This Week’s Top Stories: Eastern Canada’s Frothy Home Prices, & TD’s Money Laundering Problem

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

Canadian Real Estate

Bubble Contagion? Eastern Canada Home Prices Retain The Frothiest Growth

Canadian real estate prices surged after rate cuts in 2020, and began correcting after rate hikes in 2022. Eastern Canada, where home prices saw the sharpest growth, didn’t follow the same trajectory though. Even post-correction, only a minimal correction was observed in Nova Scotia, New Brunswick, and PEI. The gap between prices in these provinces and more expensive regions is narrowing despite a wide gap in amenities, potentially signaling a phenomenon known as “bubble contagion.” This is when frothy valuations from one region push further and further out, skewing the value of other regions as people flee.

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TD May Face US$2 Billion Money Laundering Fine, Third-Largest Ever: Analysts

One of Canada’s largest banks is facing one of the largest banking fines in history. TD is cooperating with a US investigation into alleged money laundering that took place at the bank. Initially it was believed the issue was overblown but analysts at Jefferies’ think emerging details are worse than thought, estimating it can climb into the $2 billion range. That would make it the third largest fine ever issued by US regulators. 

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Canadian Study Permit Applications Surge In 2024, Enough For 36% of Cap

New study permit applications have surged after an announcement to restrict volumes. Earlier this year, Canada announced they’ll limit 2024 to 350,000 new study permits. After the announcement, a slowdown reversed and there was a sudden record surge of applications. The first two months of 2024 already received enough applications to fill more than a third of the total proposed limit. 

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Toronto Office Space Hits Record Vacancy Rate, Availability Surges Downtown

Toronto’s temporary office downturn isn’t looking so temporary these days. The office vacancy rate for Greater Toronto reached 13.7% in Q1 2024, rising 150 basis points (bps) from last year. Even more space to rent for those looking, with tenants looking to sublease pushing the availability rate to 19.5% in the first quarter. It was originally thought to be a temporary issue in 2020, but the vacancy and availability has continued to push into a new record high. 

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Canadian Business Insolvencies Surged 87% Higher In Q1

Canadian business insolvencies are climbing at an unusually fast rate. Insolvency filings with the Office of the Superintendent of Bankruptcy (OSB) climbed 87% in Q1 2024 from last year. The end of pandemic-supports, rising debts, and weak consumer spending are compounding factors working against businesses. Experts warn the issue is even worse, since most businesses experiencing rough patches shutter instead of seeking formal debt restructuring.

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