Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada Didn’t Have A Real Estate Supply Shortage, But Its Gov May Create One: BMO
BMO Capital Markets reiterated its position that it was exuberance that drove home prices higher. By comparing new home starts to working age population growth, they found no major deviation when home prices grew. In fact, home prices grew the most when Canada’s population growth was stagnant. That might change with the Federal government’s plan to manufacture population growth without planning any basic infrastructure first. But that wasn’t the case leading up to this strategy.
Canadian Real Estate Prices Make Record Drop, No Quick Recovery: NBF
Canadian real estate’s spring rush isn’t enough to change the short-term picture. That was the take from National Bank of Canada (NBF), whose analysis argues prices fell in March when adjusted for seasonality. Annual growth for home prices also made the largest decline on record, along with weak sales volume. The bank doesn’t see the market correction over yet, since they don’t expect home sales to return to normal until at least next year.
Canadian Mortgage Credit Remains Flat Despite Rising Home Prices
Canadian mortgage credit is still flat despite some indication of rising home prices. Bank of Canada (BoC) data shows outstanding mortgage credit was flat in March, hitting $2.09 trillion. It was the third month where the balance barely moved, as higher rates incentivize people to pay off credit instead of borrowing more.
Canada’s Cheap Mortgage Credit Is Fueling Higher Real Estate Prices… Again
Canada’s cheap mortgage credit is helping some markets re-inflate home prices already. Fixed-rate mortgage interest fell in February, marking the second consecutive month. At the same time, unadjusted home prices in the priciest of markets rose in March. Probably just a coincidence the decline in mortgage interest provided roughly the same increase in leverage as home prices made a month later.
Canadian Real Estate Markets Saw Prices Rise Up To $42k In A Month
Canadian real estate prices are up according to the CREA benchmark—by a lot. Markets saw the composite benchmark price rise up to $42k in the span of a month. Cheaper credit is helping to stretch some budgets for many investors, leading to higher prices and fueled by moral hazard. Home sales remain low volume and credit isn’t even expected to become as cheap as it was pre-2020. However, try telling that to investors that have seen state-backed measures to protect them from the downside.