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Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if they did it would only spur a further rise in consumer inflation expectations. After all, inflation is at least partially a psychological phenomenon. In other words, we need to keep the masses calm. This leads us to the next point. Consensus now believes interest rates must rise. After all, inflation is above the Banks mandate, this must mean the Bank will do the noble thing and raise rates? Markets are now pricing in four interest rate hikes from the Bank of Canada by the end of 2022. But wait, it gets even better. The brain trusts at ScotiaBank are now calling for eight rate hikes by the end of 2023. This would bring the overnight interest rate to 2.25%, higher than the previous tightening cycle of 1.75% despite an enormous amount of debt added since the last tightening cycle. Has everyone forgotten that Canada’s total non-financial debt to GDP sits

Steve Saretsky -

It was back to the offer table for Canadian house shoppers. After a brief pause in shopping activity, home buyers returned in September. Sales activity increased 0.9% from August, as new listings declined. Low inventory levels continue to decimate the nations housing market as buyers pick over the scraps. There is just 2.1 months of inventory on a national basis. Just for context, a balanced market requires 4 months of inventory. In other words, new listings have to surge or sales have to plummet just to hopefully get to a balanced market where price growth can moderate. Unfortunately we are nearing the last of the fall market, with new listings expected to take their usual seasonal decline along with home sales. I don’t expect much to change between now and the birth of the spring market in early 2022. Therefor, it’s no surprise that home prices continue to rip, up 1.7% nationally over the past month. Assuming this pace continues (seems unlikely), home price inflation would be running at over 20% annualized, that’s on top of the 21.5% they already increased during the past twelve months. Year-over-year price growth is as follows: Canada +21.5% Toronto +19.1% Montreal +20.8% Vancouver +13.8% Calgary

Steve Saretsky -

We’ve talked a lot about the great reshuffling here. The pandemic changed a lot of things, including where people want to live, and how they want to live. The lust for bigger spaces for less money has driven an exodus away from the city. Recent data from Stats Canada shows Canadians are on the move. Interprovincial migration reached 123,500 people in Q2 2021. This is an increase of 55.1% from the previous quarter, and the largest migration since Q3 1991. Ontario saw the biggest outflows, losing over 11,000 people and marking the largest outflows since the 1980’s. Meanwhile, BC & Nova Scotia enjoyed the largest inflows. To be honest i’m a bit surprised BC remains at the top of the charts. Clearly sky high home prices are not deterring people from moving here. The average home price in BC now stands at a whopping $901,000 a 17.2% increase from last year. There’s really not a lot of affordable options left in BC. Here’s how average home prices stack up across the province, with annual price growth: – Chilliwack $710,238 (increase of 21.3%) – Fraser Valley $984,965 (increase of 20%) – Greater Vancouver $1,174,176 (increase of 8.9%) – Kamloops $558,291 (increase of 21.9%)

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The Canadian Economy

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

Steve Saretsky -

It was back to the offer table for Canadian house shoppers. After a brief pause in shopping activity, home buyers returned in September. Sales activity increased 0.9% from August, as new listings declined. Low inventory levels continue to decimate the nations housing market as buyers pick over the scraps. There is...

Steve Saretsky -

We’ve talked a lot about the great reshuffling here. The pandemic changed a lot of things, including where people want to live, and how they want to live. The lust for bigger spaces for less money has driven an exodus away from the city. Recent data from Stats Canada shows...

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The Saretsky Report. December 2022