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May 9, 2022 | Payment Shock for Some

We need higher rates to moderate demand, including demand in the housing market. Housing price growth is unsustainably strong in Canada. That was the message from senior deputy governor of the Bank of Canada, Carolyn Rogers this past week. Yes, the central banks continues to talk up further rate hikes, with the goal of slowing […]

May 2, 2022 | Team Transitory Has Disbanded

No regrets. That was the message from Bank of Canada governor Tiff Macklem when asked about his broken promise on holding rates at zero until the end of 2023. If you recall, in July 2020 Macklem gave the green light for Canadians to speculate on housing, announcing “If you’ve got a mortgage, or if you’re […]

April 25, 2022 | Not Bullish Sentiment

While this is probably getting tiresome at this point, inflation came in hot once again in March, hitting a 30 year high. Consumer prices are up 6.7% from last year, and are likely to hit 8% in April based on Stats Canada finally adding used car prices to the CPI basket. This is ramping up […]

April 18, 2022 | Arsonist & Firefighter

For the first time in over 20 years, the Bank of Canada raised rates by over 50bps at their most recent meeting. Everyone is panicking, inflation is here and the Bank of Canada is acting tough, they’re no longer going to support the housing market, so naturally a housing crash is just around the corner, […]

April 11, 2022 | Headline Grabbers

The Federal Government unveiled an updated budget this past week, and it included a wide range of housing policies. While many of these were good headline grabbers, some of them will never see the light of day, and others lack any real substance. Let’s dissect some of them further. Foreign Buyer Ban The media took […]

April 4, 2022 | End of the Housing Bull Market?

It’s official, mortgage rates have hit 4% here in Canada. Several of the large banks have increased their popular 5 year fixed rate mortgage above 4%. You’d have to go back to about 2013 when rates were this high. Also worth adding that 2013 was a pretty slow year for housing and so I expect […]

March 28, 2022 | Not Until Something Breaks

Happy Monday Morning! It looks like inflation might not be transitory after all, and the bond market is finally figuring that out. Bonds have been selling off hard lately, sending yields much higher, and tightening financial conditions in the process. This is particularly important for the Canadian housing market. If there was ever a catalyst […]

March 21, 2022 | Purchasing Power is Getting Slaughtered

Consumer prices ripped to a thirty year high in Canada, rising 5.7% from last year. Shelter inflation was up 6.6%, the highest since 1983. Per ScotiaBank, much of that is being driven by the homeowners’ replacement cost, which was up 13.2% y/y. Unlike the US that uses owners’ equivalent rent, Canada captures housing primarily through […]

March 14, 2022 | Stability in a World of Volatility

Inflation concerns continue to percolate. US CPI inflation ripped to 7.9% in February, the highest reading in over 40 years. So now we basically have inflation at 8% and interest rates at zero. Of course this has major implications not only from a financial perspective but a societal perspective. It’s also a fundamental driver behind […]

March 7, 2022 | Volcker Moment?

Brace yourselves, we have liftoff! The Bank of Canada officially raised interest rates a mere 25bps last week. This was the first move since 2018 and comes at a time when inflation is running at 30 year highs. Markets believe another 5-7 rate hikes are still coming this year and some are calling this the […]

February 28, 2022 | Now What?

I have long argued that a sell-off in Canadian housing will not be self-induced. In other words, policy makers are not going to willingly tank the market. If / when you have a downturn it will be due to something out of our control, likely a crisis in emerging markets that ripples through global financial […]

February 22, 2022 | Bullish Government Incompetence

I know you probably don’t need another reminder on inflation so i’ll keep this brief. Inflation figures ticked higher again in January, with consumer prices rising 5.1% from last year. Prices are now rising at their quickest pace since 1991. In other words, so long as you don’t eat, drive a car or own a […]

February 14, 2022 | Not So Fast

Inflation in the United States surged to 40 year highs in January, with consumer prices growing by 7.5% year-over-year. The last time inflation was rising this quickly the fed funds rate was sitting at 15%, today it sits at zero. This is ramping up calls for aggressive interest rate increases in order to quell inflation, […]

February 7, 2022 | Home to The Middle Class

Everyone is well aware of the great reshuffling throughout the pandemic. People migrated away from the city, opting for more space and privacy while they worked from home. Everyone rushed out to the suburbs. Similar to the toilet paper crisis at the onset of the pandemic, housing inventory in the burbs was swiftly plucked bare. […]

January 31, 2022 | Truth is Like Poetry

To the dismay of prospective home buyers hoping for a cool down in the nations housing market, Bank of Canada governor Tiff Macklem left interest rates unchanged this past week. It was an odd move considering a 25bps rate hike was already priced into the markets, and there would have been no justification needed, given […]

January 25, 2022 | Worst Buying Conditions on Record

Consumer prices continue to rip higher in Canada, officially growing at their fastest pace in 30 years per Stats Canada data this December. Consumer prices were up 4.8%, while shelter costs, which make up a part of the CPI basket, were up 5% from last year. Of course this is stirring the ongoing debate on […]

January 20, 2022 | Broken Supply Chains

As of this week, unvaccinated US truckers will not be able to cross the Canadian border. This decision by the Trudeau government is going to have significant economic impacts. COVID politics aside, let’s discuss the economic ramifications moving forward and how this could ultimately come full circle for the housing market. More than 70% of […]

January 10, 2022 | It is a Matter of Policy Decision

Here’s a wild stat to start your week off, Canada added 410,000 new immigrants in 2021. In the United States, a country nearly ten times the size, added just 500,000 new immigrants. Canada is built on immigration, and it is certainly needed. However, perhaps it’s worthwhile to discuss the tradeoffs, which seemingly no media outlet […]

January 5, 2022 | As Prosperous as Your Real Estate

It was quite the year for the nations housing market. As I highlighted a few weeks ago, this shouldn’t come as a surprise considering our monetary base has expanded by about 23% over the past eighteen months. We are undergoing the largest monetary experiment in modern history. But enough of that, let’s take a look […]

December 22, 2021 | Monetary Imprudence

Christmas came early for the 69% of Canadians who own a home. The latest data released from the Canadian Real Estate Association shows national home prices inflated at the quickest pace ever, rising 25% from last year. The home price index which measures the price of a typical home in Canada now sits at $780,400, […]

December 13, 2021 | Wartime Fiscal and Monetary Policy

Despite the market pressuring the Bank of Canada to begin liftoff and start hiking interest rates, they held firm once again this past week. The bank flagged the recent floods in BC and the emergence of the Omicron variant as air cover to stand pat. Per the official release,  “the Governing Council judges that in […]

December 6, 2021 | This is What a Crisis Looks Like

House shoppers are showing very few signs of fatigue. The latest data out of Vancouver & Toronto for the month of November suggests the bull market remains fully intact. Greater Vancouver home sales jumped 11% from last year, the second strongest November on record besides 2015. In case you forgot, the winter of 2015 was […]

November 29, 2021 | Who’s to Blame?

Bank of Canada deputy governor, Paul Beaudry is worried about the number of investors flooding the housing market. According to the Bank, investor buying has doubled since the start of the pandemic, while purchases by first-time homebuyers have increased about 45 per cent. “A sudden influx of investors in the housing market likely contributed to […]

November 25, 2021 | Interest Rates Do Not Reflect Inflation

We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC are already creating significant food and […]

November 15, 2021 | Funding The Biggest Borrower

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal. “We are still dealing with […]

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