Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s CMHC Internal Messages Show Housing Supply Narrative Is BS
Canadian real estate prices are expensive because of a lack of supply, and building more should fix it—right? That’s been the narrative for years, but it’s not what the CMHC has been discussing behind the scenes. Internal messages between the state-backed housing agency’s staff show them discussing how higher prices will improve the viability of building new projects. The exchange in 202`1 also shows the agency attributed higher prices to cheap mortgages that will help boost prices and help create more supply.
Canadian Condo Prices Are Falling Again, Close To A Correction
Canadian condo prices are returning to declines after weak sales let inventory pile up. The price of a typical condo has only pulled back 9% since peaking in 2022. Despite the sharp decline in sales, the price has barely budged as sellers waited for rate cuts. Now that the first rate cut produced little in terms of boosted activity, they might be getting a rough introduction to reality.
Canada’s Not In A Recession, But It Feels Like One: RBC
The Canadian definition of a recession, two consecutive quarters of falling real GDP, is far from happening. According to RBC, that doesn’t mean the country doesn’t feel like a recession. Canada’s largest bank notes that real GDP is rising not because of increased output but the addition of more people. Since it’s growing at a rate slower than the population growth, things have been eroding on a per capita basis. They point to other indicators, such as unemployment and household consumption, making recession-like moves.
Canadian Inflation Is Slowing, But Is It Enough To Cut Rates?
Canadian inflation is slowing but is it enough to get a rate cut at the next Bank of Canada meeting? BMO now sees the central bank cutting rates after Friday’s data, but earlier in the week, they noted the split in inflation. Regarding goods, inflation has been weakening, with prices growing at a slower rate. Services, on the other hand, have accelerated from a level that was already more than double the central bank target rate. Services tend to be closely connected to wages, which become much more sticky, and harder to slow once they ramp up. In other words, they’ll likely cut rates at the next meeting, but there’s still a chance that the Council will be cautious and pause until further clarity is revealed.
Canadian Job Vacancies For Immigrants Concerning, Fewest In 7 Years: NBF
Canada was in a mad dash to attract overseas labor to fill its sudden surge of vacant job roles. The country may have overpromised and under-delivered, because arriving labor is increasingly finding itself unemployed. According to the National Bank of Canada (NBF), the job vacancy rate is now the lowest observed in the past 7 years. This contributes to a much higher than average unemployment rate for not just recent immigrants but the young adults who traditionally compete for low-experience roles.
Canadian real estate prices are expensive because of a lack of supply, and building more should fix it—right? Developers would love to keep this narrative going. The only problem is that they are building housing that very few can afford. But they work on the premise that real estate will keep going up in price whether you are working or unemployed. And watering down the building codes helps to lower costs – no one is checking for energy-inefficient buildings. City Council Members or the Mayor who approve applications for rezoning and construction don’t have engineering qualifications of any kind.
Those working with an uninterruptible income (aka government) have a better chance of surviving. The rest might as well keep working for survival wage jobs without being guaranteed a pension or whether the business will be around next year.