Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s real estate correction is only half over, warns a prominent research firm. Oxford Economics sees the Spring bounce fading, and the correction resuming. Prices are forecast to fall another 10% by the first half of 2024, leading to a 20-25% decline from the March 2022 peak. Weighing on the market are rising rates, tight credit, and a record lack of affordability.
The latest update to Canada’s most prominent House Price Index (HPI) is under fire. Oxford Economics warned clients that the CREA HPI’s latest changes make it unreliable. The revision, one of the largest in history, minimizes price from 2005, when the index first began. Over 30 points of price increases have been suddenly dropped with the changes. Consequently, Oxford Economics informed clients they’ll be looking at more reliable measures.
Canadian inflation will be getting a boost from rising gas prices and a base effect. BMO informed investors that the headline Consumer Price Index (CPI) will rise, as a result. Headline data has helped to calm consumer concerns, but it’s not what drives rates. However, if the central bank isn’t careful, it could lead to the return of the inflationary mindset. That would undermine their ability to manage inflation, and lead to higher rates. It’s a good time to talk to your friends and family about base effects… or don’t and prepare for those sweet yields.
Canada is giving back some ground on the fight against violent crime. The Statistics Canada (Stat Can) violent crime index rose to the highest level since 2007. The fact it’s the highest since 2007 isn’t a coincidence, since crime rises ahead of recession. With rising unemployment and negative per capita GDP growth, economic opportunity is fading.
Toronto Real Estate
Greater Toronto real estate prices took a sharp nose dive, shedding around 2 points in value over a month. According to TRREB, the price of a typical home fell around $20,000 in July. Typically prices fall with sales, but this wasn’t the case this time around—they grew from last year. However, inventory outpaced sales, leading to looser market conditions. It’s a trend that was observed across most of the country’s major markets.