Bank of Canada raises its interest rate to 5%

Re:Bank of Canada raises its interest rate to 5% by seti0Cha on Wednesday July 12, 2023 @12:24PM (#36697033)

I don't know much about this area so maybe you can unpack this for me. Are you saying people are getting building permits, but not actually building? Why would that be happening? And what about the market is causing it?

[ Parent | on HN ]

Re:Bank of Canada raises its interest rate to 5% by chongli on Wednesday July 12, 2023 @12:40PM (#36697346)

They’re not building because they believe they can earn more profit by waiting for property values to go up.

[ Parent | on HN ]

Re:Bank of Canada raises its interest rate to 5% by gffrd on Wednesday July 12, 2023 @12:50PM (#36697526)

… and a permit is required to hold the property? (I'm curious why people are having permits issued if they have no plan to build)

Is this like domain names?

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Re:Bank of Canada raises its interest rate to 5% by voisin on Wednesday July 12, 2023 @03:31PM (#36700392)

Parent comment is incorrect. No one goes through the costs of design and permitting and planning approvals to do nothing and hope prices go up. You’d wait and land bank and then do it when you were ready to develop.

Developments have been put on hold because interest rates skyrocketed and inflation in construction costs has as well. So original business plans are no longer viable.

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Re:Bank of Canada raises its interest rate to 5% by Tiktaalik on Wednesday July 12, 2023 @02:31PM (#36699511)

Developers are getting permits but then the interest rates have gone up so much, or other market conditions have shifted, such that it is no longer viable to build the building.

The problem is that the system is too rigid and the conditions of project viability are extremely narrow.

[ Parent | on HN ]