Brad Currie Senior Mortgage Broker

Brad Currie

Senior Mortgage Broker

201 - 23189 Francis Avenue, Langley, British Columbia







Statistics Canada: Labour Force Survey, April 2024


Employment increased by 90,000 (+0.4%) in April, and the unemployment rate was unchanged at 6.1%. The employment rate held steady at 61.4%, following six consecutive monthly declines. In April, employment rose among core-aged men (25 to 54 years old) (+41,000; +0.6%) and women (+27,000; +0.4%) as well as for male youth aged 15 to 24 (+39,000; +2.8%). There were fewer women aged 55 and older employed (-16,000; -0.8%), while employment was little changed among men aged 55 and older and female youth (aged 15 to 24). Employment gains in April were driven by part-time employment (+50,000; +1.4%). Employment increased in April in professional, scientific and technical services (+26,000; +1.3%), accommodation and food services (+24,000; +2.2%), health care and social assistance (+17,000; +0.6%) and natural resources (+7,700; +2.3%), while it fell in utilities (-5,000; -3.1%). Employment increased in Ontario (+25,000; +0.3%), British Columbia (+23,000; +0.8%), Quebec (+19,000 +0.4%) and New Brunswick (+7,800; +2.0%) in April. It was little changed in the other provinces. Total hours worked rose 0.8% in April and were up 1.2% compared with 12 months earlier. Average hourly wages among employees increased 4.7% (+$1.57 to $34.95) on a year-over-year basis in April, following growth of 5.1% in March (not seasonally adjusted). In the spotlight: Over one in four workers (28.4%) have to come into work or connect to a work device at short notice at least several times a month. https://www150.statcan.gc.ca/n1/daily-quotidien/240510/dq240510a-eng.htm

Bank of Canada: Households are adjusting to the rise in debt-servicing costs


Following sharp declines during the COVID‑19 pandemic, many indicators of financial stress have now returned to more normal levels. Signs of stress are concentrated primarily among households without a mortgage and survey data suggest that, of these households, renters are most affected. In contrast, indicators of stress among mortgage holders are largely unchanged, remaining at levels lower than their historical averages. Factors such as income growth, accumulated savings and reduced discretionary spending are supporting households ability to deal with higher debt payments. Over the coming years, more mortgage holders will be renewing at higher interest rates. Based on market expectations for interest rates, payment increases will generally be larger for these mortgage holders than for borrowers who renewed over the past two years. Higher debt-servicing costs reduce financial flexibility for households and businesses and make them more vulnerable in the event of an economic downturn. Signs of financial stress have risen primarily among households without a mortgage The combination of higher inflation and higher interest rates continues to put pressure on household finances. Many indicators of financial stress, which had declined during the pandemic, are now close to pre-pandemic levels. Signs of increased financial stress appear mainly concentrated among renters. The rates of arrears on credit cards and auto loans for households without a mortgagewhich includes renters and outright homeownersare back to pre-pandemic levels and continue to grow. In contrast, arrears on these products for households with a mortgage have remained low and stable. https://www.bankofcanada.ca/2024/05/financial-stability-report-2024/

Bank of Canada: Financial Stability Report


Key takeaways Canadas financial system remains resilient. Over the past year, financial system participantsincluding households, businesses, banks and non-bank financial institutionshave continued to proactively adjust to higher interest rates. However, risks to financial stability remain. The Bank sees two key risks to stability, related to: Debt serviceabilityBusinesses and households continue to adjust to higher interest rates. Indicators of financial stress in both sectors were below historical averages through the COVID-19 pandemic but have been normalizing. Some indicators look to be increasing more sharply and warrant monitoring. Higher debt-servicing costs reduce financial flexibility for households and businesses and make them more vulnerable in the event of an economic downturn. Asset valuationsThe valuations of some financial assets appear to have become stretched, which increases the risk of a sharp correction that can generate system-wide stress. The recent rise in leverage in the non-bank financial intermediation sector could amplify the effects of such a correction. The financial system is highly interconnected. Stress in one sector can spread to others. Participants should continue to be proactive, including planning for more adverse conditions or outcomes. https://www.bankofcanada.ca/2024/05/financial-stability-report-2024/

Home office expenses for employees for 2023


Eligible employees who worked from home in 2023 will be required to use the Detailed Method to claim home office expenses. The temporary flat rate method does not apply to the 2023 tax year. As an employee, you may be able to claim certain home office expenses (work-space-in-the-home expenses, office supplies, and certain phone expenses). This deduction is claimed on your personal income tax return. Deductions reduce the amount of income you pay tax on, so they reduce your overall income tax liability. Salaried employees can claim: Electricity, Heat, Water, some utilities, monthly Internet access or part of your rent. Commission employees can also claim: home insurance, property taxes and lease of a cell phone, computer and more. Review the CRA website for more. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses/work-space-home-expenses.html



Canadas federal Finance Minister tabled Budget 2024 on April 16th. Gross new spending measures were substantially higher than signalled ahead of budget day, with equally substantial taxation measures partially offsetting the net impact. The budget adds a near-term boost to growth with major new spending, but it introduces another twist as it gives with one hand while taking with the other. While net new spending amounts to 0.4% f GDP over the next two years, gross outlays to Canadians adds up to a much more substantial $22.5 bn (0.7%), while syphoning off $9.5 bn from drivers of growth. This is additive to the $44 bn incremental spending provinces have announced in recent weeks. The budget clearly makes the Bank of Canadas job more difficult. The soft inflation print released into the budget risks fanning complacency around the risk of a resurgence in inflationary pressure particularly with a housing market rebound waiting in the wings (and more potential buyers on the margin after this budget). New spending is hardly focused. A gross $56.8 bn is spread widely across a range of priorities. The new Housing Plan reflects just 1/6th of new outlays. Others were channeled aheadmilitary spending, AI investments, and pharmacarewhile new pledges were tabled towards Aboriginal investments, community spending, and a new disability benefit among others. New tax measures will yield a $21.9 bn offsetnotably a big increase to the capital gains inclusion rate from one-half to two-thirds for individuals and corporations later this Spring. The net cost of new measures in this budget lands at $34.8 bn over the planning horizon. Near-term economic momentum has provided additional offsets ($29.1 bn), leaving the fiscal path broadly similar to the Fall Update. The FY24 deficit comes in on the mark at $40 bn (1.4% of GDP) and is expected to descend softly to $20 bn (0.6%) by FY29. Debt remains largely on a similar path of modest declines as a share of GDP over the horizon. The fiscal plan could have delivered on critical priorities including the Housing Plan, along with AI and Indigenous spending, while still adhering to its fiscal anchors without resorting to substantial new taxation measures that will dampen confidence and introduce further distortions to Canadas competitive landscape. It wont likely trigger an election, but it is clearly a warm-up lap as Canadians brace for the polls within the next 1218 months. The taps are unlikely to be turned off any time soon. Source: https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.fiscal-policy.fiscal-pulse.federal.federal-budget-analysis-.canadian-federal--2024-25-budget--april-16--2024-.html

Bank of Canada maintains policy rate, continues quantitative tightening


The Bank of Canada held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The Bank expects the global economy to continue growing at a rate of about 3%, with inflation in most advanced economies easing gradually. The US economy has again proven stronger than anticipated, buoyed by resilient consumption and robust business and government spending. US GDP growth is expected to slow in the second half of this year, but remain stronger than forecast in January. The euro area is projected to gradually recover from current weak growth. Global oil prices have moved up, averaging about $5 higher than assumed in the January Monetary Policy Report (MPR). Since January, bond yields have increased but, with narrower corporate credit spreads and sharply higher equity markets, overall financial conditions have eased. The Bank has revised up its forecast for global GDP growth to 2% in 2024 and about 3% in 2025 and 2026. Inflation continues to slow across most advanced economies, although progress will likely be bumpy. Inflation rates are projected to reach central bank targets in 2025. In Canada, economic growth stalled in the second half of last year and the economy moved into excess supply. A broad range of indicators suggest that labour market conditions continue to ease. Employment has been growing more slowly than the working-age population and the unemployment rate has risen gradually, reaching 6.1% in March. There are some recent signs that wage pressures are moderating. Source:https://www.bankofcanada.ca/2024/04/fad-press-release-2024-04-10

Canadian Survey of Consumer Expectations—First Quarter of 2024


Consumers believe inflation has slowed, but their expectations for inflation in the near term have barely changed. Consumers link their perceptions of slowing inflation with their own experiences of price changes for frequently purchased items, such as food and gas. Expectations for long-term inflation have increased, though they remain below their historical average. Relative to last quarter, consumers now think that factors contributing to high inflationparticularly high government spending and elevated home prices and rent costswill take longer to resolve. Canadians continue to feel the negative impacts of high inflation and high interest rates on their budgets, and nearly two-thirds are cutting or postponing spending in response. Although weak, consumer sentiment improved this quarter, with people expecting lower interest rates. As a result, consumers are less pessimistic about the future of the economy and their financial situation, and fewer think they will need to further cut or postpone spending. Improved sentiment is also evident in perceptions of the labour market, which have stabilized after easing over recent quarters. Workers continue to feel positive about the labour market and, with inflation expected to be high, they continue to anticipate stronger-than-average wage growth. Source: https://www.bankofcanada.ca/2024/04/canadian-survey-of-consumer-expectations-first-quarter-of-2024

TD Economic Report: Canadian Highlights


Central bankers took the stage this week, but it was Canadian economic data that stole the show. A significant improvement in inflation for February and a weak reading on retail sales increased expectations for an earlier cut by the Bank of Canada (BoC). Adding to this was the release of the BoCs March deliberations that confirmed the Bank is preparing to cut rates later this year. While the exact timing of the first rate cut is still uncertain, market pricing has rallied around June/July, matching expectations on timing for other major central banks. The inflation reading this week showed a meaningful deceleration, with the headline measure remaining within the BoC 1% to 3% target band. But the big surprise was the heavy discounting on items like clothing, cell phone /internet plans, and food. For the latter, that was the first contraction in three years (seasonally adjusted)! As Deputy Governor Toni Gravelle said at a speech later in the week, this was very encouraging. What was even more promising was the progress on the BoCs preferred inflation metrics. While these have remained stubbornly high over the last few months, they too have started to ease and now sit just above the 3% band. These metrics are starting to follow other measures of inflation lower, including the Banks old preferred inflation measure, CPIX. This index excludes the eight most volatile inflation items such as mortgage interest costs. Importantly, this measure has now reached the BoCs 2% target. Source: TD Economics https://economics.td.com/ca-weekly-bottom-line

Canadian Home Prices See Sudden End to Declines in Advance of Spring Market


Canadian home prices as measured by the seasonally adjusted Aggregate Composite MLS Home Price Index (HPI) were flat on a month-over-month basis in February 2024, ending a streak of five declines that began last fall, according to the latest data from the Canadian Real Estate Association (CREA). The fact that prices were unchanged from January to February was noteworthy given they had dropped 1.3% from December to January. Considering how stable the seasonally adjusted MLS HPI tends to be, shifts this abrupt are exceedingly rare. There have only been three other times in the last 20 years that have shared a sudden improvement or increase in the month-over-month percentage change from one month to the next of this size; all at various points in the last four years when demand was coming off the sidelines. Its looking like February may end up being the last relatively uneventful month of the year as far as the 2024 housing story goes, said Shaun Cathcart, CREAs Senior Economist. With so much demand having piled up on the sidelines, the story will likely be less about the exact timing of interest rate cuts and more about how many homes come up for sale this year. Home sales activity recorded over Canadian MLS Systems dipped 3.1% between January and February 2024, giving back some of the cumulative 12.7% increase in activity recorded in December 2023 and January 2024. That said, the general trend has been somewhat higher levels of activity over the last three months compared to a quiet fall market in 2023. Source: https://stats.crea.ca/en-CA/

Bank of Canada maintains policy rate, continues quantitative tightening


The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. Global economic growth slowed in the fourth quarter. US GDP growth also slowed but remained surprisingly robust and broad-based, with solid contributions from consumption and exports. Euro area economic growth was flat at the end of the year after contracting in the third quarter. Inflation in the United States and the euro area continued to ease. Bond yields have increased since January while corporate credit spreads have narrowed. Equity markets have risen sharply. Global oil prices are slightly higher than what was assumed in the January Monetary Policy Report (MPR). In Canada, the economy grew in the fourth quarter by more than expected, although the pace remained weak and below potential. Real GDP expanded by 1% after contracting 0.5% in the third quarter. Consumption was up a modest 1%, and final domestic demand contracted with a large decline in business investment. A strong increase in exports boosted growth. Employment continues to grow more slowly than the population, and there are now some signs that wage pressures may be easing. Overall, the data point to an economy in modest excess supply. Source: https://www.bankofcanada.ca/2024/03/fad-press-release-2024-03-06/

CMHC announced on March 1 that The First-Time Home Buyer Incentive program will be ending


The deadline for submitting new or updated applications for the First-Time Home Buyer Incentive is March 21, 2024, at midnight ET. No new approvals will be granted after March 31, 2024. Initially designed to alleviate the burden of monthly mortgage payments for first-time buyers, the program involved the government acquiring partial ownership of a property. Under the program, the government provided a loan of up to 10 percent of the purchase price, which could be put towards a larger down payment, thereby reducing monthly payments. However, homeowners were required to repay the incentive after 25 years or upon selling the property, with the repayment amount adjusted to reflect changes in the propertys value. Source:https://www.cmhc-schl.gc.ca/consumers/home-buying/first-time-home-buyer-incentive

No respite for Canadian housing affordability in Q4 2023


From National Bank of Canada The fourth quarter of 2023 witnessed a second consecutive deterioration for housing affordability in Canada. The degradation was widespread with every single market experiencing an increase in their mortgage payment as a percentage of income (MPPI) due to both higher interest rates and rising home prices. This worsening has practically eliminated recent improvements in affordability and our index at the national level is almost back to its worst affordability since the 1980s. That said, the headline index dissimulates a more worrisome picture. Indeed, the condo sub-index has reached its highest level of unaffordability in at least two decades. In other words, it would take nearly half of pre-tax median household income to service the median condo mortgage. With the condo market typically being the entry point for first-time homebuyers it leaves the latter with few options. While homeownership is becoming untenable, the rental market offers little respite. Our rental affordability index has never been worse. It would take nearly one third of pre-tax household income to pay for the average rent of a two-bedroom condo. The outlook for the coming year is fraught with challenges. While mortgage interest rates are showing signs of waning in the face of expected rate cuts by the central bank, housing demand remains supported by unprecedented population growth. As a result, we expect some upside to prices in 2024. On the rental side, in a recently released report by the CMHC, Canada`s rental market vacancy stumbled to a record low of 1.5% which leaves little room for an improvement in rents. Supply for any segment of the market isn`t expected to pick up anytime soon as building permits in many Canadian cities has plummeted at the end of 2023. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Canadian Home Sales Showing Signs of Recovery


Following a weak second half of 2023, home sales over the last two months are showing signs of recovery, according to the latest data from the Canadian Real Estate Association (CREA). Home sales activity recorded over Canadian MLS Systems rose 3.7% between December 2023 and January 2024, building on the 7.9% month-over-month increase recorded the month prior. While activity is now back on par with 2023s relatively stronger months recorded over the spring and summer, it begins 2024 about 9% below the 10-year average. Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers; however, in areas where sales have shot up most over the last two months, prices are still trending lower. Taken together, these trends suggest a market that is starting to turn a corner but is still working through the weakness of the last two years, said Shaun Cathcart, CREAs Senior Economist. https://stats.crea.ca/en-CA/

Bank of Canada maintains policy rate, continues quantitative tightening


The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment. In the euro area, the economy looks to be in a mild contraction. In China, low consumer confidence and policy uncertainty will likely restrain activity. Meanwhile, oil prices are about $10 per barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have eased, largely reversing the tightening that occurred last autumn. The Bank now forecasts global GDP growth of 2% in 2024 and 2% in 2025, following 2023s 3% pace. With softer growth this year, inflation rates in most advanced economies are expected to come down slowly, reaching central bank targets in 2025. In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4% to 5%. Source: https://www.bankofcanada.ca/2024/01/fad-press-release-2024-01-24/

Income gap widens as higher interest rates reduce income for lowest income households


Income inequality increased in the third quarter as the gap in the share of disposable income between households in the two highest income quintiles (top 40% of the income distribution) and two lowest income quintiles (bottom 40% of the income distribution) reached 44.9%, up 0.5 percentage points from the third quarter of 2022. The lowest income householdsthose in the bottom 20% of the income distributionwere the only income group to reduce their average disposable income in the third quarter of 2023 relative to the same quarter of 2022 (-1.2%). Gains in average wages and salaries for the lowest income households (+3.0%) were more than offset by reductions in net investment income (-43.4%). While higher interest rates can lead to increased borrowing costs for households, they can also lead to higher yields on saving and investment accounts. The lowest income households are more likely to have a limited capacity to take advantage of these higher returns, as on average they have fewer resources available for saving and investment. Higher interest rates weighed on average disposable income for the lowest income households in the third quarter. Along with a doubling of the Bank of Canadas policy interest rate from 2.5% in July 2022 to 5.0% as of July 2023, net investment income declined for the lowest income households in the third quarter of 2023 relative to a year earlier. The lowest income earners reduced their net investment income as increased interest payments, more than half of which was due to consumer credit, outweighed gains in investment earnings. Source: https://www150.statcan.gc.ca/n1/daily-quotidien/240122/dq240122a-eng.htm?HPA=1

Canadian Home Sales See Unexpected Surge to Close Out 2023


Home sales activity recorded over Canadian MLS Systems rose 8.7% between November and December 2023, putting it on par with some of last years relatively stronger months recorded over the spring and summer. The actual (not seasonally adjusted) number of transactions came in 3.7% above December 2022, the largest year-over-year gain since August. On an annual basis, home sales totalled 443,511 units in 2023, a decline of 11.1% from 2022. It was technically the lowest annual level for national sales activity since 2008; although it was very close to levels recorded in each of the five years following the 2008 financial crisis, as well as the first year the uninsured stress test was implemented in 2018. While December did offer up a bit of a surprise in sales numbers to cap the year, the real test of the markets resilience will be in the spring, said Larry Cerqua, Chair of CREA. There are only a couple of months left until that gets underway. If youre looking to buy or sell a property in the 2024, youll want a game plan, so contact a REALTOR in your area today, continued Cerqua. Was the December bounce in home sales the start of the expected recovery in Canadian housing markets? Probably not just yet, said Shaun Cathcart, CREAs Senior Economist. It was more likely just some of the sellers and buyers that were holding onto unrealistic pricing expectations last fall finally coming together to get deals done before the end of the year. Were still forecasting a recovery in housing demand in 2024, but well have to wait a few more months to get a sense of what that ultimately looks like. Source: https://www.crea.ca/media-hub/news/canadian-home-sales-see-unexpected-surge-to-close-out-2023/

A look back at 2023 and what's ahead for 2024


As 2023 is now in the rear view mirror, lets review what happend and look ahead to what economists foresee in 2024 The past year demonstrated Canadas economic resilience through robust job growth and increased investments at the beginning of the year. However, by years end, the current high-interest rates had contributed to a slowdown in business and consumer activities, leading to forecasts of weaker growth in the first half of 2024. Despite this, economists anticipate the economy to begin to rebound in the latter part of 2024. In 2023, the inflation rate began at 5.9% and gradually decreased to 3.1% by November (pending Decembers data). While the Bank of Canada doesnt anticipate inflation reaching its 2% target until late 2025, it aims for comfort within the 3% - 2.5% range. The evident impact of the Bank of Canadas rate hikes has resulted in prospective buyers feeling priced out of the market, impacting consumer confidence and leading to a wait-and-see approach throughout 2023. Concurrently, the Bank of Canadas strategic rate adjustments have effectively moderated the housing markets pace, contributing to a gradual slowdown without significantly affecting property values in most parts of the country. In 2023, Canadians also came to terms with the reality that rock-bottom interest rates are a thing of the past, and these new normal rates are now a permanent fixture. While we will see some modest decreases in rates in the coming year, many Canadians will no longer be able to delay their entry into the housing market in hopes of further rate drops. Now, lets focus on what lies ahead in 2024: There are emerging signs indicating the tangible effects of the Bank of Canadas (BOC) rate hikes are beginning to take root. Coupled with the anticipation of inflation dropping below 3%, we are finally witnessing movement in rates. Anticipated rate cuts from both the Bank of Canada and the US Federal Reserve have triggered a positive response in bond markets. This has resulted in lowered fixed rates, especially the 5-year rates, with some Insured rates dropping as much as 1%, fostering competition among lenders. As they gear up for the spring market, this competition benefits borrowers, especially first-time home buyers who have less than a 20% down payment. Theres a glimmer of hope on the horizon for Floating Rate holders (Variable or Adjustable). Most economists and markets are predicting a potential 100 - 150 bps rate cut to the current policy rate in 2024. However, the transition wont happen abruptly; the Bank of Canada (BoC) is likely to proceed cautiously, implementing gradual decreases while monitoring inflation and the economy. This will benefit Adjustable Rate holders with reduced mortgage payments and Variable Rate holders seeing a shift towards principal repayment. With housing affordability and supply shortages pressing all levels of government, there will be a continued push for new construction developments aimed at bolstering the housing supply. Though this issue isnt something that will be swiftly resolved within a year or even a few, it remains at the forefront of all levels of government, underscoring the ongoing necessity of addressing the housing shortage. What this all means for you, the consumer: Its estimated that about $251 billion in mortgages will come up for renewal in 2024, with another $352 billion worth in 2025. As a result, many Canadians will soon face a significant increase in their monthly mortgage paymenta major expenseand will have to adjust their spending. With that said, many lenders are going to be competing for your business. Working with professionals like myself, with access to multiple lenders, is essential, allowing for better rates and products. It will also be important to get ahead of your renewal so you can adjust the family budget for a certain increase in your monthly mortgage payment. For those dealing with high-interest debt, now is an opportune time to consider refinancing for debt consolidation, especially with declining rates, providing a chance to manage debt effectively. Consider this the reset button that can get you back on track and increase your monthly cash flow. Finally, as theres a growing anticipation that the period of interest rate hikes might be coming to an end, this prospect will rekindle buyer interest in the market. With the expected decrease in fixed and variable rates, increased purchasing power could spur more demand in the housing market, causing an uptick in values. Choosing a variable rate or a short-term fixed rate now enables you to buy before the surge in demand while also positioning yourself to secure a potentially lower rate in the near future rather than waiting for rates to drop significantly. While uncertainties remain, its crucial for those planning mortgage transactions in 2024 to review their needs sooner rather than later. Together, we can determine the best course of action that suits your familys budget and needs. I am here to assist whenever you are ready.

Riding Out the Mortgage Tides is a 'Mission Possible' for Canadian Households


Higher borrowing costs are leaving a permanent mark on the Canadian families who by the end of 2024 would have to budget for a roughly 30% increase in their monthly mortgage payments, on average. On aggregate, mortgage payments growth is forecast to slow next year, remain relatively flat in 2025 but pick up again in 2026, even if Canadian economy falls into a mild recession in 2024. Elevated mortgage payments will create an enduring drag on consumption and broader economic growth. Despite this, a relatively more resilient job market and largely unspent excess deposits should provide enough support for an average Canadian family to manage an increased debt servicing cost. https://economics.td.com/ca-mortgage-tides-canada-households

Home sales plummet in October as affordability remains an issue


Summary On a seasonally adjusted basis, home sales dropped 5.6% from September to October, a fourth monthly contraction in a row and the sharpest slowdown in sales since June 2022. On the supply side, new listings decreased 2.3% in October, a first decline in seven months. Active listing increased by 4.6%, a fourth monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.7 in September to 4.1 in October and is now roughly back in line with its pre-pandemic level. The market conditions loosened during the month but remained tighter than its historical average in 7 provinces, while market conditions were balanced in B.C. and Manitoba, and looser than average in Ontario. Housing starts rose 4.0K in October to a 4-month high of 274.7K (seasonally adjusted and annualized), a result comfortably above the median economist forecast calling for a 255.0K print. Urban starts advanced 6.1K (to 257.4K) on gains in both the multi-family (+2.1K to 209.9K) and the single-family segment (+4.0K to 47.5K). Starts decreased in Toronto (-13.9K to 44.6K), Montreal (-13.6K to 18.2K), and Calgary (-9.0K to 34.8K), while they increased in Vancouver (+9.0K to 34.8K). The Teranet-National Bank Composite National House Price Index decreased by 0.4% in October after seasonal adjustment. seven of the 11 markets in the composite index were still up during the month: Montreal (+3.7%), Halifax (+1.1%), Winnipeg (+1.0%), Quebec City (+0.9%), Calgary (+0.6%), Victoria (+0.3%) and Hamilton (+0.2%). Conversely, prices were down in Toronto (-1.6%), Edmonton (-1.2%), Vancouver (-1.1%) and Ottawa-Gatineau (-1.1%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Bank of Canada maintains policy rate, continues quantitative tightening


The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The global economy continues to slow and inflation has eased further. In the United States, growth has been stronger than expected, led by robust consumer spending, but is likely to weaken in the months ahead as past policy rate increases work their way through the economy. Growth in the euro area has weakened and, combined with lower energy prices, this has reduced inflationary pressures. Oil prices are about $10-per-barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have also eased, with long-term interest rates unwinding some of the sharp increases seen earlier in the autumn. The US dollar has weakened against most currencies, including Canadas. In Canada, economic growth stalled through the middle quarters of 2023. Real GDP contracted at a rate of 1.1% in the third quarter, following growth of 1.4% in the second quarter. Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year. Exports and inventory adjustment subtracted from GDP growth in the third quarter, while government spending and new home construction provided a boost. The labour market continues to ease: job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly. Even so, wages are still rising by 4-5%. Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.

Housing affordability: Significant deterioration in Q3 2023


From National Bank of Canada The third quarter of 2023 witnessed a considerable deterioration for housing affordability in Canada. This degradation follows three consecutive quarters of improvements and deletes nearly two thirds of the progress that had been made so far. The worsening was widespread with every single market experiencing an increase in their mortgage payment as a percentage of income (MPPI). At the national level the deterioration stemmed from a surge in home prices of 4.6%, the largest in 6 quarters and partially erasing the decline over the last year. A rebound in home prices during a period of rising interest rates could initially appear perplexing. That said, a chronic lack of supply in the resale market compounded by record population growth has allowed prices to rise. Also contributing to lessening affordability, mortgage interest rates rose 32 basis points in the quarter, more than eliminating the two prior declines. While still rising income was a partial offset in the third quarter, it did little to assuage the situation. Looking ahead, we see a moribund outlook for affordability. At the very least, a further worsening is in the cards for the last quarter of the year. Mortgage interest rates have steadily trended up in October on the back of rising longer-term interest rates. If interest rates hold at their current level, it would only take a home price increase of 2% in the fourth quarter to surpass the worst level of affordability in a generation. The outlook remains particularly challenging for first-time homebuyers. HIGHLIGHTS: Canadian housing affordability posted a worsening in Q323 following three consecutive improvements. The mortgage payment on a representative home as a percentage of income (MPPI) rose 4.0 points, more than erasing the previous pullback of 1.6-points in Q223. Seasonally adjusted home prices increased 4.6% in Q323 from Q223; the benchmark mortgage rate (5-year term) surged 32 bps, while median household income rose 1.2%. Affordability deteriorated in all of the ten markets covered in Q3. On a sliding scale of markets from worst deterioration to least: Vancouver, Toronto, Victoria, Hamilton, Calgary, Montreal, Quebec, Ottawa-Gatineau, Winnipeg, and Edmonton. Countrywide, affordability worsened 2.5 pp in the condo portion vs. a 4.5 pp degradation in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Housing market slowed in September as interest rates weigh in


Summary On a seasonally adjusted basis, home sales decreased 1.9% from August to September, a third monthly contraction in a row following the renewed monetary tightening cycle of the Bank of Canada and the surge in long-term interest rates. On the supply side, new listings jumped 6.3% in September, a sixth consecutive monthly increase. Overall, active listing increased by 3.7%, a third monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.5 in August to 3.7 in September. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio loosened during the month but remained tighter than its historical average in every province except Ontario, which now indicated a slightly less tight market than the average. Housing starts rose 20.1K in September to a 3-month high of 270.5K (seasonally adjusted and annualized), a result comfortably above the median economist forecast calling for a 240.0K print. At the provincial level, total starts went up in Ontario (+19.3K to 103.6K), Alberta (+8.7K to a seven-and-a-half-year high of 49.1K) and Nova Scotia (+5.1K to 8.1K). Alternatively, declines were recorded in British Columbia (-8.6K to a 7-month low of 40.5K) and Saskatchewan (-2.7K to 3.4K). The Teranet-National Bank Composite National House Price Index rose 0.7% in September after seasonal adjustment. All 11 markets in the composite index were up during the month: Halifax (+1.9%), Ottawa-Gatineau (+1.7%), Victoria (+1.7%), Vancouver (+1.1%) and Calgary (+0. 9%) posted stronger-than-average growth, while Winnipeg (+0.7%) matched the composite index, and Montreal (+0.1%), Hamilton (+0.1%), Edmonton (+0.2%), Toronto (+0.5%) and Quebec City (+0.5%) saw less vigorous increases. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Bank of Canada maintains policy rate, continues quantitative tightening


The Bank of Canada yesterday held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The global economy is slowing and growth is forecast to moderate further as past increases in policy rates and the recent surge in global bond yields weigh on demand. The Bank projects global GDP growth of 2.9% this year, 2.3% in 2024 and 2.6% in 2025. While this global growth outlook is little changed from the July Monetary Policy Report (MPR), the composition has shifted, with the US economy proving stronger and economic activity in China weaker than expected. Growth in the euro area has slowed further. Inflation has been easing in most economies, as supply bottlenecks resolve and weaker demand relieves price pressures. However, with underlying inflation persisting, central banks continue to be vigilant. Oil prices are higher than was assumed in July, and the war in Israel and Gaza is a new source of geopolitical uncertainty. In Canada, there is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures. Consumption has been subdued, with softer demand for housing, durable goods and many services. Weaker demand and higher borrowing costs are weighing on business investment. The surge in Canadas population is easing labour market pressures in some sectors while adding to housing demand and consumption. In the labour market, recent job gains have been below labour force growth and job vacancies have continued to ease. However, the labour market remains on the tight side and wage pressures persist. Overall, a range of indicators suggest that supply and demand in the economy are now approaching balance. After averaging 1% over the past year, economic growth is expected to continue to be weak for the next year before increasing in late 2024 and through 2025. The near-term weakness in growth reflects both the broadening impact of past increases in interest rates and slower foreign demand. The subsequent pickup is driven by household spending as well as stronger exports and business investment in response to improving foreign demand. Spending by governments contributes materially to growth over the forecast horizon. Overall, the Bank expects the Canadian economy to grow by 1.2% this year, 0.9% in 2024 and 2.5% in 2025. CPI inflation has been volatile in recent months2.8% in June, 4.0% in August, and 3.8% in September. Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services. Food inflation is easing from very high rates. However, in addition to elevated mortgage interest costs, inflation in rent and other housing costs remains high. Near-term inflation expectations and corporate pricing behaviour are normalizing only gradually, and wages are still growing around 4% to 5%. The Banks preferred measures of core inflation show little downward momentum. In the Banks October projection, CPI inflation is expected to average about 3% through the middle of next year before gradually easing to 2% in 2025. Inflation returns to target about the same time as in the July projection, but the near-term path is higher because of energy prices and ongoing persistence in core inflation. With clearer signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Banks balance sheet. However, Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed. Governing Council wants to see downward momentum in core inflation, and continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians. Information note The next scheduled date for announcing the overnight rate target is December 6, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on January 24, 2024. https://www.bankofcanada.ca/2023/10/fad-press-release-2023-10-25/

CMHC Housing Supply Report


HIGHLIGHTS Total housing starts across the countrys 6 largest census metropolitan areas (CMAs) increased slightly in the first half of 2023. Significant changes were observed for individual dwelling types and CMAs. Notable strength in apartment starts offset declines in all other dwelling types (single-detached, semi-detached and row homes). Apartment starts were concentrated in Toronto and Vancouver. This led to strong growth in total starts in those CMAs, offsetting lower starts in other CMAs, particularly Montral. As a result, in Toronto and Vancouver, housing starts in the first half of 2023 were well above levels observed over the past 5 years. In most other large centres, meanwhile, they were below these levels. Montral tends to build more small and low-rise apartment structures than Toronto and Vancouver. Because of their smaller size, these structures take less time to plan and build. The decline in housing starts in Montral was, therefore, more reflective of the recent deterioration in financial conditions. Elevated rates of apartment construction are not likely to be sustainable due to various challenges facing developers. These challenges include higher construction costs and higher interest rates. Significant increases in construction productivity are critical to addressing the countrys affordability and housing supply crisis over the longer term. The level of new construction activity remains too low. cmhc-schl.gc.ca

Housing prices set to moderate in coming months


With renewed activity in the residential real estate market in recent months, the seasonally adjusted Teranet-National Bank composite index rose by 1.6% from July to August, the fourth consecutive monthly increase. As a result, the composite index is now just 2.1% below its all-time peak of April 2022, following a record cumulative decline of 8.6% over one year. The widespread nature of Augusts rise is also noteworthy, as this is the first time since March 2021 that monthly increases have been observed in all the CMAs included in the composite index. However, there is reason to believe that this strength is likely to be short-lived, given the slowdown observed in the resale market over the last two months in connection with the renewal of the Bank of Canadas monetary tightening cycle. Although price declines are expected in the coming months due to the growing impact of interest rates and the less favourable economic context, property price decreases should remain limited thanks to the support of historical demographic growth and the persistent lack of housing supply. HIGHLIGHTS: The Teranet National Bank Composite National House Price IndexTM rose by 1.6% in August after seasonal adjustment. After seasonal adjustment, all 11 markets in the composite index were up during the month: Calgary (+3.5%), Vancouver (+2.8%) and Hamilton (+2.4%) reported stronger-than-average growth, while growth Halifax (+1.4%), Quebec City (+1.3%), Toronto (+1.2%), Ottawa-Gatineau (+1.1%), Edmonton (+1.1%), Winnipeg (+0.7%), Montreal (+0.7%) and Victoria (+0.2%) were less vigorous. From August 2022 to August 2023, the composite index rose by 1.1%, the first annual increase in nine months. Growth was seen in Calgary (+6.2%), Halifax (+5.1%), Quebec City (+3.6%), Vancouver (+2.7%) and Toronto (+1.4%), while prices were still down in Edmonton (-0.3%), Victoria (-1.5%), Montreal (-1.7%), Hamilton (-1.7%), Ottawa-Gatineau (-2.3%) and Winnipeg (-3.6%) https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

Housing Market Monitor: Housing market slowed in August as interest rates weigh in


Summary On a seasonally adjusted basis, home sales decreased 4.1% from July to August, a second monthly contraction in a row following the renewed monetary tightening cycle of the Bank of Canada. On the supply side, new listings increased 0.8% in August, a fifth consecutive monthly increase. Another sign of a loss of momentum in the real estate market is the proportion of listings cancelled during the month, which continues to rise, a sign that some sellers are discouraged by recent interest rate hikes. Overall, active listing increased by 1.9%, a third monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.2 in July to 3.4 in August. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in every province. Housing starts in Canada decreased slightly in August (-2.4K to 252.8K, seasonally adjusted and annualized), beating consensus expectations calling for a 250K print. Decreases in housing starts were seen in Ontario (-14.9K to 84.6K), Manitoba (-3.2K to 6.8K), and Nova Scotia (-2.5 to 3.2K). Meanwhile, increases were registered in Quebec (+14.8K to 53.1K), New Brunswick (+2.1 to 7.1K), Alberta (+1.1K to 39.6K), and Saskatchewan (+0.2K to 5.5), while starts in Newfoundland (1.1K), P.E.I. (1.2K), and B.C. (50.7K) remained unchanged. The Teranet-National Bank Composite National House Price Index rose by 1.6% in August after seasonal adjustment. All 11 markets in the composite index were up during the month: Calgary (+3.5%), Vancouver (+2.8%) and Hamilton (+2. 4%) reported stronger-than-average growth, while Halifax (+1.4%), Quebec City (+1.3%), Toronto (+1.2%), Ottawa-Gatineau (+1.1%), Edmonton (+1.1%), Winnipeg (+0.7%), Montreal (+0.7%) and Victoria (+0.2%) were less vigorous. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Housing shortages in Canada: Updating how much housing we need by 2030


From CMHC Key Highlights To restore affordability, we maintain our 2022 projection that Canada will need 3.5 million more units on top of whats already being built. Weve adjusted our 2030 projection for how many housing units there will be in Canada in 2030 based on current rates of new construction. Our most recent projection is 18.2 million units, down from our 2022 estimate of 18.6 million. This is largely due to the shortfall in housing construction. About 60% of the 3.5 million housing unit gap is in Ontario and British Columbia. This is because housing supply hasnt kept up with demand over the past 20 years in some of the largest urban centres. Additional supply will also be needed in Quebec. Once considered affordable, the province has become less affordable over the last few years. More supply need is also projected for Alberta due to strong economic growth. Other provinces remain affordable to households with an average level of disposable income. However, challenges remain for low-income households in accessing housing that is affordable across Canada. In addition to our baseline scenario of 3.5 million additional units being needed to restore affordability by 2030, we offer 2 alternate scenarios: a high-population- growth scenario and a low-economic-growth scenario. We provide regional highlights for areas across the country. https://assets.cmhc-schl.gc.ca/


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