When The Price of Your House Stops Appreciating in Value It Becomes a Money Pit: The average price for a Hamilton-area home topped a $1 million in January(abnormal interest rates) – February 3, 2022,
In 2021, using government data, Canada saw an inflation rate of 3.4%, The Consumer Price Index (CPI) rose 4.8% on a year-over-year basis in December, up from a 4.7% gain in November. Excluding gasoline, the CPI rose 4.0% year over year. If the Bank of Canada(BoC) wasn’t so corrupt opting to pick winners and losers in the economy that it likes, it’s interest rates would be at least 3.4% or something near to it. Instead, current BoC policy interest rates are 0.25%, meaning that to combat consumer price inflation, the bank of Canada has interest rates 1/4 of 1%
Policy Interest Rate
0.25% Jan 26, 2022 | Total CPI Inflation 4.8% Dec 2021 | bankofcanada.ca
The Bank of Canada is engaging in welfare for public and private entities it imagines should be the beneficiary of the goal it’s trying to accomplish. Now, if the Bank of Canada was a private entity or a product of the free market, one could argue, well, it’s issuing private money and if you don’t like what the Bank of Canada is doing, use another currency, but no, The Bank of Canada is a Federal Crown Corporation, which in Canada means it’s a State-owned enterprise that has monopolistic powers to crush people it deems unworthy of access market interest rates.
The truth is that consumer price inflation s the result of failed government programs, people call it government spending, but it should actually be called government investing, and lately, government investments have been a complete failure, there were times in which consumer price inflation wasn’t rising, but we’re no longer in that environment, Justin Trudeau made the decision to create a carbon tax and the energy costs have gone up.
I pay for gas to heat my home, there’s a carbon tax on that, let’s say that carbon tax is necessary, okay fine, well the Bank of Canada is supposed to raise interest rates to reflect inflation because those of us who have to work for a living are losing our purchasing power, while people who borrow money or debtors are finding their purchasing power increases.
This immoral action by the Bank of Canada is leading to individuals and legal entities gaining an unfair advantage in the housing market, because as an example if the equity in my house rises in value and I’m a real estate investor, I can now outbid a working-class Canadian for a house without even having to work in most instances.
Now, if FREE MARKET interest rates were driving this, that would be okay, because it would be actual market demand, but this equity for the most part is being fueled by the Bank of Canada’s controlled interest rate environment. The Bank of Canada has a monopoly and it’s exploiting this monopoly at the expense of newbies entering the housing market. This is evil and immoral and should be stopped immediately because what you’re getting is desperate hard-working Canadians paying an above-market price for a house, simply because the Bank of Canada has decided to use it’s monopolistic powers to benefit certain participants in the Canadian economy.
Anyway, no offense to the good people living in the Hamilton-Burlington area, but look for yourself, at some of the homes selling $1 million dollars. We’re not talking about mansions here, we’re in most cases talking about starter homes selling for $1 million dollars. These inflated prices are also making rent prices more expensive, which is terrible, evil, and bad for the future of our children in Canada, because when people have to spend more on housing because the Bank of Canada has decided that it will protect certain classes of citizens, unexpected unforeseen problems can arise.
I hope the BoC will consider having market interest rates in the future because even now, it’s appearing that housing prices are plateauing, and when that happens, overpriced homes, will soon become money pits, and liabilities. If the price of mortgages stops appreciating maintenance of homes will have to be paid with earnings instead of artificial price appreciation derived from near Zero Interest Rate Policies.
Interesting times ahead!