Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Real Estate Prices Exit Holding Pattern, Dive Towards Hard Landing
Since the initial plunge in 2022, existing home prices have moved sideways, waiting for the market to make up its mind. It appears it has, with prices moving lower—shedding 0.4% in January, helping to push prices back to February 2021 levels. Prices are being driven lower by the 16.2% y/y drop in sales, pushing the sales-to-new-listings ratio to just 36.4%, firmly in a buyers’ market—where the industry expects prices to fall.
Canadian Housing Is Too Expensive To Buy, Not Profitable To Build: CIBC
One would think a sharp correction would drive demand for new housing, especially in BC and Ontario, but that hasn’t been the case. CIBC economists warn that despite home prices being “below trend” in Ontario (-28%) and BC (-13%), the market remains unaffordable for end-users. At the same time, rising building costs have made it difficult for builders to slash prices, resulting in an unusual standoff—home prices are too high for end-users and too low for developers. The bank warns that housing starts lag real demand, and things are expected to get worse before they improve.
Most Canadian Provinces See Home Prices Rise, Two Hit Record Highs
Canadian home prices have plunged 21.8% (-$183.6k) since peaking in March 2022, wiping out roughly four years of gains. Diving into the data reveals this sharp correction has been confined almost entirely to Ontario and BC. CREA data shows the majority of provincial Home Price Indexes climbed in January, and sit just off record highs. In fact, two provinces have managed to hit new record highs, despite the elimination of factors originally used to justify climbing prices, such as low rates and a population boom. Before concluding these markets are just built differently, it’s worth recalling BC and Ontario historically lead the national market, as they did on the recent upswing. We’ll find out if they lead on the way down soon enough.
Canada Changed How It Measures Phone Bills, Now Inflation Is “Plunging”
Canadian headline inflation slowed to 2.3% in January, and your phone bill is the entire size of the decline. The cost of mobile phone plans accounted for 0.1 percentage points of the Consumer Price Index (CPI) decline in January. Skeptical that phone bills fell that sharply? You might be onto something: this is mostly due to a change in the way they measured phone bills. A major change was made in 2024, with the agency warning the data makes year-over-year comparisons unreliable for at least 12 months. That warning doesn’t change the influence it has on the final headline CPI, summing up the disconnect consumers have with the index.
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