Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s Real Estate Bubble Is Now The Largest Ever, Correction Needed: RBC
Canadian real estate is in its biggest bubble ever, and RBC sees falling prices fixing it. The bank estimates a median household buying would need to spend 67% of its income to service a mortgage. It’s even worse in Toronto (85%), and Vancouver (95.7%), where it’s now an impossible task to buy for most. The lack of affordability is now worse than the early 80s bubble, but falling prices are expected to fix it.
Canada Is In Recession & “Overvalued” Real Estate Will Be Hard Hit: Oxford Econ
Canada is likely already in a recession and it will help drive real estate prices lower. Oxford Economics has forecast GDP will fall 1.3% in 2023, and 2.3% from peak to trough. Over leveraged households and falling real disposable incomes will amplify the issues. They forecast home prices will fall 30% at the national level as this moderate recession sets in.
Canadian Mortgage Debt Hits 100% of GDP, Crisis Risk Surges
Canadian mortgage debt reached a new milestone—it’s the size of the country’s GDP. Residential mortgage debt reached $2.073 trillion in October, up 8.3% ($159.8 billion) from last year. It’s equivalent to 100% of GDP, and growing at double the rate. Experts warn such high ratios often result in a crash, and financial crisis.
Canadian Job Vacancies Fall Sharply As Population Growth Surges
Canada’s job vacancies pulled back sharply, proving another caution sign. There were 902,600 job vacancies in October, down 4.8% (44,300 jobs)— a big change from the 1.2 million-plus in April. The job vacancy rate (5.0%) also fell below the unemployment rate (5.2%) for the first time in nearly a year. The balance of power is rapidly shifting back to employers as the stimulus boom ends.
Canadians Continue To Flee Real Estate Bubbles To More Affordable Provinces
Canadians are migrating to more affordable provinces, and at rapid rate. Leading for residents lost to other provinces was Ontario (-11,600 people; +61.5%), and BC (-4,800). The biggest winners of those fleeing residents was Alberta (+19,000), Nova Scotia (+2,300), and even New Brunswick (+1,500). A negative flow is a strong indicator that residents see more opportunity elsewhere. Immigration can hide this trend temporarily, but it eventually flows to the opportunity.
unbelievable that a city like toronto has such valuable property
what’s going on in toronto???
it’s a place, other than america, for owners of foreign sweatshops to hide their money can be the only answer