Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Rental List Prices Make First Drop Since COVID, BC & ON Cities Lead Lower
Canadian rental prices just made their first annual drop in years. The average monthly asking price for a rental fell to $2,151 in October, down 1.2% from last year. It was the first annual decline since 2021, when the low-rate investor boom began to peak. When it came to crucial 1-bedroom apartments, cities like Toronto and Vancouver are leading the way lower. In fact, B.C. and Ontario cities in general had the fastest falling rents in Canada.
Canada’s West Leads Provincial GDP, Per Capita Growth Dropped In Half
Most are already aware that Canadian per capita real gross domestic product (GDP) is on a downward trajectory. What many may not realize is this problem is driven by a handful of provinces. A new BMO Capital Markets analysis shows that only half of provinces are negative, with the other half remaining positive. One of the more surprising data points was B.C., which has received significant criticism but also happens to be home to the fastest growth in the country—measured per capita or aggregate.
Toronto Real Estate Prices Roll Back To 2021 Levels, Near Technical “Crash”
Toronto real estate prices continue to fall showing few signs of firming. TRREB reported the price of a benchmark (typical) home fell to $1.06 million in October, shedding 0.8% (-$8,400) over the 31-day period. That puts prices back at September 2021 levels, rolling back to where they were 3-years ago and shedding a whopping 19.3% (-$253,500) since hitting a record high in March 2022.
Canadian & American Bond Yields Form Widest Gap Since Asian Financial Crisis: NBF
The Canadian and American economies typically move together, rarely diverging due to strong cross border trade. This is one of those times, according to the Big Six National Bank of Canada (NBF). Bond yields are the biggest red flag with the divergence now the largest over the past 30 years. Canada’s low yields are indicative of an economy in a phase of oversupply, highlighting the weakness of households. The U.S. has seen yields rip higher as American households continue to surprise the market, demonstrating strong consumption despite higher interest rates. That may be good news for the Bank of Canada (BoC) who believes they’ll need policy to diverge, but it will have consequences such as a much weaker loonie.
Bank of Canada Market Survey Sees Rates Staying Higher For Longer
Canadians may see interest rates stay higher for longer if the market is right about where things are heading. The Bank of Canada (BoC) released the results of its latest market participant survey, and experts now see rates staying higher for longer. That’s often good news since it typically means strong households that are driving inflation, but it may not be the case this time. They also see inflation remaining on target, implying the increase may be the result of needing to reinforce currency strength. Uh oh.
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