Bank Of Canada Jolts Economists With Stand-Pat Rate Decision Amid Inflation Risk
"Holt said one possible explanation is that the Bank of Canada and the U.S.
Federal Reserve are co-ordinating policy in an effort to bolster the American
dollar and "take the froth" off of commodity prices."
Back in March I blogged about Serfdom Life and the continuing risk of interest rate slashing in the US and it's influence on Bank Of Canada to do the same. Times have changed. From the housing bubble evolved the food bubble and now the energy bubble. Some bullish real estate "investors" were in the mindset that in the new financially reformed 21st century, it would be impossible for interest rates increase as we now live in a "credit society." Those who can't realistically afford an object of desire could purchase on credit.
In the big picture, the pendulum which swung the way of big spending is now finally swinging in the opposite direction with purpose - to spur society back into a savings mode.
Inflation is back with a vengeance. With high energy prices, there is nowhere to escape for the average consumer.
Bernake looks like he is done cutting rates in the US. Will this be the direction of the Bank Of Canada. Interest rates will have to rise to curb runaway inflationary pressures. Banks will not hesitate to raise mortgage rates accordingly as it means more renenue.
Falling house prices, higher interest rates, rising property taxes, rising mortgage rates, high energy prices, high food prices, highest CPI and inflation in the country. It's certainly a fun time to be overextended or specuvesting in this marketplace.
Once again, it's the perfect storm folks. Take another 40k off or more and get out now while you can!
20 comments:
its now too late to get out
the greater fools are in
I agree with Squid. All trapped in a cafe now. The greater fools. Moreso, anyone who is speculating on a condo in Calgary. Good luck. Have fun. Don't forget to turn the lights out if you're the last one to leave. Where are the bulls now? All in hiding!
I meant cage
and here go the interest rates
UP UP AND UP
All you bitter renters are priced out of the market forever. Sales are going through the roof now. Pending sales are highest they've been all year. Inventory has hit a plateau. Soon the next upswing will occur in the market. Ha suckers!
Yes Anonymous, priced out forever... Because anyone born today will never be able to afford a house. Oh, what's that? declining population, aging demographic, negative migration, long term water shortages?
One reason there are a lot of pending sales is because of the predicted rate cut/hold (buyers know its as good as it gets until at least september now...)
And I personally am not bitter. I just don't understand sacrificing a huge amount of my income for something that really isn't that nice. Calgary has a lot of "Faux Nice", but not a whole lot of "Real Nice". As a first time buyer, why mortgage my life away? If I want to be house poor, I would rather be it somewhere other than Calgary. If the oil and gas sector ever declines, people might as well just sign their names and walk away...
I think one thing a lot of the RE bulls in Alberta forget is that a lot of people are moved here for the good financial times. When it doesn't become financially feasible to leave here, a lot of the professionals here that have cut there teeth and gained a lot of experience, will go where they can live a better lifestyle for less money. And yes, there are a lot of those places...
Wow, apologies for the horrible spelling on my last post...
I think "trapped in a cafe" was funny. Gave me the image of a bunch of 27 year olds with 40 year mortgages no money down sitting around Starbucks talking about how great of an investment they made.
By the way i don't know how CMHC figures on this 40 year mortgage when the design/build standard in Canada is for the structure to last 30 years.
Trapped in a cafe. LOL.
The pending sales are high as rates are held status quo.
It's funny to see the relationship b/w the increase in sales and also prices are declining as well.
Very interesting.
Yeah, you're right. One could loose his hope in times like these. The bubbles just keep popping up and there seems no end to it.
As a Toronto real estate agent, but surelly not the only one, I wished that it would come to an end. But, we survived one crisis, we'll get over the next one, for sure.
A developer put up two side by side infills on 25 A St. S. W.
They were originally priced at $930 000 each, after a few weeks on the market, the price was reduced to $875. Still no sales.
The seller switched realtors and they are now on as a "new listing" for $888 000.
Something doesn't make sense here.
While cruising around the city this weekend, you can't help but notice alot of unfinished properties that already have for sale signs on them. Some are in their infancy stages and being sold. Same applies for many condo developments who are offering many offers and bonuses for buyers even before the property is finished construction.
Glad I found this site, interesting to read comments. What I was looking for is information to help me decide what to do> I own a house here in Calgary but I don't like it. I am trying to decide if this is a good time to sell and buy something I really like. I figure there must be people who are willing to take a big price cut just to sell, and I own my place free and clear, bought it 5 yrs ago so I can afford to sell it below comparables on the market. Anyone had experience with offereing 10% to 20% less than asking price?
Does anyone know what happened to MLS.ca?
They were going to change the name of that website on June 16th to Realtots.ca but the change never materialized.
They had it even advertised on mls.ca but I guess they pulled it down.
Maybe too much realtots? People might be getting sick of them by now.
The US have stopped cutting interest rates. Pure economic carnage. Combo of recessionary economy with static interest rates (or increased rates in future). Double whammy. Would you like fries with that?
If you own a house free and clear in Calgary right now and can sell it without a loss, then I would be selling it, renting for a year or two and then buying when prices come back to reality. You will then be one of the few to have come of this debacle on the plus side! That is what we are doing. House is gone, money in bank, renting at a pretty low price compared to what a mortgage would cost on the same property right now, and will buy back in maybe in 2010, 2011.
Anonymous, good call. From an investment perspective you're in a way selling short in the market. Good way to make money when the market is going down. Smart decision.
Call me "Anonymous 3"! Heck, anyone who purchased since 2003... should sell, if they can, "as is"... If you can break even now, and still have some equity left over... you at least have some equity left over. Many will lose "lots" in Calgary, Edmonton, Sherwood Park... other areas where prices reached a level of madness over the years... And this is not just "flippres", but good, honest, hard-working people... who simply jumped on the wave...
All that said... the time is now... to move on...
The crash is going to happen soon. Realtors are unravelling within their JOB and living off last year's profits. Speculators are angry, stressed and frustrated. It's all unravelling now. Smart ones are on the sidelines watching with a full bucket of layered buttered popcorn in their hands.
het you took down that great post
sure..they quoted a ytd price..but it tricked me and more than likly most calgarians..it was a good post
squid
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