Canadian Banc Corp T.BK

BOC says shelter cost is not because of interest rates

[mouserman]

The Financial Post reports in its Friday, Feb. 2, edition that Bank of Canada governor Tiff Macklem says the central bank cannot solve the housing crisis with interest rates because the root cause is a supply shortage. A Canadian Press dispatch to the Post reports that Mr. Macklem appeared before MPs on the finance committee Thursday following its interest rate decision last week and faced multiple questions on housing affordability. The governor acknowledged that high interest rates are feeding into higher housing costs, but he noted that shelter price inflation has been high both during times of low and high interest rates. He says government should be focused on increasing housing supply to improve affordability, and warns policies that increase demand will worsen it. Last week, the Bank of Canada continued to hold its key interest rate at five per cent and signalled it has begun considering the timeline for rate cuts. It also singled out rapidly rising shelter costs as the primary reason why inflation is still above the 2 per cent target.

[TheeRook]

 The supply shortage is for basic housing not luxury housing . You can find lots of homes for sale with all the latest lux items you do not really need for $$$$$$$.  Few  homes  with just the basics, like they would mass build, in the last century  go up for sale.  Usually only when the old owner passes.

[mouserman]

With the rise in interest catching many by surprise, some overextended home -owners sell their fancy oversized abode to downsize to something that is more affordable as far as mortgage cost goes. So not a surprise that  bigger, higer priced homes are for sale while the affordable ones are hard to find.