DATE

More Stimulus Please

Steve Saretsky -

The Canadian labour market shed over 200,000 jobs in January, far worse than expected. General consensus had estimated a contraction of about 40,000. You know what this means, house prices are going higher. I’m half joking, of course, but it seems the worse the economic fundamentals, the higher house prices seem to go right now.

However, it is certainly true that deteriorating economic figures provide further air cover for the Bank of Canada and the Trudeau Government to keep their foot firmly pressed on the stimulus accelerator. The worse the numbers, the more stimulus will keep coming. Make no mistake, housing is going up based on liquidity, not economics.

In fact, the Bank of Canada was out this past week saying they might target overshooting inflation moving forward. Bank of Canada Deputy Governor Lawrence Schembri commented, “We might be willing to tolerate a small overshoot or, like the Fed has done, actually aim for an overshoot. And that’s a question we are pondering right now.”

Meanwhile, housing inflation is certainly overshooting. National home sales and prices are expected to hit record highs once again when January figures are reported next week. According to data compiled by Ben Rabidoux of North Cove Advisors, residential mortgage credit growth is accelerating at 7.5% year-over-year, the fastest pace of growth in over a decade. Banks are pumping out loans, with home buyers eager to leverage up in the quest for more space during the pandemic.

The drive to qualify is well underway. According to research from CIBC, the majority of the strength in the Greater Toronto Area is clearly in the suburbs. And it makes sense when you consider that, on average, beyond the first 50 km, every 10 km drive further away from the city will buy you an extra $25,000 of house.

In Guelph, a city more than an hour’s drive from Toronto, the benchmark price for single-family homes soared 21% in December compared to a year earlier, according to data from the city’s real estate board. In Abbotsford, about 45 miles southeast of Vancouver, detached homes jumped 14%. Adjacent to Abbotsford, in a small city called Mission, with a population of less than 40,000- home prices have surged 21% over the past twelve months. Zoom Zoom, more stimulus please.

Three Things I’m Watching:

1. Canada lost over 200,000 jobs in January- worse than expected. (source: Richardson Wealth)
f4ed167f-6059-42ea-b711-c0f5a05a8117-5720763
2. The further away from the city of Toronto, the more bang for your buck. (Source: CIBC)
589f6e74-8c2b-4370-bb18-f0bdeefb32cf-6833868

3. The drive to qualify. Detached Home Prices in Mission, BC are rising at a rapid pace, up 21% from last year. (Source: REBGV)
4cf3265d-5634-4034-b78e-12bf78ede09e-2263300

Join the Monday Newsletter

Every Monday morning you'll receive a short and entertaining round-up of news on the Vancouver & Canadian Real Estate markets.

"*" indicates required fields

The Canadian Economy

Steve Saretsky -

Happy Monday Morning! The Bank of Canada moved to the sidelines once again, appeasing premiers in BC & Ontario who publicly pleaded with the BoC last week. It’s no secret these two provinces have the most to lose, their coffers largely built on a highly levered housing market, but we’ll...

Steve Saretsky -

Happy Monday Morning! A few weeks ago we summarized the cabinet shuffle, arguing the replacement of both the housing minister and immigration minister was simply rearring deck chairs on the Titanic. When new immigration minister Marc Miller was repeatedly questioned about rampant immigration putting strains on infrastructure and housing, he noted,...

Steve Saretsky -

Happy Monday morning! The Federal government is ramping up the noise amidst dismal polling numbers and a federal election only two years away. We had a cabinet shuffle just a few weeks ago, which included the immigration minister becoming the new housing minister. This week they arranged a housing retreat...

Steve Saretsky -

Happy Monday Morning! Headline CPI inflation surprised to the upside this past week, pushing back up to 3.3% and well above market expectations of 3%. However, those who have been following along here will know the importance of base effects. When headline inflation fell to 2.8% last month we were...

Steve Saretsky -

Happy Monday Morning! It’s been a few weeks now since the Trudeau government shuffled his cabinet ministers, naming both a new housing minsiter and a new immigration minister. However, as we discussed a few weeks ago in my piece, Same Faces, Different Places, nothing has fundamentally changed. These are the same...

Get the Saretsky Report to your email every month

The Saretsky Report. December 2022