a blessed 300 dollars a month below market and crossing my fingers it stays that way for now), and around here studio units can start in the mid 500's. The larger units easily run upwards of 2 - 4 million dollars if you go for the trendier, older buildings like the old Irwin Toy factory.

Rents are feeling it as well. I think the numbers just came out yesterday or today and an average 1 bed is about $1950. I've seen one bedrooms rent in this neighbourhood for upwards of $4000 a month -- again for the trendier buildings. And this is by no means the upper limit.

I remember approximately 2 years ago, when the average attached houses in the downtown were ~600k (usually 2 or 3 bed, kitchen, living, dining, basement, yard, garage). They hardly exist for anything less than 950k

Back then the average 1 bed rented for 1200 - 1500 a month. That's a long lost dream now.

Re: Bank of Canada increases overnight rate target to 1 per cent

#114

Post by acchow »

myth_drannon wrote: post #61
asdf33323 wrote: post #56

Earlier quoted context omitted.

Prices aren't down 20-30% - you're referring to average sales price. Big difference. It's been attributed to the sales mix (people opting for condos/townhomes)

They are. You can check the prices by categories. Detached houses -20%, condos are still holding up. Houses went from 960K to 720K since April

"Average sales price is down 20%" is an entirely different statement from "prices are down 20%, on average".

Think about that.

Re: Bank of Canada increases overnight rate target to 1 per cent

#116

Post by asdf33323 »

refurb wrote: post #80
tostitos1979 wrote: post #74

Earlier quoted context omitted.

Sorry. Your info doesn't match the same reality I live in. As the parent said, sales went down (don't know about mix). Prices for detached homes have not. We were seriously putting offers in March and got outbid for INSANE sums. e.g. 720K offer in Milton .. property went for 100K over. In Mississauga, homes listed for 850K went for 950K-1million. I am looking at data now and it has slowed but not gone down yet.

Real estate is local. I've seen multiple listing in the Toronto area, SFH, that haven't sold and are delisting at 20-30% below comparables from 3 months ago.

I call BS unless you provide proof.

Re: Bank of Canada increases overnight rate target to 1 per cent

#117

Post by pjc50 »

SilasX wrote: post #63
rjtavares wrote: post #38

Earlier quoted context omitted.

When you're talking about billions: If you hold it physically, you have to store it and secure it, which costs money. If you deposit it in a commercial bank, it'll be less safe than German bonds.

Wait, what? Isn't most money electronic anyway? How does it cost (O(n)) money to keep an entry in a digital record?

> keep an entry in a digital record

A record where, though?

Bank "clearing" means that ultimately a bank is keeping its money either with other banks or with the central bank. They're records, but not necessarily interest-bearing, and keeping it with other banks is not risk-free.

Re: Bank of Canada increases overnight rate target to 1 per cent

#118

Post by cpncrunch »

betaby wrote: post #94
cpncrunch wrote: post #60

Earlier quoted context omitted.

>They don't, that's why Reference? See my answer to RobertoG for more details.

That answer is incorrect. Bank can and will loan money they do not have http://www.investopedia.com/articles/investing/022416/why-ba... Neither there is a connection of saving account returns and discount rate. In contrast connection of the discount rate and CC rate is explicit http://hudsonsbaycredit.capitalone.ca/docs/Hudson_Bay_Cardho... very first page.

Yes, I understand that banks don't need savings to generate loans and the two aren't tied, and my answer didn't say that.

My point is that the market determines savings rates, and when interest rates are higher, banks can afford to give higher savings rates.

Re: Bank of Canada increases overnight rate target to 1 per cent

#119

Post by SilasX »

pjc50 wrote: post #117
SilasX wrote: post #63

Earlier quoted context omitted.

Wait, what? Isn't most money electronic anyway? How does it cost (O(n)) money to keep an entry in a digital record?

> keep an entry in a digital record A record where, though? Bank "clearing" means that ultimately a bank is keeping its money either with other banks or with the central bank. They're records, but not necessarily interest-bearing, and keeping it with other banks is not risk-free.

How about keeping it with the central bank?

Re: Bank of Canada increases overnight rate target to 1 per cent

#120

Post by astrodust »

School-Cotton wrote: post #83
astrodust wrote: post #34

Earlier quoted context omitted.

Those aren't as valuable in a crisis as you might think. Pure gold and junk gold are largely interchangeable. If you want to be ready for some societal meltdown, load up on junk gold. A small gold ring is easier to barter with than a gold brick.

I bet drugs, canned food, and weapons/ammo are an even better thing to stock up on if you want to be ready for a TRUE meltdown, where civilization descends into total anarchy/lawlessness. But there is a pretty wide spectrum between that and what we have now. Gold is a hedge against something like what happened to Yugoslavia, even if it's not a good hedge against the apocalypse.

The closest thing to the "apocalypse" you're likely to see is what happened in Argentina and what's happening in Venezuela.

Having a "prepper bunker" full of expensive supplies is not an asset, it just makes you a target. Having a small cache of things you can easily hide, secure, and trade is significantly better. If you have to bail in your city because things get too ugly you don't need a trailer truck to move.

Any normal person who needs more than a bug-out bag and a passport to survive is doing it wrong.

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