Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Toronto & Vancouver Are Now The Weakest Real Estate Markets In Canada
Toronto and Vancouver are traditionally Canada’s hottest real estate markets, leading the trend. If that still holds true, it might be a problem in the coming months. Experts believed the two regions were temporarily going through a sluggish period, and would pick up as interest rates fell. Now that interest rates are falling, only sellers are piling into the market. The surge of inventory and lack of buyers now has these two cities with the weakest demand balance of any market in the country.
Canadian Housing Starts Stagnant, 3x Growth Was Never Realistic: BMO
One of Canada’s largest banks warns that housing starts are stagnant, but they say that’s a good thing. Despite the sudden climb in interest rates, the 6-month trend for housing starts remains fairly stable. It’s not the peak seen at record-low rates, but it’s above pre-pandemic levels and holding up surprisingly well, according to BMO. The volume isn’t anywhere near tripling like policymakers stated it would be, but that was never realistic, says the bank.
Quebec To Lower Study Permits, Should The Rest of Canada Follow?
Canada’s second-largest province is implementing further policy measures to better control its growth. Quebec is introducing new legislation to limit student permits for the region by managing variables. Amongst the examples cited, the province will begin managing regions, institutions, and the fields that international students can study. This comes after the province’s attempt to pull back its temporary resident growth, which has more than doubled over the past year. Just a month prior, the province also implemented processing limits for temporary foreign workers in major cities with elevated unemployment. It was a policy adopted by the Federal government shortly afterward, begging the question: should the rest of the country seek to adopt this policy as well?
Canadian Real Estate Prices Fall, Market Unsure If Bounce Is Near
Canadian real estate prices fell last month but at a slower pace than the previous month. The benchmark price of a home fell 0.6% (-$4,600) to $713,200 in September, leaving prices 3.3% (-$24,700) lower than last year. Prices have fallen a whopping 16.3% since hitting a record high back in March 2022, but have largely been rangebound—moving horizontally between an upper and lower bound. This is a strong indication the market isn’t sure where prices should be, and is waiting for a sign. If falling rates fail to push the market to new highs, the market may be looking a little too overvalued for buyers at this time.
Canadian Inflation Slows, Clears Way For Bank of Canada To Cut 50 BPS
Canadian inflation is slowing so fast that it’s sparking concerns of oversupply and deflation. Annual growth of headline CPI fell to 1.6% in the latest report, below the central bank target of 2 points. The decline was almost entirely attributed to gasoline. Removing gasoline and/or looking at Core CPI shows no progress made over the past month. However, much like the Bank of Canada, we’ll gloss over how skewed a model needs to be for the seasonal transition of gas prices to lower inflation that much. Experts now expect deflation fears to be enough to warrant doubling the pace of rate cuts later this month, cutting 50 basis points at the next meeting.
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