This Week’s Top Stories: Canada’s Recession & Toronto Real Estate is Crowned The King of Bubbles

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

Canadian Real Estate

Toronto Is The Biggest Real Estate Bubble In The World, Vancouver 6th: UBS

Swiss mega-bank UBS published its annual Global Real Estate Bubble list, and two Canadian cities were prominently featured at the top. Toronto real estate has officially taken the crown as the biggest real estate bubble in the world, with Vancouver not far behind at six. Only one other country, Germany, ranked two cities in the top ten — an impressive accomplishment.

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Stephen Punwasi: I’m Running For Mayor Of Toronto Because We Have A Generational Opportunity

The chaos around Toronto real estate has reached a fevered-pitch. The city is now the biggest real estate bubble in the world, investors are buying 60% of units, it takes 30-years just to save the downpayment for a home, and young adults are fleeing as fast as they can. Here’s a data-driven breakdown of the real estate issues that impact Toronto, and how one mayoral candidate (and our co-founder and former chief data scientist) plans to solve them. 

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Canada’s Recession Will Hit Sooner Than Expected, Over 370k Job Losses Expected: RBC

RBC is calling a moderate recession after soaring inflation forced interest rates much higher than anyone expected. The rise in interest rates is expected to reduce household purchasing power by $3,000, estimates the bank. At the same time, they expect the jobless rate will climb 7% (about 2 points) higher than today. By our calculations, that means a loss of roughly 371,000 jobs. The bank says this isn’t a catastrophic decline, but it’s hard not to see how this will be unpleasant for many. 

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Canadian Real Estate Markets Up To 76% Overvalued, Correction Through 2023: BMO

BMO Capital Markets flagged Canadian real estate’s severe overvaluation this week. Historically, the bank says home prices increased about 3% per year, after adjusting for inflation and interest rates. A bubble sparked by low rates in 2020 sent prices soaring above typical values. Toronto’s exurbs were the worst off, rising 76% above trend by Q1 2022. The bank warned investors, a price correction is already underway and they expect it to run through 2023, as rising borrowing costs knock the exuberance out of the market.

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