It’s time for your cheat sheet on this week’s Most Important Stories.
Canadian real estate
Canadian real estate needs to focus more on demand side issues: BMO
Canadian real estate needs to focus on measures on the demand side to repair housing. Urban housing completions reached over 200,000 annualized units in July. The higher than usual supply should cool prices down, but is not due to insatiable demand. Big Six Bank suggests focusing on more demand-driven measures to fix the market.
Currently, the strategy is in fact the opposite, with Canada deploying demand stimulus measures. These are typically only used after a crash, but Canada is curiously using them as prices hit record highs.
A third of Canadians say they are “poor at home” and a fifth regret their purchase
One-third of Canadians run out of money after paying their mortgage. A quarterly survey conducted by Ipsos found that 32% of homeowners consider themselves “poor in terms of housing”. That is, they have no more money for anything else after paying their bills. Additionally, the same survey found that a fifth of homeowners regretted making their purchase. MNP used the data to estimate that 5.5 million Canadians would be vulnerable to a financial shock. Examples would be higher rates (i.e. the economy improves) or job loss.
The cost of living in Canada is the number one issue in this election: Abacus Data
The cost of living in Canada is the number one issue in this election, according to polls. The problem was a major concern for 62% of voters, up from 55% in the 2019 election. Access to healthcare lags far behind, with 47% of voters citing it as a major concern. Expect inflation and housing to be hot topics in the media in the coming weeks.
Canada’s real estate bubble saw inventory is tightening. This is what he did the last time the price dropped too
Canadian real estate markets saw their inventories decline much faster than sales last month. This has led to a tightening of the market, which has led some to believe that another wave of house price growth may be coming. That may be true, but more likely it’s the fact that a market doesn’t just move in a straight line. Earlier drops of this size for the SNLR show that a rebound had also occurred. It was more of a break than a reversal though.
Canadian mortgage debt has never grown so explosively, reaching $ 1.7 trillion
Canadian mortgage debt has never seen a monthly increase like it has. The outstanding balance reached $ 1.7 trillion in June, up 1.37% ($ 23.6 billion) from the previous month. This is the largest monthly increase in Canadian history. Over the past year, one in seven dollars added to mortgage debt was in June. Quite an accomplishment considering the borrowing load this year.
Soaring Canadian house prices are helping push inflation to its highest level in years
Canada has experienced one of the highest inflation in years, and this is largely due to shelter costs. The annual CPI rose 3.7% in July from 3.1% in June. Rising housing costs are a big part of the numbers, especially since they are a major component. Housing grew 4.4% over the same period.
Inflation is accelerating, especially housing costs – although this could be an anomaly, at least the numbers showing inflation could be. Recent adjustments to the inflation basket have experts claiming it will lead to chronic underreporting. Even more than before, apparently.
New home starts in Canada drop, but remain 30% above pre-pandemic levels
New housing starts in Canada have declined, but remain well above their long-term average. Seasonally adjusted annual rate (SARA) housing starts hit 272,176 in July, down 3% from the previous year. Urban starts accounted for 249,001 of these starts, down 0.65% from last year. A drop sounds bad, but you really have to take it against the background of the amount of construction that has recently taken place. This is 25% more than in the same period in 2020 and 30% more than in 2019. There are a lot of housing coming on the market, even before we consider that the population growth has been. low over the past year.
Home sales in Canada just fell for the first time in over a year
Sales of existing homes in Canada continued to decline after hitting a record high earlier this year. There were 53,870 homes sold through MLS in July, down 14.9% from the previous month. Compared to last year, this is also a decrease of 15.2%. It was the first time in more than a year that home sales had declined negatively. Who thought that getting closer to the end of a pandemic would mean fewer home sales?
Admissions of permanent residents to Canada exceed pre-pandemic levels
Admissions of permanent residents to Canada exceed pre-pandemic levels. There were 74,250 permanent residents admitted in the second quarter of 2021, up 5.4% from the previous quarter. In terms of volume, these are pre-pandemic levels, but not quite a recovery. Previous quarters were significantly below the target rate. This means that the current figures are most likely backlog clearing. If you factor in the artificial increase, these numbers aren’t as impressive as they used to be.
Falling home sales in Canada could soon lead to slower price growth, according to National Bank
Big Six bank sees signs of slowing down in Canada’s warm market. The National Bank of Canada (BNC) said the C11, a price index for the country’s largest markets, rose 2.0% in July. It’s a substantial increase, but for the second month in a row they’ve gone down. The bank’s economist also notes a drop in home sales, which he says is behind the market decline. This can cause house prices to slow down in the not-so-distant future. It has already started to materialize in local council data.
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