[Burnaby] City of Lougheed | Phase 1 Completed

[Caliplanner1]

Originally Posted by VarBreStr18

How do? I never too economics 101.... seriously

When you get a chance google the Invisible Hand and read up on the laws of supply and demand....I'm sure you'll get it because everyone here has at least a high school level education.

[VarBreStr18]

Originally Posted by Caliplanner1

When you get a chance google the Invisible Hand and read up on the laws of supply and demand....I'm sure you'll get it because everyone here has at least a high school level education.

it is OK if you cannot answer a direct question, but please do not use such innuendo!!!

[Caliplanner1]

My apology, was a bit busy. Canada's relatively low bank interest rate on loans is a function of lower levels of consumer demand or WEAK consumer demand for bank loans (whether due to generally low incomes/high debt ratio to earnings etc.) alongside an excess supply of available investment capital/money sitting in the banking system. Massive inflows of foreign investment funds serves to further increase the amount of available investment funds (re: supply of money) available within the Canadian banking system, which ultimately serves to additionally drive down the price of loans as reflected in the regime of falling interest rates. Hope that helps!

[GilmoreStation]

As millenial buyers make up the makority of buyers, they may not be able to afford higher rates.

[Caliplanner1]

Originally Posted by GilmoreStation

As millenial buyers make up the makority of buyers, they may not be able to afford higher rates.

In many ways the Canadian economy exhibits elements of stagflation (re: fast rising prices in such areas as housing cost alongside a weak Canadian dollar in terms of purchasing power/international exchange rates etc.).

[LeftCoaster]

Originally Posted by Caliplanner1

My apology, was a bit busy. Canada's relatively low bank interest rate on loans is a function of lower levels of consumer demand or WEAK consumer demand for bank loans (whether due to generally low incomes/high debt ratio to earnings etc.) alongside an excess supply of available investment capital/money sitting in the banking system. Massive inflows of foreign investment funds serves to further increase the amount of available investment funds (re: supply of money) available within the Canadian banking system, which ultimately serves to additionally drive down the price of loans as reflected in the regime of falling interest rates. Hope that helps!

What? Money supply is set by the federal government, ie the Federal Reserve in the US or Bank of Canada.

An influx of foreign capital does not increase the amount of Canadian Dollars in the country as that is completely controlled by the Bank of Canada's monetary policy.

Holding monetary policy steady, an influx of foreign capital into Canada will drive up EXCHANGE rates as demand for CAD increases while supply stays the same.

[Caliplanner1]

Originally Posted by LeftCoaster

What? Money supply is set by the federal government, ie the Federal Reserve in the US or Bank of Canada.

An influx of foreign capital does not increase the amount of Canadian Dollars in the country as that is completely controlled by the Bank of Canada's monetary policy.

Holding monetary policy steady, an influx of foreign capital into Canada will drive up EXCHANGE rates as demand for CAD increases while supply stays the same.

LOL...I knew somewhere that the question posed was an attempt by some here to engage my knowledge of international econ. Anyway, let's go at it.

Where did I say that a given influx of investment dollars increases the amount of "Canadian dollars" in the country per se? That's a dumb assertion at best because foreign investors may not necessarily buy a home with Canadian funds. I for one as an American invested American dollars here in Canada (not Canadian dollars).

What I said however was that when money is brought into the country by foreign investors it ends up in the Canadian banking system to add to the pool of potential investment dollars (thus the potential to drive down interest rates in general). Think of Quebec's investor immigrant program where foreign dollars can buy you "citizenship" and is used by the provincial government for local investment purposes (offsetting the need to borrow such desired funds from the Canadian banking system....thus helping to keep the competition (with the local private sector) for SCARCE investment funds (and attendant bank rates) low. Further, foreign dollars in the Canadian Banking system can be used by the feds to buy Canadian dollars on the global market in order to help prop the trading value of the Canadian dollar in the international currency marketplace.

I'm not sure where you studied your international economics but monetary policy/exchange rates etc. by governments/central banks etc. are inadvertently affected/impacted by the international flow levels of investment dollars.

Maybe if your formal training in economics had exposed you to such regimes as the I.M.F. and the World Bank which bailout many a (debt riddled/high interest rate/high exchange rate bound) third world economies you'd be more understanding of that which I speak.

[LeftCoaster]

Wow, I think you may win the most patronizing post of the year. Really, an LOL?

What I don't understand is why you are saying forex doesn't need to be exchanged to do business in Canada... because it does. Money brought into the country is not offsetting the need to use CAD but joining that need because our contry operates in Canadian denominated assets. You may have 'used USD to buy your house', but those USD were converted into CAD to perform the transaction, and those CAD don't just appear, they need to be minted or released into monetary supply by the BoC, who controls monetary policy, which is key. If they do not expand the pool of CAD in the system then there will be no increase in money in the Canadian banking system, simply a credit to Canada's foreign reserves and an increase in demand for CAD. The only way the amount of money in the system increases is by printing money or the BoC buying bonds, not an influx of foreign capital.

Let's take the example of the CAD drop during the oil plunge a few years back:
When foreign entities buying oil from Canada disappeared the CAD dropped. Though they were using US dollars to buy Canadian oil they needed to convert it to CAD first to purchase said oil. When that demand stopped the subsequent demand for CAD dropped off a cliff and so did the exchange rate, but nothing happened to bank rates because those are a function of the overnight rate, which is set by the Bank of Canada.

I don't know why we can't have a mature conversation about this without you calling my assertions dumb and questioning my 'understanding of that which I speak'.

Get off your high horse man.

[Caliplanner1]

Originally Posted by LeftCoaster

Wow, I think you may win the most patronizing post of the year. Really, an LOL?

What I don't understand is why you are saying forex doesn't need to be exchanged to do business in Canada... because it does. Money brought into the country is not offsetting the need to use CAD but joining that need because our contry operates in Canadian denominated assets. You may have 'used USD to buy your house', but those USD were converted into CAD to perform the transaction, and those CAD don't just appear, they need to be minted or released into monetary supply by the BoC, who controls monetary policy, which is key. If they do not expand the pool of CAD in the system then there will be no increase in money in the Canadian banking system, simply a credit to Canada's foreign reserves and an increase in demand for CAD. The only way the amount of money in the system increases is by printing money or the BoC buying bonds, not an influx of FOREX.

Let's take the example of the CAD drop during the oil plunge a few years back:
When foreign entities buying oil from Canada disappeared the CAD dropped. Though they were using US dollars to buy Canadian oil they needed to convert it to CAD first to purchase said oil. When that demand stopped the subsequent demand for CAD dropped but nothing happened to bank rates because those are a function of the overnight rate, which is set by the Bank of Canada.

I don't know why we can't have a mature conversation about this without you calling my assertions dumb and questioning my exposure to the IMF??

Leftcoaster, forget my "patronizing" stance. Just keep focused on the laws of (effective) supply and (effective) demand as it affects the price of any respective item being traded then you'll see the logic of my point.

[LeftCoaster]

Originally Posted by Caliplanner1

Leftcoaster, forget my "patronizing" stance. Just keep focused on the laws of (effective) supply and (effective) demand as it affects the price of any respective item being traded then you'll see the logic of my point.

I understand supply and demand quite well actually.

What you are not acknowledging is that incoming foreign investment does not effect supply because that is controlled by the BoC.

If someone brings 100 million dollars worth of Yuan they will not dump that yuan into into Royal Banks coffers, that money will first need to be converted into CAD. That amount of CAD in the system does not increase by 100 million dollars unless the BoC releases more money. All it does is drive up demand for said CAD on the FOREX market.

[Caliplanner1]

Originally Posted by LeftCoaster

I understand supply and demand quite well actually.

What you are not acknowledging is that incoming foreign investment does not effect supply because that is controlled by the BoC.

If someone brings 100 million dollars worth of Yuan they will not dump that yuan into into Royal Banks coffers, that money will first need to be converted into CAD. That amount of CAD in the system does not increase by 100 million dollars unless the BoC releases more money. All it does is drive up demand for said CAD on the FOREX market.

Leftcoaster, the BoC and their pool of foreign resource dollars do affect the capacity of ordinary commercial banks and their local investors/business people etc. to access pools of investment dollars (whether in the foreign or local currency needed). For some reason you think that what happens in the Bank of Canada is disconnected from the banks on main street and vice versa. The economy is ORGANIC/interconnected (at the national/local levels).

[LeftCoaster]

Originally Posted by Caliplanner1

Leftcoaster, the BoC and their pool of foreign resource dollars do affect the capacity of ordinary commercial banks and their local investors/business people etc. to access pools of investment dollars (whether in foreign or local currency as needed). For some reason you think that what happens in the Bank of Canada is disconnected from the banks on main street and vice versa. The economy is ORGANIC/interconnected (at the national/local levels).

Of course I don't think the connection between the central bank and the commercial banks is non-existent, the BoC lends to the Bay Street banks at what is called the overnight rate, which I mentioned before. This is mainly done as a clearing function to allow banks to balance their books between each-other which is why it is also called the interbank rate. The Central bank uses that rate to set their interest rate policy. That rate is not a function of the level of FOREX which is held but a function of how the central bank wants to set interest rates and how much money they want in the system. They use this rate to set monetary policy to stimulate demand but it has little to nothing to do with how much foreign reserves they have.

Following the decline of the gold standard back in the 70s, central bank currency is now FIAT and is therefore backed by the government, not a stockpile of gold or other currency in lieu. As such central banks set their own interest rates and monetary policy independent of other assets. Just look at Quantitative easing to see this process in action.

[privatejet]

Originally Posted by LeftCoaster

What? Money supply is set by the federal government, ie the Federal Reserve in the US or Bank of Canada.

An influx of foreign capital does not increase the amount of Canadian Dollars in the country as that is completely controlled by the Bank of Canada's monetary policy.

Holding monetary policy steady, an influx of foreign capital into Canada will drive up EXCHANGE rates as demand for CAD increases while supply stays the same.

I am just going to post the Bank of Canada's response on why it does not fully control the money supply and the various gauges of it.http://www.bankofcanada.ca/wp-content/uploads/2010/11/canada_money_supply.pdf

[Homeowner]

Originally Posted by VarBreStr18

Many cant afford SFH, so they turn to town home and condos. Crazy thing they buy condo and leave them empty , hence pushing up condo price and yet not helping rental market. Too much spare money out there!!! this bubble got to burst.

Who has the $ to buy a condo and leave it empty? The mortgage, strata and property tax is probably around $2,000 for a one bedroom per month out of pocket.

[Homeowner]

Originally Posted by VarBreStr18

Less than 1% I believe.
When my friend moved from Toronto last summer, she has to bid for a 1 bedroom condo , there were no less than 8 viewers bidding for the same condo.
She did not get it because she refused to overbid. It was $1800 for a 1 bedroom in Yaletown. She has to write a cover letter to represent herself. Sorry think we are derailing from this thread, got to stop here.

$1800 seems cheap now. A bigger one bedroom around 600 sq ft can be rented for about $2,000 these days.

[Homeowner]

Originally Posted by SkyboxInvestment

Pretty different offerings - Brentwood is now prime Burnaby vs the COL offering of Burquitlam (more affordable Brentwood) IMO.

Metrotown ($1200/ft) > Brentwood ($900/ft) > Burquitlam area ($800/ft)

Sometimes I wonder why Brentwood prices aren't closer to Metrotown's prices. Brentwood is more closer to the Vancouver downtown city core. Granted Metrotown seems to be where all the action is for Burnaby. But still the spread per square foot between the 2 is quite huge.

[Caliplanner1]

Originally Posted by LeftCoaster

Of course I don't think the connection between the central bank and the commercial banks is non-existent, the BoC lends to the Bay Street banks at what is called the overnight rate, which I mentioned before. This is mainly done as a clearing function to allow banks to balance their books between each-other which is why it is also called the interbank rate. The Central bank uses that rate to set their interest rate policy. That rate is not a function of the level of FOREX which is held but a function of how the central bank wants to set interest rates and how much money they want in the system. They use this rate to set monetary policy to stimulate demand but it has little to nothing to do with how much foreign reserves they have.

Following the decline of the gold standard back in the 70s, central bank currency is now FIAT and is therefore backed by the government, not a stockpile of gold or other currency in lieu. As such central banks set their own interest rates and monetary policy independent of other assets. Just look at Quantitative easing to see this process in action.

The problem with using gold backed currency is that of a tendency for long term economic deflation/stagnation/retarded growth etc. which would ultimately fuel persistent economic downturn/rising unemployment etc. given the reality of the RELATIVELY fixed supply of that precious metal.

[LeftCoaster]

Originally Posted by Caliplanner1

The problem with using gold backed currency is that of a tendency for long term economic deflation/stagnation/retarded growth etc. which would ultimate fuel persistent economic downturn/rising unemployment etc. given the reality of the RELATIVELY fixed supply of that precious metal.

Sure, which is who no one uses it anymore...

Which is why everyone in the western world that I can think of now uses a FIAT system, which allows the Central Bank to control money supply independent of external factors and therefore control their interest rate.

Which in turn is why foreign inflows of capital have no substantive impact on interest rates.

[Caliplanner1]

Originally Posted by LeftCoaster

Sure, which is who no one uses it anymore...

Which is why everyone in the western world that I can think of now uses a FIAT system, which allows the Central Bank to control money supply independent of external factors and therefore control their interest rate.

Which in turn is why foreign inflows of capital have no substantive impact on interest rates.

I wouldn't go as far as to say that such "allows the Central Bank to control money supply INDEPENDENT of external factors and therefore control their interest rate" because in truth central banks do have to keep an eye on external/international pressures (which ultimately drives or retard local/domestic growth) IF they are to make the best macro economic decisions possible (in the interest of national economic development/security).

[LeftCoaster]

Originally Posted by Caliplanner1

I wouldn't go as far as to say that such "allows the Central Bank to control money supply INDEPENDENT of external factors and therefore control their interest rate" because in truth central banks do have to keep an eye on external/international pressures (which ultimately drives or retard local/domestic growth) IF they are to make the best macro economic decisions possible (in the interest of national economic development/security).

No it allows the Central Bank to Control the interest rate.

They absolutely take into account other internal/external factors when determining how to exert said control, but that control is theirs alone.