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The Bank of Canada is failing Canadians | Surrey REALTOR® explains why they have ruined EVERYTHING

The Bank of Canada is absolutely failing Canadians right now. On January 26, the bank of Canada met to discuss the overnight lending rate and make decisions about whether that rate would be increased, based on on how the economy is performing. The problem, however, is they chose to do nothing, and in doing nothing, are absolutely destroying things that we may not be able to recover from. This video today is all about the huge mistake the Bank of Canada made 2 days ago and how it's going to impact our marketplace in Surrey, BC and surrounding areas.

Okay, so inflation is absolutely running out of control and that is just not limited to the stuff that we buy every day, it's also happening in real estate. For those of you that don't know what inflation is, inflation is just really how much your money is worth today versus how much it was worth yesterday. As an example, if you had $100 5 years ago, that $100 today might only be worth $95. Inflation is a huge, huge problem if it starts to run out of control. The Bank of Canada typically wants to see about a 2% increase in inflation every year, and this year we are looking like we're about between 5% to 7% currently. In fact, for something fun or scary, depending on how you look at it. You can actually check the description below because there's a link to an inflation calculator from the Bank of Canada and you can see exactly how much your money is worth today versus how much it was worth in the past. 

So not only is everything that we buy way more expensive and you see this in the grocery store, you see this in the items you buy on Amazon or the local shops. It's everywhere. Food prices, everything. But as you likely know, it's also hit homes, and it's hit homes hard. The Bank of Canada put emergency level rates in place right at the start of the pandemic, and it certainly made sense to do it at that time, because buying and selling homes really helps keep the economy afloat. The more people buying and selling homes is better for the economy because not only do they go and spend money, but people also spend money on services, furniture, updates, all that sort of stuff that goes along with moving into a new home or selling a home.

The problem is the economy isn't in the same spot as it was in March of 2020. We've been living in this pandemic lifestyle now for almost a whole 2 years in British Columbia, and since then, home prices have completely run away. And that can be a huge problem. For those of you that own homes already. You're probably smiling ear to ear. Your equity has grown incredibly over the last 18 months to 24 months, and you have a lot more value in your home than you once did. For those of you watching, though, that don't own a home, this is of a huge concern to you. And this is exactly where the bank of Canada is failing Canadians from coast to coast. 

For one of the first times in a long time, we stand a massive risk of affecting First Time Home Buyers and preventing them from getting into the marketplace to begin with. And that's a huge problem. Let me give you a little bit of an example before I tell you why that's so problematic. Imagine you want to buy a condominium in Downtown Street, and the prices for a one bedroom condo, on average, are probably getting in and around $500,000, which is way higher than it once was years ago, or even months ago, for that matter. With a reasonable carrying costs in terms of strata fees, at today's mortgage rates, the average person needs to make almost $85,000 to carry a mortgage on that condo comfortably. If they only have 5% down. Most first time buyers only have roughly 5%, maybe 10% down. They don't have a lot of money because they're first time buyers. So you're telling me you can only buy a 1 bedroom condo and you need to make $85,000?

Well, guess what? Everybody watching. Most people in Surrey don't make $85,000, especially first time buyers, because they tend to be younger or new to the province or country. So what are they going to buy and where are they going to live? Rents, just like property prices have gone way, way up. So this is a big problem.

When a first time home buyer buys a property, they set up a massive chain of events in the sale process, meaning they might go buy a condo, and the owners of that condo might buy a townhome, and the owners of that townhome might buy a detached home. And thus you can imagine the chain that is set off by a first time home buyer. The very second that first time home buyer or the average first time home buyer can no longer afford a home, that chain stops moving. Now, you know this, I'm not an economist, but what I do know is inflation is running completely out of control and home prices have gone up to an extent that is incredibly concerning for home buyers.

If you're watching this video and you want to buy a home but you're waiting for the market to change, that's very problematic because if it gets more expensive, you A: Might not get to own a home at all, but B: You might not even get to live in this location anymore. Who the Bank of Canada is serving by keeping the interest rates low is beyond me and many other people, not only in the real estate industry, but also the financial industry. By keeping the rates at emergency levels when our economy is doing very well is hugely problematic. And this is why the Bank of Canada is completely failing Canadians, because first time home buyers and anybody wanting to generally buy a property is getting completely hosed.

The next Bank of Canada meeting is on March 2, 2022 and it's highly anticipated that they will raise rates but it was highly anticipated they were going to raise rates 2 days ago, which they failed to do. You're going to want to keep an eye on this announcement. If you're a homeowner in a variable type mortgage, any rate increase is going to affect you. If you're a first time home buyer and are still not in the market, this is going to affect you as well as soon as rates go up. So what is the effect of when rates go up? I'm sorry if this video was a little direct and a little bit of doom and gloom, but what the Bank of Canada is doing is not good for anyone.


Watch the full video here: https://youtu.be/sS4yjYbT1Sc
 
LINK to the Inflation Calculator:
https://www.bankofcanada.ca/rates/related/inflation-calculator/
 
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https://germyn.ca/buyers-form.html
 
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The Germyn Group
Darin Germyn PREC* & Adam Howsam
Macdonald Realty LTD
homes@germyn.ca | 604-542-2444 | www.germyn.ca
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