Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian real estate investors are concentrated in newer, more affordable housing supply. For example, investors own under a quarter (24%) of all of Ontario’s housing. But the concentration is skewed to homes built after 2016, owning nearly a third (32.3%) of those units. Condo apartments are the most affordable housing, but over half (56.4%) are investor-owned. Similar trends can be seen in four other provinces that Stat Can provided data for.
Canadian seniors are cashing in on their home equity windfall at a rapid pace. Reverse mortgage debt has surged 5.9% (+$370 million) higher to $6.7 billion in November. Compared to last year, the balance is a whopping 31.0% higher. Reverse mortgage debt might be the fastest growing segment of debt in the country.
Despite warnings of a recession, Canada’s labour market continues to remain strong. National employment climbed 0.8% (+150k jobs) in January. Toronto and Vancouver bucked the trend, showing rising unemployment rates. However, both cities are still showing a robust job market. Strong employment is great news for everyone but the Bank of Canada. They recently announced a pause to rates, expecting the economy to cool down. It isn’t.
The Bank of Canada’s Market Participant Survey revealed expectations of a weak economy. The survey revealed the finance community expects a recession within 6 to 12 months. A weak economy is also forecast to see interest rates start falling in the last quarter of this year. While rates are seen as falling, they aren’t expected to come down to pre-pandemic levels.
Investors dominate Ontario’s real estate market, owning most new condo apartments. This is true even in major cities like Toronto, where investors owned 55.2% of the new condos. In smaller cities like Norfolk and Woodstock, investors own all new construction built. Stats Can’s dive into tax data confirms our earlier analysis showing investors have been driving prices since before peak growth in 2021.
Investors purchased nearly half of recently built condo apartments made since 2016. The trend is consistent across major cities, with small cities up to 90% investor-owned. The data shows investors have been a major buyer of units even before the recent rate-cut frenzy.