Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s Real Estate Bubble Is Batsh!t Crazy Compared To Other G7s
Canadian real estate prices are moving like nothing else in the developed world. New data from the US Federal Reserve shows Canadian home prices have risen much faster than any other G7 country. Despite recent growth being attributed to population, this issue pre-dates the recently adopted narrative. Since 2005, Canadian home prices have shown more than double the growth of any other G7 country.
Canadian Real Estate Markets Improved, But Prices Are Still Falling: BMO
Canadian real estate sales rose but not enough to stop prices from falling. Home sales showed monthly growth of 8.7% in December, while new listings fell. Despite the mild tightening, prices continue to fall—dropping another 0.8% in December. It was the fourth month that home prices fell, with at least one bank forecasting prices will continue to fall further this year—even with improved sales.
Bank of Canada To Hold Rates But Push Back On Cuts Next Week: RBC
The Bank of Canada (BoC) is unlikely to change rates next week, but that doesn’t mean it won’t be eventful. RBC, Canada’s biggest bank, is watching for any clues in the announcement. This time last year, the BoC was overly enthusiastic about the progress they made on inflation. Ironically, this enthusiasm sent consumers on a shopping spree that resulted in even further rate hikes. Ideally, they don’t repeat the same mistake.
Canadian Mortgage Rates May Resume Climb As Bond Yields Surge
Canadian bond yields have been falling, helping to provide cheap mortgage capital. The Government of Canada (GoC) 5-year bond yield peaked in October, falling nearly a point by year end. This rate directly influences 5-year fixed rate mortgages, which have fallen roughly in line with the decline. However, over the past week, there’s been a sudden surge—with nearly a third of that progress rolled back. Mortgage rates have yet to adjust after the rapid increase, but that doesn’t mean they won’t.
Canadian Inflation Accelerates, Moderate Recession Has Kicked Off
Canada just saw a minor rollback when it comes to progress on the battle against inflation. The latest CPI data shows mild acceleration, which is the opposite of what the BoC was hoping for. This trend is demonstrating that inflation is a much stickier issue than many think. It’s also likely to make the BoC cautious when it comes to stating how much progress is being made.
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