Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Housing Agency Bizarrely Forecasts Record Home Prices & Weak Economy
Canada’s economy is heading for a downturn, so prepare for record home prices. That was the message from the CMHC, the country’s national housing agency and state-owned mortgage insurance provider. Their latest forecast is calling for home prices to hit a new record high, with the average sale price 20% higher than 2023. At the same time they see rising unemployment, slow real GDP growth, and the economy generally having a bad time. While they attribute the price growth to population growth, more than half can be explained by just the additional credit stimulus they expect over the period.
Canadian GDP Growth Hits Half The Estimate, Previous Data Revised Lower
Canada’s economy showed surprising strength at the start of the year, but it’s already fading. Statistics Canada reported final real GDP numbers for February, showing half the growth rate anticipated in preliminary data. The agency also revised the boom in January lower, and now anticipates zero growth for March. That’s a big shift from what was originally anticipated, especially as Canada is left out of the global economic boom experienced by its peers.
Canadian Real Estate Prices Climbed Faster Than Mortgage Payments
Canadian mortgage payments are rising and applying pressure on affordability. They’re also lagging home prices, which moved even faster than payments. According to Equifax payment data, home prices were the biggest influence on the lack of affordability experienced by new households. Rising interest rates mean paying more to borrow, but they also put a cap on excess demand, slowing price growth. The push to cut rates to lower financing costs may not actually improve affordability, but do the exact opposite.
Toronto Real Estate
Greater Toronto Rental Vacancy Rate Soars 30% Higher, Prices Barely Move
Greater Toronto’s population has been booming but it’s rental vacancy rate is too. The vacancy rate for apartment rentals is now double the rate experienced at the start of 2019. Despite the surge in rental vacancies, not much relief had materialized. Only a minor pullback has been experienced.
Toronto Real Estate Inventory Soars, One of The Weakest Months Ever
Greater Toronto home prices made a big jump last month, breaking out of its rut. Home sales weren’t the driving factor, which show one of the slowest Aprils on record. At the same time, inventory climbed significantly from last year. The increase is a bit of a mystery, but anecdotal evidence shared by agents indicates the few buyers in the market are scrambling to get “ahead” of anticipated rate cuts, which they believe will send prices higher. Whether enough exuberant buyers are in the market to continue this trend remains to be seen.
