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"This will be the last edition of the year, see you all in 2022."

You might want to start practicing typing "2023"!

BTW, I followed your work before substack... Have a good holiday!

I'm glad to see you focus on homeowner carrying costs, in assessing "affordability" (and therefore demand for homes) We know the price sensitivity at different prices depends on carrying costs.

Mortgage rates are just a convenient (and incomplete) proxy measure of carrying costs.

The bubble was the purposeful creation of the Bank of Canada and other Central Banks and surely encouraged by the Federal Govt. policy of prosperity by stimulating demand by increasing the number of consumers (ignoring supply like the poor economic thinkers they are).

Now that the Bank of Canada will try to keep rates at what is still at historically low/medium, with the FED and ECB continuing to raise, the Loonie is bound to continue to decline, increasing non-mortgage home carrying costs, even higher. Of course this is helped along by a Govt. that value signals by raising the price of energy, giving a pervasive boost to inflation. Even offsetting higher taxes with helicopter money just increases demand and prices. Good economic policy is never allowed to intrude on repeated opportunities to redistribute money gained by borrowing from the future.

Starting and maintaining a household and filling a new home with furniture, in Canada, these days requires loads of cash or a healthy income to pay outrageous credit card bills. The C$ has declined by almost 10% this year, increasing prices in Canada. But that is just the most visible; Canadian prices have led to increased the HST being paid, on prices that were marked up due to higher transportation costs (partly caused by Govt. policy) and more the opportunity to raise prices to generate more profit and being able to blame it on "costs".

There is no free lunch when the Bank of Canada, wearing its clown shoes, stomps around trying to manipulate the economy. Intervention has multiple negative consequences that tempt the Govt. to intervene and distort things even more.

Is this any way to run a circus?

Bottom line is that it is not just high mortgage service costs that makes it difficult for families to own homes. It is the generally high (and getting higher) prices (compared to the US and elsewhere) that reduce family disposable income.

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