DATE

Steve Saretsky -

In the world’s big financial centers — from New York to Toronto to London to Sydney — rents for city apartments are plunging. As reported by Bloomberg, International students who normally bolster demand are stuck at home and young renters, the most mobile group in real estate, are finding fewer reasons to pay a premium to live in what is, for now, no longer the center of things. In Manhattan, rental apartment listings have tripled from last year, sending rents tumbling by 11%. Apartment rents are now the cheapest they’ve been since 2013.  In San Francisco, The median monthly rent for a studio has plunged by 31% year-over-year. Meanwhile, in Downtown Toronto, rents have collapsed by 14.5% , as per recent third quarter data from Urbanation. The exact same story is playing out in London, Singapore, and Sydney Australia. The once booming cities are suddenly hollowing out. A wave of buyers are fleeing to the suburbs, seeking solace from a global pandemic that continues to rage. The mass exodus to the suburbs, while easy to understand today, was largely unforeseen back in March. Today, it remains a key factor supporting housing activity. A recent piece from HSBC Global Research highlights the phenomenon of rising house

Steve Saretsky -

The Canadian housing market continued on its torrid path in September, with home sales ripping to record highs in September. Sales surged 45% on a year-over-year basis. Meanwhile, months of available inventory for sale crashed to 2.6, the lowest total on record during our nations history. This pushed home prices higher, with the average sales price jumping an eye popping 17.5% year-over-year. Keep in mind, the average sales price has been skewed higher as the composition of homes selling has changed. Larger free standing single family homes are selling like hot cakes while condo inventory is accumulating due to a pandemic induced work from home movement. However, using the home price index, which accounts for a change in sales composition, home prices rose 10%, hitting fresh highs. As shocking as this is, one needs to look no further than the central banks, which have flooded the system with liquidity. The Bank of Canada’s balance sheet has more than tripled since the pandemic. Their weekly purchases of Canada Mortgage Bonds (a proxy for supporting the mortgage market) has grown from $250 million pre-pandemic to over $9 billion as of October. Ironically, on the same day national home prices surged by double

Steve Saretsky -

A sliver of hope has emerged for the Canadian economy as the labour market added nearly 380,000 jobs in September. The unemployment rate is slowly coming down, now hovering at 9%, surpassing most economists expectations on the recovery front. However, those job gains could prove temporary, with the Ontario government reintroducing rolling lockdowns once again. Toronto, Ottawa and Peel region will once again be closing indoor restaurants, bars, gyms, and asking people not to travel. In other words, fiscal and monetary support is going nowhere anytime soon. While the benefits of such programs are helping to support jobs, and ease financial pain, there is no such things as a free lunch. In a speech this past week, Bank of Canada Governor Tiff Macklem, noted “our policy path will eventually have an impact on financial system vulnerabilities. As much as a bold policy response was needed, it will inevitably make the economy and financial system more vulnerable to economic shocks down the road.” Macklem is referring to Canada’s private debt loads, which currently rank third highest amongst the G-20 nations. They need to keep these debt loads growing in order to avoid a painful debt deleveraging. This requires keeping interest rates at zero

Steve Saretsky -

When the housing market essentially re-opened in June following the lockdowns, there was a narrative going around about pent-up demand. At the time it was hard to justify the strong recovery in sales, surely it must have been a case of pent-up demand that would soon fade once these buyers from the spring pulled the trigger in the summer. Well, here we are now in November and sales are still going strong. At what point does the narrative shift from pent-up demand to housing boom? I’ll stop short of calling it a new bull market, but there are certainly shades of 2016 emerging. Buyers looking for single family homes are witnessing line-ups around the block for open houses, bidding wars, and the return of subject free offers. In October, 30% of single family houses in Greater Vancouver sold over the asking price. That’s the highest percentage since June, 2017.

Steve Saretsky -

It was another feel good headline for the Vancouver Real Estate market in September as media outlets promoted the record breaking 56% year-over-year increase in home sales. The incredible surge in activity has trounced all market forecasts, even surpassing the most optimistic scenarios initially touted by local real estate brokerages, who are obviously inclined to remain upbeat, even in the worst of times. However, behind the buzz of the media headlines, something is brewing. The health of the housing market is diverging at an unprecedented pace. The single family housing market is ripping hot, sales were up a whopping 72%, the highest total for September in over a decade. Inventory has collapsed to a six year low, sparking bidding wars for families desperate for more space during work from home orders. This is forcing prices higher, with both the average and median sales price ripping 13% and 12% respectively. This flurry of activity has also shown up in the condo market, where sales activity for the month of September was the highest in over two decades. There’s just one problem, new listings are piling up faster than sales. New listings ripped to record highs, and were 42% above the ten

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The Canadian Economy

Steve Saretsky -

In the world’s big financial centers — from New York to Toronto to London to Sydney — rents for city apartments are plunging. As reported by Bloomberg, International students who normally bolster demand are stuck at home and young renters, the most mobile group in real estate, are finding fewer reasons to pay...

Steve Saretsky -

The Canadian housing market continued on its torrid path in September, with home sales ripping to record highs in September. Sales surged 45% on a year-over-year basis. Meanwhile, months of available inventory for sale crashed to 2.6, the lowest total on record during our nations history. This pushed home prices...

Steve Saretsky -

A sliver of hope has emerged for the Canadian economy as the labour market added nearly 380,000 jobs in September. The unemployment rate is slowly coming down, now hovering at 9%, surpassing most economists expectations on the recovery front. However, those job gains could prove temporary, with the Ontario government...

Steve Saretsky -

When the housing market essentially re-opened in June following the lockdowns, there was a narrative going around about pent-up demand. At the time it was hard to justify the strong recovery in sales, surely it must have been a case of pent-up demand that would soon fade once these buyers...

Steve Saretsky -

It was another feel good headline for the Vancouver Real Estate market in September as media outlets promoted the record breaking 56% year-over-year increase in home sales. The incredible surge in activity has trounced all market forecasts, even surpassing the most optimistic scenarios initially touted by local real estate brokerages,...

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The Saretsky Report. December 2022