Bank of Canada talks on house price stickiness
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Market Highlights
National house prices are falling based on both HPI and Average metrics:
Stat central
🏠 40-years
The amortization of Equitable Bank’s new mortgage product. As prices increase — first auto, now home — lenders spread the payments over a longer term to make them more “affordable.”
💸 $655, 507
The average price of homes sold across Canada in September 2023. An increase of 2.5% from September 2022.
👵 2 to 1
The ratio of workers to retirees in 2035 in Canada. This is up from 7 to 1 in 1971. Time will tell how migration and housing respond to the aging population
Headlines
Ottawa exempting home heating oil from carbon tax for 3 years, Trudeau says - The government will double the carbon price rebate for rural Canadians beginning next April, which seems like an interesting timing decision given that the consumption of heating fuel is elevated from October-April, then drops off for the summer…
Toronto luxury condo The One enters receivership - the 85-storey project located at the southwest corner of Yonge Street and Bloor Street West has faced numerous headwinds since the start of development in 2015, such as several lawsuits and delays. A court document alleges that the project is under almost $1.7 billion in debt.
Bonnie Crombie overrides Mississauga's decision on fourplexes after federal funding axed - Bonnie Crombie has used her strong mayor powers to reverse a Mississauga council decision that would prevent four-unit homes, otherwise known as fourplexes, from being built within city limits after the federal government withdrew infrastructure funding.
Tweets & Charts
Trevor Tombe did some great analysis work on Canadian inflation recently:
@daniel_foch posted a bunch of chart summaries from the BOC’s Monetary Policy Report that have great discussions in the thread.
One of our favourite anon MBA’s posted some videos from the BOC presser discussing how the central bank perceives house price resilience against rates. I think they need to respect the lag a bit:
What we’re reading
Canada’s Growing Housing Gap: Comparing Population Growth and Housing Completions in Canada from Fraser Institute. This research bulletin compares annual population growth in Canada with housing completions between 1972 and 2022. The results surprised us a bit.
October 2023 Monetary Policy Report from the Bank of Canada. Inflation continues to decline gradually in most economies. Higher policy interest rates and tight financial conditions contribute to slowing global demand growth and easing price pressures, although inflation in services prices is sticky.
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Catch ya next week!
-Padder & CREIP