Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s Housing Crash Rivals US In 2008, But The Pain Is Hidden: BMO
The Canadian housing crash now rivals the US in 2008, with prices falling for nearly 5 years. However, unlike the US crash, Canada’s economy appears to have avoided most of the negatives. The country’s economy grew 1.7% annually over the four years, helped by stronger borrowers and rate cuts. Strong headline data is hiding the true impact, warns BMO Capital Markets. That strong GDP growth is actually negative when adjusted per capita. Meanwhile, resilient consumption is due to a reliance on seniors, who aren’t impacted by a rise in unemployment so sharp it’s rarely seen outside of recessions. The economy is in turmoil, the optics are just focused on the wrong areas.
Canadian Real Estate Spent 5 Years Wiping Out Just 13 Months of Gains
Canadian home prices fell 0.9% (-$5.7k) to $651,400 in September, 22.5% (-$189k) lower than the March 2022 peak. Home prices are now down to February 2021 levels, a timeline worth some attention. The painful market correction that’s lasted almost 5 years has only managed to wipe out 13 months of gains. Historically weak sales and near-record high inventory suggest the downturn isn’t over.
Canadian Bond Yields & Borrowing Rates To Rise With US Inflation: BMO
Borrowing in Canada is set to get more expensive due to rising US inflation. Canada’s 2-year government bond yield rose to 3.25% this week, and the Bank of Canada is expected to hike 1 point by 2027. Yields were driven by higher gas prices, but continued to climb even after gas prices stopped. BMO warns Canada’s yields are rising due to US inflation, despite domestic weaknesses.
Canadians Plan To Buy First Home At 41, Property Ladder Breaks: RBC
Canadians plan to enter the housing market at a much later age in life than past generations. A new survey from RBC found the average first-time buyer plans to buy at 41 years old, 12 years later than usual. Being older with higher incomes, they plan to skip starters and want a long-term purchase. At the same time, nearly half of the owners who want to upgrade can’t actually afford to in this market. This combination can mean the end of the property ladder, and a big change for the real estate industry.
