Bank of Canada says housing affordability is about boosting supply, not lowering interest rates

Fuck me, prices are a function of supply AND demand now?

Well, that's a sudden outbreak of common sense.

This needed to be said a long time ago. People can't seem to grasp that lower interest rates mean that average Joe qualifies for a bigger mortgage. Bigger mortgage qualifications = bigger housing prices since people can overbid, etc. driving up housing prices. Lower interest rates are the opposite of what we need!

The only people that are helped by lower interest rates are people that spent way more than they should have and are in debt up to their scalp. Those people need debt counseling/consolidation services to manage their debt individually. Don't fuck up the rest of the housing market because you are in too much debt.

Commentators have been saying that interest rates are pushing up housing costs, which contributes to inflation. I suspect this is Tiff's way of reminding listeners that housing costs aren't the his problem.

Yeah, you'll certainly boost supply if mortgage rates continue to be as high as they are, because people won't be able to keep their homes.

This is the best summary I could come up with:

"Housing affordability is a significant problem in Canada but not one that can be fixed by raising or lowering interest rates," Macklem said during a speech in Montreal on Tuesday.

Randall Bartlett, senior director of Canadian economics at Desjardins, said prices for both rented and owned accommodation are projected to continue growing above their pre‑COVID pace beyond the end of 2024.

"One of the key takeaways from the Bank of Canada's January 2024 Monetary Policy Report is that shelter inflation is likely to be the single most important driver of year-over-year price growth in the first half of 2024," he wrote in a research note.

"More restrictive financial conditions have limited the flow of private investments into new purpose-built rental housing, resulting in a decrease of planned projects and further fuelling the affordability crisis," the CMHC report said.

But some believe the mere anticipation of changes to the central bank's key overnight lending rate may lead to a flood of pent-up activity in housing sales.

If that's the case, affordability will only get worse as construction slowed, even while the pool of potential buyers swelled — with Canada experiencing record levels of immigration last year.

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