Interest Rates

[Positrac]

Originally Posted by Trochu

When was the last time you drove by a Starbucks and the drive through was empty? And as we all know, $10/day for 5 years can equate to $300k, bamb, house paid for!

That being said, costs are increasing significantly faster than wages and it's going to be an issue in the coming years if things continue as they have.

My math tells me forgoing that $10 Starbucks will save you enough to buy that $300,000 shack in 82 years…

But I do get the point you’re trying to make. A couple Starbucks a day is a luxury not the necessities of life. Stuff some of our parents would have called luxuries 40 years ago are now considered common necessities to a younger generation.

[MountainTi]

Originally Posted by 58thecat

It wasn’t easy many packed it up and tried their luck in another occupation etc

I know many that just made the interest payments to satisfy the banks

I just hoped that many learnt from those times to avoid getting caught up in it again and passed on their learnings to their kids

I guess it comes down to controlling what you can and managing the rest accordingly

Tirebob hit the nail on the head with his post.


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You seem to be talking about non-essentials/luxuries. I'm talking about staying afloat running a business (to keep a workforce employed), maintaining a farm, ect... in the years of high interest. The 80's were a tough time for a lot of people. Living on wild game and a part time job at 7-11 in the evenings didn't cut it for a lot of people. Not sure what lessons were to be learned by these people
You were one of the lucky ones that worked for

[Sledhead71]

There have been too many people living on borrowed time financing items that are not readily using nor needed due to the ease of lending. I use to look to others and think I was doing something wrong, lived in a mobile home while my friends build on the golf courses... When we went camping, I drug a 18 foot Scamper with an ice box for a fridge, they tugged houses on wheels with a tow vehicle to bring the load of toys..

Fast forward a few decades, and I see these same friends stuck in a loop now complaining about rising interest rates... I feel for them but honestly can't blame anyone but themselves...

Going to be a long road back to understanding the sun does not always shine and best be prepared for the storms coming...

[tirebob]

Originally Posted by FortMac

I think you think alot of people live high on the hog when quite frankly they don't.

A $2000 cell phone is $35 a month.

Wages have been stagnant for a very long time while the price of everything else has gone up exponentially.


The house down the road for me is for sale, $380k, if I put 19k down, and with a 4% Mortgage, the payment every month would be $2000 a month,.

The average person makes $55,000 a year.

The average house price in Canada is over 650k.


It's just not reasonable for the average young Canadian to expect to buy a house, and it has zero to do with the price of cell phones or a PS5.

No I don't think that and never meant that.

I said home ownership is possible with sacrifice. Does the first home need to be a 380,000K starter home? Can't is be a run down condo that needs a ton of work, like mine was with two kids? Then once I put the work in and sold it, took the sweat equity and rolled it into a run down POS house in a crap neighbourhood, put the sweat equity in again, sold it and rolled it into a small crappy runny down starter home in a little bit better neighbourhood. Put the work into that and so on and finally I am in an older run down acreage in a wicked place that I put a ton of work into and am about to list and sell so I can finally buy the place I have busted my butt for doing this all over the last 30 years.

Just for the record... Average is a silly metric to use. Average is not realistic and certainly does not apply to reality since Toronto and Vancouver skew "average" by a country mile, just as Wal-Mart lifer employees skew "average" salaries by a country mile. Also, I am not sure where a $2000 cell phone costs only $35/month but I sure would like to know. Remember if you take that plan you are paying way higher for a cell phone data plan to compensate the difference. It is math like this that gets our kids buried not understanding the true costs of things.

Myself personally, it has only been in the last 10 years I have surpassed the average salary as you have described above, and even then I have not even remotely come close to cracking 6 figures, and I have raised two kids safely into adulthood with a stay at home wife. it is absolutely possible for those willing to buckle down and do it, but as I was alluding to with my original post, if one is not willing to sacrifice to make it happen, they sure as heck don't just deserve it.

[fishnguy]

Our house was priced at $18,500 in about 1980. We paid $321,000 for it in 2014 - we bought the top, so to speak, but didn’t have a choice because there were no reasonably priced rentals available in town (there were two suitable for us for double the mortgage payment in the entire town). It is not a 10-bedroom 10-bathroom house with a two-car garage either (under 1,000 sq ft, in fact). And it needed work. I probably put… I would estimate it at $50K of my labour alone in it. It’s for sale now, we will see how much it will sell for/how much we will lose.

My parents bought their house in 2000 for $198,000 brand new and it is worth probably over a mil today. My dad was making $18/hour then as an electrician. The excat same job at the exact same plant is paying around $40/hour today (a guy needs more qualifications though because plc and other ish are now a widespread thing). Gas was $0.47/litre and dollar store was an actual “dollar” store. You could also either buy quality used furniture in Value Village/Salvation Army or whatever; better yet, you could pick a “like new” couch and a tv off the street that people were throwing out. Go check out the condition of furniture in a similar store today, if you find any. Hardly anyone replaces their furniture nowadays until it isn’t suitable for use anymore. Minimum wage was either $6.75 or $7.25 in 2000, can’t recall which one. It is $15 now and many were outraged over the fact. Most things at grocery stores are up 25%+ from less than a year ago.

For many (most?) “boomers”, their real estate is their retirement plan.

Probably about half (or close to it) of the population of Canada live in Greater Toronto, Montreal, and Vancouver areas.

Most people have no idea about basic economics, implication of government policies, finances, etc.

But also, a few countries are on the brink of annihilating the world with nukes, so none of the above probably matters much in the bug picture

[Scott h]

Originally Posted by -JR-

I have not increased my rent on my rentals in 10 years .
Told my renters if they look after the house , it will never go up .

I did the exact same with my rental properties. I would much rather make a little less each month than start over with new tenants, and the problems that inevitably arise with them. The issue today is that there are a lot of people that figure that becoming a landlord is a fast way to get rich.
How many have put down $75K down on a $375K rental property, only to have their monthly payments go from $1200 to $1700? Can the rental market absorb the kind of increase needed to cover that??? Never mind the fact that the current price of that same property is probably now $340K, effectively wiping out most of the owners real equity.
Getting into the rental game in a falling market, with rapidly rising interest rates is a fast way to go broke.

[Bigwoodsman]

I see BOC to continue to raise interest rates, I see double digit interest coming. I also see the Feds doubling down on their carbon tax and personal income tax. WEF is demanding this.
With Russia getting more aggressive in the Ukraine, also being accused of sabotaging the Nord Stream pipeline in the Baltic sea. Things are about to get real tense on the European front. This will only add to the cost of heating our homes here.
Economic sanctions etc, tough talk isn't doing anything to deter Putin from his quest. Klaus Schwab and his crew are wringing their hands over all of this.

Hang on tight boys and girls things are going to get rough.

BW

[eric2381]

Victim mentality prevents many people from becoming successful

[ehrgeiz]

Originally Posted by Bigwoodsman

I see BOC to continue to raise interest rates, I see double digit interest coming. I also see the Feds doubling down on their carbon tax and personal income tax. WEF is demanding this.
With Russia getting more aggressive in the Ukraine, also being accused of sabotaging the Nord Stream pipeline in the Baltic sea. Things are about to get real tense on the European front. This will only add to the cost of heating our homes here.
Economic sanctions etc, tough talk isn't doing anything to deter Putin from his quest. Klaus Schwab and his crew are wringing their hands over all of this.

Hang on tight boys and girls things are going to get rough.

BW

I actually think the opposite will occur. I think they're going to capitulate soon and start lowering interest rates or perhaps providing direct stimulus instead.

Unless of course the real intent is widespread insolvency and a league or serfs with no rights ownership... then again both routes might get us there.

[Buckhead]

I don’t see them lowering interest rates. I expect to them to keep raising them higher and quickly until something breaks. They way overshot on stimulus and now they will overshoot on demand destruction.

[58thecat]

Allan Jackson said it right, it’s alright to be little bitty!


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[Map Maker]

Cash is King
Debt is Sh!t

[lmtada]

Interest rate normalization is 6-8%. The last 15 years. Governments, Consumers, have gorged on debt (with low interest rates). Painful to head back to normalization.

[fishtank]

Good time to grab and piece of paper and pen to do a budget list/plan , as some need to tighten the belt a bit to get thru this cycle , get the priorities straight on needs and wants . Good luck
The pass decade been fuel by cheap debt and a lot of people took on debt because it was cheap some with their homes equity, now interest rate are on the rise those debt need to be serviced. That HELOC is going to be a big monkey on home owner back .

[Trochu]

Originally Posted by Positrac

My math tells me forgoing that $10 Starbucks will save you enough to buy that $300,000 shack in 82 years…

You need a new financial advisor Posi, I'd recommend this guy:

CTV Investing $10 everyday at 5% return can net $300k in 5 years.

[jstubbs]

Originally Posted by fishnguy

Our house was priced at $18,500 in about 1980. We paid $321,000 for it in 2014 - we bought the top, so to speak, but didn’t have a choice because there were no reasonably priced rentals available in town (there were two suitable for us for double the mortgage payment in the entire town). It is not a 10-bedroom 10-bathroom house with a two-car garage either (under 1,000 sq ft, in fact). And it needed work. I probably put… I would estimate it at $50K of my labour alone in it. It’s for sale now, we will see how much it will sell for/how much we will lose.

My parents bought their house in 2000 for $198,000 brand new and it is worth probably over a mil today. My dad was making $18/hour then as an electrician. The excat same job at the exact same plant is paying around $40/hour today (a guy needs more qualifications though because plc and other ish are now a widespread thing). Gas was $0.47/litre and dollar store was an actual “dollar” store. You could also either buy quality used furniture in Value Village/Salvation Army or whatever; better yet, you could pick a “like new” couch and a tv off the street that people were throwing out. Go check out the condition of furniture in a similar store today, if you find any. Hardly anyone replaces their furniture nowadays until it isn’t suitable for use anymore. Minimum wage was either $6.75 or $7.25 in 2000, can’t recall which one. It is $15 now and many were outraged over the fact. Most things at grocery stores are up 25%+ from less than a year ago.

For many (most?) “boomers”, their real estate is their retirement plan.

Probably about half (or close to it) of the population of Canada live in Greater Toronto, Montreal, and Vancouver areas.

Most people have no idea about basic economics, implication of government policies, finances, etc.

But also, a few countries are on the brink of annihilating the world with nukes, so none of the above probably matters much in the bug picture

I came here to write basically all of that. Very well said sir.

My old man hassles me all the time about not buying a house. He bought his first house in 1985 for $80,000. His dad paid half for him, so he had a sub $40,000 mortgage. The land value of that property alone is over $400,000 now.

And for all the folks throwing “everyone’s idea of a starter home is so big now!”, developers are building them that big because LAND value is so expensive, so while house square footage has increased, lot size has shrank dramatically. Developers aren’t going to build a bunch of 1000 sq ft ungalows on these expensive tiny lots because that doesn’t maximize their investment, so they build as large as they can on these tiny lots. When they’ve spent $100,000 on the lot, are they going to build a $200,000 house or $350,000 house? Anything smaller that is being built is almost always a multifamily development of some degree (duplex, townhouse, lowrise, etc) and for a lot of folks, the point of owning is to have some separation from neighbours, if even just a few feet of fresh air between.

Overall, the lack of empathy from the older generations to what younger generations are facing as far as housing affordability specifically is bordering on insanity. There are so many metrics, statistics and articles highlighting how much worse the situation is now yet folks continue to stuff their head in the sand while citing worthless anecdotes and red herrings (people buying coffee in the morning is so laughable as a reason, as if everyone in the 80s wasn’t spending the inflation adjusted equivalent on cigarettes and booze then).

[tirebob]

Originally Posted by jstubbs

I came here to write basically all of that. Very well said sir.

My old man hassles me all the time about not buying a house. He bought his first house in 1985 for $80,000. His dad paid half for him, so he had a sub $40,000 mortgage. The land value of that property alone is over $400,000 now.

And for all the folks throwing “everyone’s idea of a starter home is so big now!”, developers are building them that big because LAND value is so expensive, so while house square footage has increased, lot size has shrank dramatically. Developers aren’t going to build a bunch of 1000 sq ft ungalows on these expensive tiny lots because that doesn’t maximize their investment, so they build as large as they can on these tiny lots. When they’ve spent $100,000 on the lot, are they going to build a $200,000 house or $350,000 house? Anything smaller that is being built is almost always a multifamily development of some degree (duplex, townhouse, lowrise, etc) and for a lot of folks, the point of owning is to have some separation from neighbours, if even just a few feet of fresh air between.

Overall, the lack of empathy from the older generations to what younger generations are facing as far as housing affordability specifically is bordering on insanity. There are so many metrics, statistics and articles highlighting how much worse the situation is now yet folks continue to stuff their head in the sand while citing worthless anecdotes and red herrings (people buying coffee in the morning is so laughable as a reason, as if everyone in the 80s wasn’t spending the inflation adjusted equivalent on cigarettes and booze then).

And the lack of being able and willing to look at the situation in front of you and deal with what has to be done to get where you want to go makes the older generation shake their heads at the younger people.

Your fathers scenario is not typical for most people I would have to say. More were like my situation. It isn't a lack of empathy. It is simply a need to roll up your sleeves and do what it takes or don't complain kind of thing.

By no means am I trying to sound like this is meant as a negative comment to you so please do not take it that way, but one thing that is exactly part of the problem I am speaking to is where you said

the point of owning is to have some separation from neighbours, if even just a few feet of fresh air between.

... Sometimes one has to be willing to live uncomfortably at first to get to the point where they can live comfortably. If that is their expectation then while maybe I have empathy for them, I have no sympathy if they are unable to adjust and make it eventually happen.
I know coming from my background making very little money and grinding it out no matter what because nobody was going to change it for me makes me a little jaded, but if I can do it, anyone can.

[HyperMOA]

Originally Posted by fishnguy

Minimum wage was either $6.75 or $7.25 in 2000, can’t recall which one. It is $15 now and many were outraged over the fact. Most things at grocery stores are up 25%+ from less than a year ago.

Not that I totally disagree with much of what you are saying these comments made me laugh. Especially when they are written right next to each other.

You realize that $15 increase of minimum wage you applaud, caused the inflation you complain about in the next sentence. Well not the inflation of the last year obviously, but I’m pretty sure you know what I’m saying.

[FortMac]

Originally Posted by HyperMOA

Not that I totally disagree with much of what you are saying these comments made me laugh. Especially when they are written right next to each other.

You realize that $15 increase of minimum wage you applaud, caused the inflation you complain about in the next sentence. Well not the inflation of the last year obviously, but I’m pretty sure you know what I’m saying.

$15 today was worth $8.90 in 2000. Minimum wage going up did not cause the mess we are in.

[The Elkster]

Originally Posted by HyperMOA

Not that I totally disagree with much of what you are saying these comments made me laugh. Especially when they are written right next to each other.

You realize that $15 increase of minimum wage you applaud, caused the inflation you complain about in the next sentence. Well not the inflation of the last year obviously, but I’m pretty sure you know what I’m saying.

Yeah raising wages without a corresponding rise in productivity was never going to improve standards of living. The only way to do that is through better productivity/$. The same money chasing more products is the recipe for lower prices (relative to wages) making more affordable items for everyone. The trend of less work/productivity for more money seems nice and selling that idea makes for political wins but is just a recipe for inflation which kills buying power and lowers general standards of living. There is a severe lack of understanding of basic economic principles today...compounded by all the financial manipulation, money printing and short term gov't vote buying.

[Positrac]

Originally Posted by Trochu

You need a new financial advisor Posi, I'd recommend this guy:

CTV Investing $10 everyday at 5% return can net $300k in 5 years.

Well, I can't say you've never given me anything now...lol.

[The Elkster]

Originally Posted by FortMac

$15 today was worth $8.90 in 2000. Minimum wage going up did not cause the mess we are in.

That is an inflation adjusted number...let's not forget inflation is in large part dictated by wages...and around we go.

Dollar numbers alone mean little in regard to affordability. Productivity relative to dollars is the only thing that really matters. Less productivity with the same or more dollars floating around is a recipe for inflation NOT better affordability. Flat productivity with rampant money printing or wage escalation is also a recipe for inflation and NOT better affordability.

The long and short of it is people will be able to afford more if they produce more in a given shift. Whether through harder work or tech improvements etc. Simply raising wages does nothing to improve affordability. It just provides the facade of being better off.

This is a key concept when it comes to cheap readily available energy. Our current standard of living is so high because cheap energy improved productivity so much. With higher energy costs or energy shortages standards of living will come down no matter the amount of gov't money printing. Watch Germany over the next couple years to get an example of this dynamic in action.

[leeaspell]

Originally Posted by FortMac

$15 today was worth $8.90 in 2000. Minimum wage going up did not cause the mess we are in.

My house appraisal value in 2000 was $101,860.

It peaked in 2016 at $301,600

2022 is $238,900

We bought in 2019 at $245K, after some help with a down payment. My first job in the patch in 2005 was paying $250/day. The same job today is paying the same, but houses cost double or triple what they did then.

Wish I had the solution for the current housing/rate of pay issues, but I don't. If I did I would be one rich person haha. Hope everyone can ride er out and find good times ahead.





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[The Elkster]

Originally Posted by leeaspell

My house appraisal value in 2000 was $101,860.

It peaked in 2016 at $301,600

2022 is $238,900

We bought in 2019 at $245K, after some help with a down payment. My first job in the patch in 2005 was paying $250/day. The same job today is paying the same, but houses cost double or triple what they did then.

Wish I had the solution for the current housing/rate of pay issues, but I don't. If I did I would be one rich person haha. Hope everyone can ride er out and find good times ahead.


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More money chasing a similar number of houses equals higher prices not better affordability. I've tried to explain this to people that are ****ed the banks won't lend them more. Some think taking out more money is going to allow them to buy more house. Reality is all their buying competition will also have access to more money and prices just get driven up for the same houses. Wages will never rise as quickly as banks can mint money via fractional lending. Add in record low rates making monthly payments on large loans "Affordable" and viola. Banks and commission based realtors make out well though!

[IronNoggin]

Tide may be turning towards greater economic freedom

Canadians will have the opportunity to make their voices heard on economic freedom in the next federal election

And of course in this country Pierre Poilievre was recently elected leader of the Conservative Party. Poilievre has been appealing to younger Canadians with his “take back control of your life” message: “I am running for prime minister to put you back in charge of your life and to make Canada the freest nation on earth … In a free country, smaller government makes room for bigger citizens.” In the next federal election, currently scheduled for 2025, Canadians will have the opportunity to make their voices heard on economic freedom, which has waned in recent years as governments in Canada have expanded their roles.

The recipe for a pro-market government hasn’t changed since the 1980s. Reduce government spending so individuals, families, entrepreneurs and businesses — rather than politicians and bureaucrats — decide where society’s resources are allocated. Reduce marginal taxes to encourage individuals to work, invest and undertake entrepreneurial activities. Secure and protect property. Respect the rule of law. Rein in inflation. Reduce regulations and remove barriers to trade.

These policies allow workers, entrepreneurs, investors, business-owners and families to make decisions about where to invest their labour, savings and entrepreneurial energies. Time and time again, when government allows individuals and families to have greater control over their economic lives, people prosper.

https://financialpost.com/opinion/op...onomic-freedom

[Geraldsh]

I heard another gem today when this subject came up:

The rich stay rich by living like they're poor
and
the poor stay poor by living like they're rich.

[leeaspell]

Originally Posted by The Elkster

More money chasing a similar number of houses equals higher prices not better affordability. I've tried to explain this to people that are ****ed the banks won't lend them more. Some think taking out more money is going to allow them to buy more house. Reality is all their buying competition will also have access to more money and prices just get driven up for the same houses. Wages will never rise as quickly as banks can mint money via fractional lending. Add in record low rates making monthly payments on large loans "Affordable" and viola. Banks and commission based realtors make out well though!

Bankers and Realtors.......it's like giving the fox the keys to hen house.

When we were looking at houses we wanted to stay around $250 or so, which limited us to older homes or trailers, and we didnt want a trailer on a little tiny piece of land. Our house is 1000ft2 built in 1976 it it's on a huge double lot in a quite neighborhood, needs a little cosmetic work but was in good shape and move in ready. The realtor and the mortgage broker kept trying to get us in to the $300-350k range because he could me approved for it. Told him I wasn't worried about getting approved for it, I want to be able to afford it when things turn or we have a job loss or something.

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[HyperMOA]

Originally Posted by FortMac

$15 today was worth $8.90 in 2000. Minimum wage going up did not cause the mess we are in.

I actually commented that the increase to $15 did not cause the rise we have seen in the last 12 months. Did you miss that part?

The $15 minimum wage raise definitely did cause some of the inflation over the last decade however. That has added to the mess we are in today, just not the last 12 months. To think otherwise would be foolish.

Ask yourself why $15? Why not make minimum wage $10,000,000 an hour and everyone could retire after a few hours and we all would be rich wouldn’t we? That would work right?

[I’d rather be outdoors]

Originally Posted by IronNoggin

Tide may be turning towards greater economic freedom

Canadians will have the opportunity to make their voices heard on economic freedom in the next federal election

And of course in this country Pierre Poilievre was recently elected leader of the Conservative Party. Poilievre has been appealing to younger Canadians with his “take back control of your life” message: “I am running for prime minister to put you back in charge of your life and to make Canada the freest nation on earth … In a free country, smaller government makes room for bigger citizens.” In the next federal election, currently scheduled for 2025, Canadians will have the opportunity to make their voices heard on economic freedom, which has waned in recent years as governments in Canada have expanded their roles.

The recipe for a pro-market government hasn’t changed since the 1980s. Reduce government spending so individuals, families, entrepreneurs and businesses — rather than politicians and bureaucrats — decide where society’s resources are allocated. Reduce marginal taxes to encourage individuals to work, invest and undertake entrepreneurial activities. Secure and protect property. Respect the rule of law. Rein in inflation. Reduce regulations and remove barriers to trade.

These policies allow workers, entrepreneurs, investors, business-owners and families to make decisions about where to invest their labour, savings and entrepreneurial energies. Time and time again, when government allows individuals and families to have greater control over their economic lives, people prosper.

https://financialpost.com/opinion/op...onomic-freedom

[HVA7mm]

I won't lecture anyone regarding frivolous overspending and budgetary responsibility, we've all likely thrown money to the wind at one time or another. I'm not a "boomer" but a gen-Xer, and wasn't very financially sound for the first 30 years or so of my life. I likely also witnessed my parents struggle financially due to inflation and interest rates while growing up, but didn't really notice that much as we never had to worry about a meal on the table. There was never a lot of money, but we had something to eat. That being said, as a family we lived a much simpler life and certainly did without most of the creature comforts that my own family has become accustomed to. My dad would also say that his growing up was much more prosperous than that of his parents who grew up during the Great Depression.

Currently many young people are way more financially responsible than I was at their age, but stuff is really expensive now. I sincerely hope that the sting of inflation and rising interest rates will taper off and that the financial pain that people experience is short lived. I don't like seeing people go through tough times, and I would like to think that most others don't as well. Hang in there, humans are a pretty adaptable species and have powered through adversity since the beginning of time.