*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[you&me]

Originally Posted by Bill Bumface

...

On the point regarding subdividing a lot and putting up 2 $800k places, I actually think this does help. Once developers burn through the demand of wealthier people looking for a more dense option (duplex instead of single family), the profits will start to dry up, and they will turn their attention to other underserved sectors...

I would say the duplexes themselves are an indication that catering to wealthy buyers is self-limiting.

For a builder, a duplex has a lot of additional costs that a larger single family home wouldn't, such as the 'party wall', double the appliances, furnaces, hot water tanks, more doors, trim, hardware, bathroom fixtures, larger garage (2 doubles vs. usually a triple) etc...

The margins would be better if the developer could get $1.6mm for a single family home over two $800k duplexes, but the market doesn't support those homes at $1.6mm, so an equilibrium is found where the developer builds a side-by-side because it maximizes profit... And the price attainable for the single family homes is somewhat ironically limited by the zoning (and prevalence) of duplexes <- And this is the point where everyone crosses their arms and nods, "good".

The real winner in this whole ground floor access built form seems to be the 4-plex & townhomes that fit on a single 50' lot... Where a single family home might cap out at ~$1.4mm in these areas and a duplex at $800k (these prices feel low for today, but I'm rolling with the example given), the 4 plex or townhome units will still push $600k each (and more), providing the most potential margin to a builder, and therefore being constructed more often.

This is why I'm a big fan of the arterial upzoning and this built form, because I think it does more to address the often-cited "missing middle" far better than a 3 bedroom condo practically could.

[chemgear]

https://bc.ctvnews.ca/federal-labour...rike-1.6476283

"Today, after eleven days of a work stoppage, I have decided that the difference between the employer's and the union's positions is not sufficient to justify a continued work stoppage," the statement said.

In a brief online update Tuesday evening, the BC Maritime Employers Association noted that they, along with the union representing thousands of striking dock workers, received correspondence from Seamus O'Regan saying he has invoked his statutory powers under the Canada Labour Code to instruct the mediator to draft the terms of a recommended settlement within 24 hours.

“It has knock-on impacts on cost of living for people across the country as goods get more expensive because imports are not available and it's really the worst time for that,” he said.

"We also know in British Columbia, where the port is, that port workers have seen increasing costs just like everybody else.”

The cost to the economy has been estimated at anywhere between $250 million to $1 billion per week.

[Bill Bumface]

Originally Posted by you&me

I would say the duplexes themselves are an indication that catering to wealthy buyers is self-limiting.

For a builder, a duplex has a lot of additional costs that a larger single family home wouldn't, such as the 'party wall', double the appliances, furnaces, hot water tanks, more doors, trim, hardware, bathroom fixtures, larger garage (2 doubles vs. usually a triple) etc...

The margins would be better if the developer could get $1.6mm for a single family home over two $800k duplexes, but the market doesn't support those homes at $1.6mm, so an equilibrium is found where the developer builds a side-by-side because it maximizes profit... And the price attainable for the single family homes is somewhat ironically limited by the zoning (and prevalence) of duplexes <- And this is the point where everyone crosses their arms and nods, "good".

The real winner in this whole ground floor access built form seems to be the 4-plex & townhomes that fit on a single 50' lot... Where a single family home might cap out at ~$1.4mm in these areas and a duplex at $800k (these prices feel low for today, but I'm rolling with the example given), the 4 plex or townhome units will still push $600k each (and more), providing the most potential margin to a builder, and therefore being constructed more often.

This is why I'm a big fan of the arterial upzoning and this built form, because I think it does more to address the often-cited "missing middle" far better than a 3 bedroom condo practically could.

Good points, and I think if the zoning allowed for easy combining of two adjacent 44-50' lots, the other great form factor is the 6 unit row houses. Often they are throwing 6 lower level suites in them too. Now we have 6 units per lot, all ground floor access, and you get rid of the awkward yards that come with the 4 unit buildings, as everyone has a proper front and back green space, although small.

But cue the whinging about parking and garbage bins because we have terrible policies around both of those right now that leaves everyone entitled to public space they don't own in the street and lane.

[Fuzz]

https://goo.gl/maps/XCV5QeYui8bXDP1t9


This is a decent 4 unit that just went in. But wow, I see the bin problem! Sillyness.


https://goo.gl/maps/dc7DhX4PaMtzn6G46


This one combined 2 50 foot lots for what looks like a 8-plex.

[Paulie Walnuts]

Another rate hike as expected and hopefully the last. Once more people are unemployed and unable to make payments maybe they will stop.

[MillerTime GFG]

Up she goes. Prime rate will now be 7.20%. Insanity.

[Slava]

Meanwhile inflation in the US came in lower than anticipated at 3% flat. It's interesting, because things appear somewhat deflationary at this point, and the central banks are still hiking.

[greyshep]

Man did I ever mess up listening to the advice of a mortgage broker when I could have renewed at 3% for 5yrs. Went with variable because he thought the motion up on interest rates was going to be short lived.

Ultimately my fault but dang this sucks.

[Mr.Coffee]

Originally Posted by greyshep

Man did I ever mess up listening to the advice of a mortgage broker when I could have renewed at 3% for 5yrs. Went with variable because he thought the motion up on interest rates was going to be short lived.

Ultimately my fault but dang this sucks.

I really wouldn't listen to any mortgage broker.

Truth is- nobody knows what's going to happen. Do what you feel is good / right. If you're like me then you can rest easy trusting you'll make the wrong decision.

[Muta]

Originally Posted by greyshep

Man did I ever mess up listening to the advice of a mortgage broker when I could have renewed at 3% for 5yrs. Went with variable because he thought the motion up on interest rates was going to be short lived.

Ultimately my fault but dang this sucks.

You and me both buddy. I renewed at a three-year variable at 1.25% in January 2022. That was supremely dumb in hindsight.

[Izzle]

Obviously this rate hike cycle was a once in a lifetime situation but would folks have had a stop loss so to speak? Ie if variable rates climb to the fixed levels then lock immediately at those fixed rates for the remainder of the term?

So tough to say. Lock in fixed and rates fall then you're kicking yourself.

I also suppose that rates back then were so low that the only place it had to go was up.

[Yoho]

https://twitter.com/user/status/1679145162449223682

[Slava]

^If the BoC had stopped raising rates, we'd be at about 2-2.5% inflation I think and very close to their desired figure. That's specifically due to the increased shelter figure.

[Old Yeller]

Originally Posted by greyshep

Man did I ever mess up listening to the advice of a mortgage broker when I could have renewed at 3% for 5yrs. Went with variable because he thought the motion up on interest rates was going to be short lived.

Ultimately my fault but dang this sucks.

I still maintain variable is better in the long-run, but with my current variable rate I'm starting to wonder if that's just a coping method to help me sleep at night.

[bizaro86]

Originally Posted by Slava

^If the BoC had stopped raising rates, we'd be at about 2-2.5% inflation I think and very close to their desired figure. That's specifically due to the increased shelter figure.

I think it's hard to know the counterfactual. That's true if they didn't raise rates and everything else turned out the same.

But I think I'd they hadn't raised rates the huge federal deficits and (and effective negative real rates) would have juiced the housing bubble like a y2k Era home run hitter, and we'd be in an even worse spot for housing inflation.

[GGG]

Originally Posted by Old Yeller

I still maintain variable is better in the long-run, but with my current variable rate I'm starting to wonder if that's just a coping method to help me sleep at night.

If you bought 15 years ago or so saving 1-2% per year for the last 15 years would reduce your mortgage to the point where the additional points you pay now were worth it. IF you put that money into the mortgage or investments. If you bought a car and went to Hawaii then perhaps not.

[The Fonz]

Hold onto your butts

[dubc80]

Originally Posted by greyshep

Man did I ever mess up listening to the advice of a mortgage broker when I could have renewed at 3% for 5yrs. Went with variable because he thought the motion up on interest rates was going to be short lived.

Ultimately my fault but dang this sucks.

I'm in the same boat, man. Misery loves company.

I'm at a $800 or so increase in payment per month right now. I could be financing a nice new car.

[Slava]

Originally Posted by bizaro86

I think it's hard to know the counterfactual. That's true if they didn't raise rates and everything else turned out the same.

But I think I'd they hadn't raised rates the huge federal deficits and (and effective negative real rates) would have juiced the housing bubble like a y2k Era home run hitter, and we'd be in an even worse spot for housing inflation.

Oh I should've clarified that I meant the last few raises this year. I think that they had to raise in 2022. It's just that the inflationary increases now, or what seems to be holding, is shelter. Basically everything else is coming down at this point.

[dubc80]

Originally Posted by Izzle

Obviously this rate hike cycle was a once in a lifetime situation but would folks have had a stop loss so to speak? Ie if variable rates climb to the fixed levels then lock immediately at those fixed rates for the remainder of the term?

So tough to say. Lock in fixed and rates fall then you're kicking yourself.

I also suppose that rates back then were so low that the only place it had to go was up.

I inquired a few times about locking in my variable rate but the problem is, the fixed rate offered was quite a bit over and above what the adjusted variable rates were with the increases. They would not let you fix it at the current rate.

So, you'd be paying more than accepting your adjusted raised variable rate. Plus, there are all the disadvantages which come with fixing it.

It really only made sense if you did it at the very start when things started increasing and if you thought things would be getting a lot worse. I should of for sure done that knowing what I know now but who knew it would increase 10x over the year.

Unfortunately, the big damage is done already so you may as well ride it out if you have the means to absorb the increase in payment cost.