This Week’s Top Stories: Canada Might Be Heading For A Financial Crisis & RBC Sees Home Prices Falling

Time for your cheat sheet on this week’s top stories.

Canadian Real Estate

Canada Is Heading For A Recession, Financial Crisis Can’t Be Ruled Out: Oxford Econ

The Canadian economy is heading for a recession and it doesn’t have much room to save itself, according to macro research firm Oxford Economics. They see a recession coming in the next few months that will be amplified by Canada’s high debt loads and high inflation. Due to soaring inflation, the central bank will have a limited ability to cut interest rates to soften the impact. Expect a moderate recession, not a mild one, warned the firm.

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Canadian Real Estate Has Never Been Less Affordable, Price Correction To Fix It: RBC

Canadian real estate has never been less affordable, according to the country’s largest bank. RBC warns a typical household now requires more than half their income to service a mortgage, the highest share recorded. They expect affordability to get worse in the near term due to higher rates, but that should self-correct over the next few months. Higher rates are expected to push home prices lower and improve affordability fairly quickly, with things looking better next year. 

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Canada’s Wealthiest Households Saw Their Net-Worth Fall $200k, $78k Was Real Estate

Canadian households are seeing their net worth fall sharply these days. In Q2 2022, the average net worth fell to $940,600 — down 6.5% (-$65,400) from the last quarter. The top fifth of households saw an average loss of $200k in the last quarter. The drop in net worth isn’t in one specific area, almost all major asset classes are giving back some of the inflated gains over the past few years, as interest rates normalize. 

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Toronto Real Estate

Toronto Real Estate Prices Have Dropped Over $224,000 In Just 6 Months

Toronto real estate prices are still falling as interest rates climb even higher. The price of a typical home fell to $1,104,000 in September, down 1.3% (-$14,300) from a year before. Since March 2022, when interest rates began rising, prices are now down 16.8% (-$224,300) — rolling back nearly a whole year of gains. Not much relief is expected in the coming months as interest rates continue to make a sharp climb. 

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  • Morsale 5 months ago

    Canada increase interest otherwise your loonie will go down Fifty cents even lower to a USA dollars

  • Balter 5 months ago

    The only way they could ever afford all those COVID cheques is to inflate all the debt away when they’re done. Unfortunately many who worked right through and kept paying taxes rather than collecting the sole will be hit just as hard by climbing rates and expected to keep paying for government debt they didn’t even benefit from. I’m old enough I’ve seen it at work – thought my first mortgage at 9¾ percent was a real bargain – if you can make the payments the value of the home will outstrip the mortgage over time; however, in the 1980s there were many stories of people just walking away from their home, unable to make the payments. Comparatively we are in the same situation: rates are still much lower but the gains have all been stolen from the consumer by outrageous prices far in excess of the incomes tied to them. I said over a year ago: if real rates go above zero defaults will cover the land like snow. Central bankers at the time were still patting each other on the butt and knowingly telling us it was “transitory” this could be viewed as an error, but I think they deliberately let it accelerate in order to disappear trillions in debt with a cloud of inflation. At this point wages simply have to go up, there is not even a chance of transitory, they’ve taken us over the falls – there will be a wage-price spiral. There already is.

  • Jim westendorf 5 months ago

    Lay the blame for inflation where it belongs … at the feet of big oil that is raking in billions in profit. Fuel costs affect everything from groceries, restaurants, medical supplies, construction goods, clothing, all retail goods, travel. How come fuel at the pump costs more when the price of a barrel of oil has a huge drop. The oil industry is just playing with us and we allow it to happen….we deserve it!

  • R.Lilley 5 months ago

    What a load. Canada has lower inflation than its peers because of Covid cheques, not the opposite. Protecting the public’s buying power during and immediately after the lock downs allowed business to restart immediately and quickly get up to speed. Blaming inflation on Christia Freeland and her steering of Canada’s economy is just Conservative rhetoric. I’d rather a Rhodes Scholar lead us than a man going his own way.

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