Happy Monday Morning! The blistering hot spring market, which has been plagued by a twenty year low in new listings across the country is finally starting to simmer. This is welcoming news for home buyers, whom instead of competing with six other buyers might only have to compete with three other groups on offer night. An incredible opportunity, some might say.. As of right now there is still just 3.3 months of inventory for sale across the country, conditions remain incredibly tight and prices are still ticking higher. However, with the spring market now in the rearview, many can’t help but wonder if there’s still another shoe to drop. After all, house prices remain sky high and mortgage rates have barely budged. We jacked rates by 425bps and the housing correction ended after nine months. Seems too good to be true. We’re about to get another test with bond yields pushing higher in recent weeks. The Canada 5 year has been on a tear, up 70bps this month alone. Not a great looking chart. While mortgage rates have been rangebound for the past six months, they’re back on the move again, jumping roughly 20bps over the past few weeks across

Happy Monday Morning! Inflation came in hotter than expected in April. Headline inflation ticked in at 4.4%, well above the 4.1% that was expected. It was the first month over month increase in the rate of headline inflation since June 2022. Naturally, panic ensured shortly thereafter. Markets immediately removed their expectations for a rate cut this year and have suddenly reversed course. There’s now an 11% chance of a hike at the June 7 meeting, and nearly a 40% chance of a hike by September 6 according to OIS markets. Furthermore, Scotiabank, who has been incredibly hawkish throughout this tightening cycle is putting their stamp on another 25bps hike in June. That’s bad news if you’re sitting on a variable rate mortgage. According to Desjardins, there are a lot of people up shit creek without a paddle. More than 75% of all variable rate mortgages in Canada have already breached their trigger rate. In other words, the interest owed is greater than the original monthly mortgage payment. These borrowers, along with the banks who dished out these loans, are in extend and pretend mode as amortizations climb to dizzying heights. It’s estimated these borrowers will need to increase their payments

Happy Monday Morning! Anyone following this newsletter since about January knows that the housing market has surged back to life. Inventory has fallen off a cliff at the same time buyer sentiment has rebounded, coinciding with the BoC’s Tiff Macklem taking his foot off the gas. In the GTA, home sales ripped 27% month-over-month in April on a seasonally adjusted basis. That’s the largest bounce since the depths of the pandemic. On the West Coast, seasonally adjusted home sales in Vancouver have jumped 50% over the past three months, inching closer to their long term average despite inventory at two decade lows. The result has been meaningfully higher prices since bottoming in the fall. This is hard to rationalize given mortgage rates remain elevated and affordability remains illusive. We might be inching closer to a recession but buyers don’t seem to care. According to National Bank, housing affordability hasn’t been this bad since the 1980s. Undoubtedly this is pushing prospective home buyers into the rental pool. Now add one million new migrants over the past twelve months and you can see where things start to go wrong. According to a recent rental report from Zumper, the national vacancy rate slipped below

Happy Monday Morning! We get readers of all stripes on this newsletter. Policy makers, bankers, property developers, and every day people trying to figure out what’s going on in the crazy world of Real Estate up north. We’ve hit nearly seven thousand subscribers now which i’m incredibly grateful for. I’m not sure if David Rosenberg is one of them, but the esteemed economist echoed many of my thoughts this past week. Here’s Rosie in his widely followed Breakfast with Dave newsletter. You don’t say. Political pressures are poised to ramp higher as home prices begin climbing once again. April data points to a continued rebound across most major markets. Here in Vancouver, home prices have increased for three consecutive months as measured by the home price index. Multiple offers are back in full swing, especially for entry level product. This has confused a lot of prospective home buyers considering mortgage rates are still hovering near 5%. However, when looking at standing inventory its really not that hard to figure out, the number of homes listed for sale on the MLS as of the end of April stood at 8263, an eighteen year low. In other words, it’s pretty hard to

Happy Monday Morning! We’ve talked a lot about the recent mismatch between population growth in this country and the ability to deliver enough new housing supply to not only meet demand but actually moderate price growth. Housing is all about supply and demand after all. We’ve tried to obliterate demand but it seemingly won’t go away. Here’s a short list of demand side policies in no particular order in recent years: Thanks for reading The Saretsky Report! Subscribe for free to receive new posts and support my work.Subscribe Every level of government has tried to slow demand with little results. Yes some of these policies lack real teeth, and yes we did kill the high-end luxury market. The luxury market remains on life support when we told foreigners to stop sending their money over here. So while we have eliminated the foreign owned pied-à-terre, we have not actually made housing more affordable for the average Canadian, it’s actually gotten worse! It seems obvious we must now seriously look at the supply side of the equation. If it feels like i’ve been beating a dead horse in recent months I apologize. But please consider the following. CMHC just dropped its latest