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Regional real estate reports out last week showed Canada’s housing markets continue to deflate under the weight of rising interest rates.
No surprise there. The Bank of Canada has hiked rates three and a half percentage points since March, thoroughly dousing the nation’s overheated housing market. And more hikes are expected.
Sales in most markets are now well below pre-pandemic levels and prices continue to slide. Still RBC economist Robert Hogue noticed “interesting nuances” in some of last week’s reports.
In Toronto, Canada’s biggest housing market, there are signs that the sharp decline of recent months may be stabilizing, wrote Hogue in a recent note.
Sales on a seasonally-adjusted basis were just about flat between September and October. And while rising rates have cooled demand there is no sign they are heating up supply, he said.
“So far there’s no indications higher rates are triggering any distressed selling wave,” said Hogue.
The decline in prices is also slowing. Hogue said the composite MLS Home Price Index fell for the seventh straight time in October from the month before. But the 1.1 per cent drop is less than a third of the 3.4 per cent average fall between April and August.
Torontonians might take some comfort in this. Since the March peak in this market, prices have now fallen 18 per cent or $237,000, wiping out almost half of the pandemic gains.
Meanwhile in Montreal, “the downturn isn’t letting up,” said Hogue. More buyers are staying out of the market, inventories are rising and prices keep heading south. RBC estimates sales dropped 2.6 per cent in October from the month before, but that too is less than the average of 7 per cent in the previous three months.
Calgary is one of the few markets in Canada that has remained well above pre-pandemic levels. RBC estimates that sales here actually increased by almost 5 per cent month over month in October. Prices have come down, but the 4.2 per cent decline since the peak in May is a fraction of the correction seen in other markets.
Across Canada price declines appear to be slowing, said Hogue. Nonetheless, “whether activity is stabilizing, will soon stabilize or slump further, our view is the market will stay generally soft over the coming months.”
RBC does not expect Canada’s housing to hit bottom until next spring at which time the national benchmark price will have dropped 14 per cent from (quarterly) peak to trough.
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It’s what BMO chief economist Douglas Porter calls a “nasty side effect of inflation.”
Monday, striking education sector workers in Ontario agreed to return to work only after the provincial government offered to rescind a controversial law outlawing strikes. The same day GO Transit workers walked off the job, shutting down regional bus service across the Greater Golden Horseshoe and leaving commuters scrambling.
Seems it’s no coincidence that when inflation spikes, labour strikes aren’t far behind. Over the past 70 years the only bout of serious labour unrest in Canada was in the mid-1970s to the mid1980s, Porter wrote in a note about the BMO chart above. That was also the last serious stretch of high inflation — up until now.
Strikes usually lag inflation by about six months, Porter said, and in the mid-1980s labour unrest carried on for several years after inflation broke. The economist said that was probably partly catchup, but there was also debate over whether high inflation had truly gone away.
U.S. Midterm Elections
Steven Guilbeault, minister of environment and climate change, will hold a media availability to in Sharm-El-Sheikh, Egypt, to discuss his participation in the United Nations Climate Change Conference (COP27)
The parliamentary budget officer will post a new report entitled “Global greenhouse gas emissions and Canadian GDP” that examines the long-term impact on the Canadian economy of changing weather patterns due to climate change
The Energy Transition Centre in downtown Calgary opens for business. The centre will support the research and development of new energy technologies while accelerating the commercialization of promising innovations by supporting new start-ups
Francois-Philippe Champagne, minister of innovation, science and industry; Randy Boissonnault; minister of tourism and associate minister of finance; and Pete Guthrie, Alberta’s minister of energy, will make an announcement in Edmonton about strengthening Canada’s economy for the low-carbon future and talk about how the government of Canada is contributing to emissions reduction
Helena Jaczek, minister of public services and procurement, will announce an investment in the Canadian Council for Aviation and Aerospace.
The Rural Municipalities of Alberta hosts its 2022 fall convention.
Today’s Data: U.S. NFIB Small Business Economic Trends Survey
Earnings: Dye & Durham, Intact Financial, TransAlta, Maple Leaf Foods, Lundin Gold, Walt Disney, Boardwalk REIT, Ovintiv, News Corp
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Snowbirds looking to escape the Canadian winter may be in for some sticker shock with inflation rising and the value of the Canadian dollar falling against the U.S. currency.
If you’re heading down south this winter, you’ll need to prepare yourself for a more expensive stay, and our content partner MoneyWise has these strategies to save on travel, accommodations and the cost of living.
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Today’s Posthaste was written by Pamela Heaven, @pamheaven, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.
Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com, or hit reply to send us a note.
Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. Check out the latest episode below:
https://news.google.com/__i/rss/rd/articles/CBMiU2h0dHBzOi8vY2EuZmluYW5jZS55YWhvby5jb20vbmV3cy9wb3N0aGFzdGUtY291bGQtd29yc3Qtb3Zlci1jYW5hZGFzLTEyNTk1OTE2NC5odG1s0gFbaHR0cHM6Ly9jYS5maW5hbmNlLnlhaG9vLmNvbS9hbXBodG1sL25ld3MvcG9zdGhhc3RlLWNvdWxkLXdvcnN0LW92ZXItY2FuYWRhcy0xMjU5NTkxNjQuaHRtbA?oc=5
2022-11-08 12:59:59Z
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