Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Government Spending Now 80% of GDP Growth
Canada’s economy grew faster than expected but still showed recession-like behavior. Annualized real GDP growth came in at 2.1% for Q2 2024, much higher than market expectations. However, the details were less flattering with government spending making up 80% of the quarter’s growth. The growth rate is also advancing slower than the population, resulting in the 7th quarterly decline for per-capita GDP in the past 2-years. Canada may not technically be experiencing a recession, but it’s acting like it’s smack in the middle of one.
Canada May Hit Low-Wage Foreign Worker Record Even With Freeze
Canada is starting to regret its attempt to exploit immigration to bolster profits. This week, the Government of Canada (GoC) announced that it would modify the rules for its “low-wage” temporary foreign worker (TFW) scheme. Low-wage TFW applications submitted by companies will no longer be processed for Census Metropolitan Areas (CMAs) with an unemployment rate above 6 points. The announcement follows a similar one made in Quebec a week prior, at the request of the Province. It’s worth noting that this policy will only cover the 41 CMAs, leaving most cities and rural regions unimpacted.
Canada To Roll Out New Steel Tariffs, Home Building Costs To Rise
Canada is rolling out tariffs to boost input costs for a key homebuilding component—steel. Starting this October, the GoC will hit steel imports from China with a tariff to tackle “oversupply” that may drive prices lower. Virtually every market outside of North America has seen steel prices correct post-shortage, but Canada and the US have been resistant as elections approach.
Canadian Immigration Policy Isn’t Helping Anyone: BMO
One of Canada’s largest banks warned the country’s immigration plan isn’t working for anyone. In a research note to investors, BMO Capital Markets warned the country’s use of immigrants as a stimulus is starting to fail. Despite being sold on the narrative of a labor shortage, people are migrating to Canada (and shelling out big bucks for its schools), only to find out those opportunities don’t actually exist. They’re finding themselves in the middle of a labor surplus, and young adults are experiencing the fallout.
Toronto New Home Sales Hit An “All Time Low,” 70% Below Average
Everyone knew Toronto real estate was slow, but the new home market is unprecedented. It was the slowest July for new home sales ever, resulting in rising inventory. As a result, inventory is building and prices have resumed slipping after moving sideways for nearly a year following a double-digit price drop.
