Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Statistics Canada’s Canadian Housing Statistics Program (CHSP) released data showing most new condos are investor owned. The organization stated the data is increasingly important amidst public discussion about affordability. Ownership concentration and financialization are concerns that can skew housing in favor of higher values, despite increased social liabilities.
The project originally marketed as Canada’s largest residential real estate project is facing another hurdle. The One, located at the prestigious address of 1 Bloor St West, is an 85+ story residential tower located in one of the most expensive districts in the world. Having such an ambitious project can lead to a few hiccups, the latest being a default on a $1.35 billion loan. The project is now under receivership, after the lender became concerned about defaults and delays. In total, the filings reveal outstanding liabilities of $1.66 billion—a staggering amount.
Canadians are about to see more real estate inventory, as housing starts continue to move higher. Housing starts have come down from the peak, but remain significantly higher than pre-2020 levels. The additional inventory, typically owned by investors, is going to meet Canada’s sudden swelling inventory of existing homes for sale. That’s good news for buyer’s, since the excess inventory has already begun pushing home prices lower. It might be bad news for investors, looking at the same price issue.
Canada’s economy is slowing and it’s finally bringing headline inflation lower. The Consumer Price Index (CPI) surprised by slowing 0.2 points in September. Consensus estimates from the market had expected inflation to rise further, mirroring the US. BMO Capital Markets explained that next month is likely to drive headline inflation lower due to a base effect. All of this could mean the Bank of Canada is going to have a difficult time justifying a rate hike this month.
Expect real estate activity to cool even further in the coming months, according to a central bank survey. The Bank of Canada quarterly consumer expectation survey found fewer households plan to buy or sell a home. Sky high home prices are likely a major contributor to this issue, which has already throttled buyers and led to more inventory. Market inventory is building so fast, two Canadian banks have had to adjust their prices even lower.