Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Real Estate Markets See Supply Soar As Investors Exit: RBC
Canadian real estate markets have seen supply soar as investors head for the exit. That was the take from RBC, who warned investors that low rates didn’t stimulate buyers so much as sellers. They don’t expect the market to firm until rates are a lot lower, and that’s bad news for sellers looking to exit.
Canadian Real Estate Prices Slip, Lower Peaks Print Bearish Sign
Canadian real estate prices slipped lower once again. The price of a typical home has made a double-digit decline since peaking in 2022, and sits at a similar level to 2021. Those used to analyzing asset prices may have noticed one more issue—the annual peaks are getting smaller. That’s typical of buyer exhaustion, where fewer people are willing (and able) to pay higher prices. The pattern is traditionally observed before a price correction, but irrational markets can surprise with more irrational decisions.
Canada Has A Supply Problem—Youth Unemployment: BMO
BMO Capital Markets is warning that young adults (15-24 years old) are having an unusually hard time finding a job. An increase is expected at the top of the business cycle, but no one expected it to rise so fast. Currently, 1 in 7 young adults are looking for work, and job vacancies are rapidly falling. Since these are the same roles that recent immigrants tend to apply for, a big short-term headwind might be forming. Most immigrants arrive in Canada looking for opportunity. If that opportunity doesn’t exist, they’re less likely to apply and/or stay.
Canadian Mortgage Delinquencies Are Rising Fast But Still Relatively Low
Canadian mortgage delinquencies are on the rise, and climbing sharply. The delinquency rate in Q1 2024 has yet to hit a concerning level, but the speed and timing do still present concerns. This is an unusually fast normalization of the rate at a time where there are a lot more mortgages. The rate shouldn’t be rising quite this fast, especially when the economy is supposedly doing very well and banks are actively trying to mitigate delinquencies.
Canadian Real Estate Is Stable, Toronto Condos Are An Exception: BMO
Canadian real estate markets are in for a boring summer. BMO Capital Markets wrote to investors this week to explain not much improvement in demand is expected in the short-term. While inventory is rising, they have little concern about “oversupply” appearing. The exception is Toronto’s condo market, which is suddenly seeing rising vacancies, weak demand, and a surge of inventory as investors attempt to exit the market.
Toronto Real Estate
Toronto Mortgage Delinquency Rate Doubles, Hits 8 Year High
Rising mortgage delinquencies is a Canada-wide isuse, as most markets come off record lows. Toronto is once again demonstrating that it is an exception, not just climbing faster but hitting an 8-year high for its delinquency rate. Traditionally the market leads the trend, which may be a bad sign of things to come for Canada’s real estate markets.
Vancouver Real Estate
Vancouver Mortgage Delinquencies Return To Pre-Pandemic Levels
Vancouver mortgage delinquencies are on the rise. A look at Equifax data shows the delinquency rate at large institutional lenders has climbed back to 2019 levels. It’s not a concern at this time, but it can turn into one quickly considering a rate is a share of the total. The total volume of mortgages has increased significantly over the past 5 years, meaning a lot more delinquent mortgages are needed for the same rate. Not a concern for a bank, where it’s just the cost of doing business. A bigger concern for the number of households failing.
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