This week's podcast has us looking into a number of pretty big changes taking place in our economy this month, along with a close examination of both the November Real Estate Stats for Vancouver and the impact of the decision by the BOC, to further hold rates.     With the BoC having maintained interest rates at 5%, in line with expectations due to a slowing economy and decreasing inflation rates, marks the third consecutive hold, reminiscent of the pattern observed in 2020 when rates remained at 0.25% for almost two years! The current stability hints at a potentially stabilizing economic landscape, with attention shifting to the possibility of rate cuts in the new year.     The decision to hold rates is influenced by a softer-than-expected October inflation reading at 3.1% y/y. Gasoline price declines, contributing to a 0.1% m/m drop in the headline index, were a key factor. Core inflation, which the BOC monitors, decelerated from 4.0% to 3.8%. The combination of falling inflation, a weakening labor market, and subdued economic growth indicates a further holding in rate hikes, with expectations of rate cuts as early as April next year.     Arrears rates have increased slightly to 0.16%, with Saskatchewan having the highest rate at 0.58%. The podcast discusses the government's response to potential challenges in mortgage renewals through the "Canadian Mortgage Charter." However, it's noted that the charter lacks legal backing, presenting it more as a symbolic gesture than a concrete policy shift.     The GDP fell by an annualized rate of 1.1% in Q3, below the BOC's expected 0.8% growth. Real GDP per capita has declined for a fifth consecutive quarter, indicating a weakening economy. Meanwhile, recent cooling in the bond market is anticipated to result in savings for those seeking fixed-rate mortgage products in the latter half of 2025 or 2026.     Predictions about rate cuts are prevalent now, with markets pricing in 3 to 4 quarter-point cuts by the end of next year. While this may benefit some mortgage holders, there's also the potential negative impact on the economy, especially considering factors like job losses and negative GDP continue to get worse.   Local November sales statistics for Vancouver didn't change much, noting a 4.7% sales volume increase from November 2022 but a significant drop in sales volume of 17% m/m. Inventory remains a central theme and a sales-to-active ratio officially indicating Vancouver is in a balanced market. Prices have seen a 1% decrease from October 2023, marking the fourth consecutive month of declines but still reflecting a 4.9% increase over November 2022.     Tune in and get the full story on our ever-changing Vancouver real estate landscape.

  This week we dive deep into the real estate landscapes of Toronto and Vancouver, Canada's largest real estate cities with Merete Lewis, an Agent with Chestnut Peak Real Estate out of Toronto. We dissect the recent trends and statistics that are shaping both property markets and we look at which city is fairing better under the current economic climate.   In Toronto, the month of October witnessed a notable softening in home sales, hitting levels not seen since 1995, with less than 5000 sales. Despite this, immigration remains robust, creating a dynamic where the market feels akin to holding a beach ball underwater. As we explore the data, we unveil a deepening Buyer's market in both cities with new listings surging and inventory reaching levels not seen since 2012. With the Housing Price Index (HPI) on a multi month decline, those looking for a deal may soon find one.   Shifting our focus to Vancouver, a decline in sales of 13% in September and October has continued into November, resulting in a 19% downturn. Despite flat new listings, the sales-to-new-listings ratio indicates a declining price environment, favouring buyers. The counter-seasonal increase in inventory for the first time in 20 years, coupled with a consecutive decline in the HPI, suggests a market that is adjusting. While prices are currently 5% higher than last year, the trend indicates a nuanced situation.   As we navigate through these statistics, we aim to validate the trends by comparing them to real stories on the ground. We delve into questions surrounding market sentiment, the impact of recent economic changes, and the challenges faced by both buyers and sellers.   Reflecting on our previous discussion about the similarities between Toronto and Vancouver, we observe how both markets bounced back in the spring but have since experienced shifts. Toronto, in particular, faced challenges in October, which was only marginally better than the previous year after significant rate hikes. The sentiment has changed, and the market has transitioned into a much slower market.   Our conversation extends to specific queries about the Toronto condo market. With headlines portraying a challenging scenario, we seek to uncover the real story. Are investors assigning condos at lower values or walking away from deals? How is the market responding to the current conditions?

  In a recent article, Doug Porter, Chief Economist for BMO, revealed a startling reality: rents in Canada have surged by 8.2% year over year, marking the fastest pace since 1983! Moreover, for the first time in 60 years of records, income growth has trailed behind rents by a significant margin. These figures set the stage for a profound discussion with local Property Manager and founder of Greater Vancouver Tenant and Property Management, Keaton Bessey.   Adding to the narrative, November's Report from www.Rentals.ca highlights that the annual rate of rent growth in Canada was 9.9% in October, the second-fastest increase in the past seven months. Vancouver leads the pack with astonishing average rent of $2,872 for a 1-bedroom and $3,777 for a 2-bedroom, while Burnaby closely follows, surpassing Toronto at $2,647 for a 1-bedroom and $3,341 for a 2-bedroom.   Armed with these facts, we delve into a series of questions with our esteemed guest, a seasoned property manager with 13 years of experience, to unravel the mystery of how we got to this point and whether it was an inevitable outcome as soon as home home prices began their surge.   We shed light on the potential impact of the current economic conditions on the rental market and with signs pointing to a slowing economy, we explore whether lower GDP output and a possible recession could be key factors affecting rental prices. Will an economic downturn slow down rent increases, or is it fundamentally a supply-related concern?   On the more contentious topic of rent controls, particularly in Vancouver, where opinions are divided, Keaton provides unique insights into whether rent controls work, and if not, what alternative solutions might exist to address the soaring rents and the city's distinction of having the highest average rent in the country.   We also look at rent collection under the current economic climate as it's a great indicator of where the economy lies as well as we look examples of renters breaking leases and what it means for both tenants and landlords. We also put Keaton on the spot as we ask him to peer into his crystal ball as we explore predictions on future rental rates. Will they go up or down, and what factors contribute to this projection?   Finally, the conversation touches on immigration and its impact on the rental market. Despite staggering immigration numbers, we explore why many newcomers don't transact until they earn their permanent residency as well as touching on how to rent to new immigrants and the steps you should take as a landlord when they don't have local references.

  In a significant move to boost housing supply, the federal government has unveiled a groundbreaking initiative following six months of record-high rental rates. A substantial $1.2 billion in low-interest loans is earmarked for the construction of 2,644 rental homes across seven new projects in Toronto. This aligns with Toronto's ambitious plan to build 65,000 new rent-controlled homes by 2030, with funds totalling $30-40 billion, or approximately $500,000 per home. While these measures address the supply issue, their impact may not be felt for 5-10 years.   Shifting to the pre-sale market, the surge is noticeable as resale inventory lags below averages. Over 3,500 pre-sale units hit the market in October across 20 projects, marking the largest release in 2023. With an anticipated 1,450 units in November, the absorption rate in October was 27%, slightly below the typical 30% for this season. The looming question: will investors retreat due to the Airbnb ban?   In the US, the annual inflation rate slowed to 3.2% in October 2023, surpassing market forecasts. Despite a 4.5% drop in energy costs, housing expenses accounted for over 70% of inflation. The positive outcome boosted the stock market, with the S&P experiencing its best day since April, the Dow rising 500 points, and the Canada 5-year bond dropping by 20 bps. Keep an eye out for Canada's announcements on November 21 and December 19.   National headlines from major news outlets paint a picture of the housing market entering a 'hibernation' phase, echoing a slowdown in sales, listings, and flat prices. While October saw a 17% decline in home sales below pre-pandemic levels, regions are affected differently. Ontario and British Columbia are entering a buyer's market, with moderately lower prices predicted by economists. Conversely, Alberta remains the outlier as Calgary's benchmark prices rose by 9.4% in the past year. Despite high rates, market activity suggests prices are generally holding, though sellers are adapting to collaborate closely with buyers.   Now, turning to the unique landscape of the Greater Vancouver Regional District (GVRD), despite 20 months of rising interest rates and a 35% decrease in buying power, home prices have only dropped 5% since the peak, up 6% from a year ago.  Over 1 million mortgages have renewed with rates 2-3 times higher, yet no significant increase in mortgage arrears is noted. With less than 1% of listings as court-ordered sales and inventory 25% below long-term averages, the GVRD market remains remarkably stable, evidenced by average prices rising $10,000 and median prices up $5,000 halfway through November.

  In this week's episode, we delve into the very challenging landscape faced by developers across major Canadian cities, a slowing national economy, more job losses and slowing GDP all the while we see some of the highest rental rates on record. We start with the gripping tale of a Toronto-based developer embroiled in a receivership debacle, owing creditors a staggering $200 million, putting their ambitious Mimico project in jeopardy. The ambitious plan promised to transform the Mimico Triangle with an expansive mixed-use space including condos, greenways, retail, and office spaces. As the situation escalates, we can't help but feel the intensity of the struggle faced by these builders.     Shifting gears to Vancouver, we uncover a web of rumors surrounding some of the city's prominent developers. Amidst a plethora of unpaid bills and multiple lawsuits, the company is fervently denying any financial trouble, with various claimants yet to prove these allegations in court. However, this is not the first time this prominent developer has faced legal issues, with previous lawsuits marring their reputation across various buildings.     Amidst these troubling developments, we uncover the larger challenges facing developers in the current market. With high-interest rates impacting the industry, several projects, including one in the Metrotown area and another in East Vancouver, are struggling to meet sales targets. Seeing projects for sale and others pausing or cancelling altogether, the landscape has changed drastically from just a few years ago. Even as governments advocate for affordable housing, the reality on the ground seems far from supportive. Developers are caught between the stringent demands of the market and the need to provide viable housing solutions.     Adding to the mounting pressures, the recent spike in development cost charges in Metro Vancouver has added to the financial burdens, leaving developers and eventually their Buyers grappling with how to deal with these costs. Despite the efforts to combat the housing affordability crisis, the recent move by the British Columbia government mandating high-density, transit-oriented developments has its own set of challenges and implications, further adding to the complexities faced by developers.     As the economic landscape continues to fluctuate, with employment rates and sales figures witnessing a decline, the impact on the housing market is palpable. Toronto's housing market is facing its lowest sales since 1995, with inventory levels soaring to unprecedented heights. Similarly, the rental rates across Canada, particularly in Vancouver and Burnaby, have hit new highs - again!

Consumer confidence in the Real Estate market is a vital economic barometer and has taken a worrisome downturn. In September, confidence plummeted to levels nearly as low as during the peak of the pandemic and the Global Financial Crisis, setting off alarms that a recession may be looming. A significant red flag emerged as respondents expressed a high degree of pessimism, with 70.5% feeling that it's a bad time for major purchases.This pessimism isn't confined to households; it's also evident in the business community. Furthermore, per capita GDP is showing further signs of contraction, declining at a rate not seen since the financial crisis. This metric holds significant importance as it provides a glimpse into the state of the middle class, reflecting the overall health of the economy. Comparatively, Canada's population growth remains uncertain, with fluctuations and significant undercounts. The latest data shows a record year-on-year population growth of nearly 1.2 million, following a sharp downward revision in the previous quarter. Interestingly, this revision came after reports that temporary residents had been undercounted by approximately 1 million, an issue that Statistics Canada did not dispute! These discrepancies highlight the lack of clarity in understanding Canada's actual population growth and shows how our immigration program has been run amuck. In the real estate market, Toronto is experiencing a substantial slowdown, with sales declining by 1.8% month-over-month and 3.6% over the past two months. Sales have dropped by 22% since their peak in May, particularly impacting the condo and detached housing segments, which are both at 20-year lows in terms of sales. This drop in sales has led to a surge in inventory, which has risen by 11% month-over-month and 44% year-over-year! New listings have also increased, reaching levels 10% above the norm. Investors with an 80% loan-to-value ratio and today's mortgage rates are facing negative cash flows of -$1,375. This marks a significant departure from being cash positive just a few years ago and may lead to further increases in condo inventory. Vancouver has not yet experienced the same levels of negative cash flow and is currently sitting around the five-year average, which is 40% lower than 2020. In the construction sector, there has been a decline in the number of dwellings under construction in Toronto, with a 4.2% drop in August, the most significant decline since 2015. This decrease is particularly noteworthy because under construction counts had been steadily increasing since 2016. A similar trend is also visible in Vancouver, with a 1.2% decline in September, driven by a 2.4% drop in the condo segment. The real estate sector is typically a leading indicator for the overall health of the economy. As more and more households struggle with higher and higher rates, we suspect more pain will come before it gets better. Tune into this weeks Podcast and get the full breakdown.

In this week’s episode, we're diving into the current state of the Fall real estate market with the September Stats and it's not looking very (pumpkin)spicy. With falling prices, low sales volumes, high mortgage rates, and a significant lack of inventory to choose from, it's shaping up to be quite a challenging season for both buyers and sellers.   Let’s look at the numbers - We saw a total of 1,926 sales in September, which is a 20% decrease compared to August. This marks the fourth consecutive month of declining sales, which is unusual for the Fall market - although perhaps it isn’t when you consider the circumstances. However, September still surprised us with year over year sales volume increasing by 13%, but still 26% below the 10-year seasonal average.   At that pace, it’s looking more and more like there won't be a traditional 'fall' market this year, as high mortgage rates and below-average sales volumes are likely to persist throughout 2023 and into 2024.   New Listings are up! In September, 5,446 properties were newly listed, showing a 28% increase year-over-year and a 5.2% rise above the 10-year seasonal average. Interestingly, monthly new listings have rarely exceeded the 6,000 mark since 2005, remaining relatively steady over 18 years despite a 600,000 increase in GVRD population.   Total inventory sits at 10,647 listings and this is only the second time it has crossed the 10,000 mark in the past year, increasing by 7% month-over-month. While inventory is up by about 100 listings compared to the previous year, it remains 40% lower than pre-pandemic levels. We expect a slight climb in inventory for October and November and we should also mention that foreclosure rates account for a negligible 0.005% of the total inventory.   The Sales to Active Ratio has us sitting in balanced market territory at 17.7%, this ratio is down 6.3% month-over-month and a significant 19% since the peak in May when it hit 37% - a strong Sellers market. This marks the first time the market has reached a balanced state since January, albeit for just one month.   The Housing Price Index (HPI) has dropped for the second consecutive month, down 0.4% month-over-month to $1,203,300. While this reflects a 4.4% year-over-year increase, prices are only down 5% from their all-time high in April 2022, despite substantial increases in mortgage rates. Median prices have seen some fluctuations, jumping by $65,000 but recovering from a $78,500 drop the previous month to reach $965,000, which is 3.5% under the all-time high!   Join us on the podcast this week and get the full story!

  Thinking about selling your home and want to know when is the best time? Well knowing when not to sell is equally as important. I’m going to give you 5 compelling reasons why you shouldn’t sell your home in 2023. Selling your home is a big decision, you only get 1 chance to maximize the sale price and walk with as much capital as possible. This video was created to offer some insights into how holding on to your property even longer could potentially result in a higher sale price in the future AND share insights into how you may be able to hold that property indefinitely, yet still be able to access the equity to make the move into your next property, or help finance your retirement years.  

  Inflation in Canada has been easing, with the current rate standing at 2.8%, the slowest since March 2021 and down from 3.4%. The largest factor contributing to this decline was lower gasoline prices compared to the same period last year, showing a decrease of 21.6%. However, shelter costs have risen by 4.8% year over year, driven by significantly higher mortgage interest costs (up 30.1% from the previous year) and increased rents (up 5.8% from June 2022). Moreover, grocery prices have surged by 9.1% year over year.   Analyzing the inflation trends, it has been on a downward trajectory for a year, starting from July 2022 when rates were at 3.75%.  With the overnight rate at 5%, and inflation within the target band of 1-3%, the looming question becomes, does the BOC continue to raise, hold or start to cut? The Bank of Canada estimates inflation to hover around 3% for one year and gradually decrease to 2% by mid-2025, signaling that rates may very well need to remain around 5% for the next 2 years.    This would dramatically alter the housing landscape.   In the housing market, housing starts have been fluctuating, with Canadian housing starts rising by 41% to 280k units in June, following a 23% decline in the previous month. Compared to the same month last year, starts were up by 4%. In British Columbia, new housing starts rose significantly by 61% to 66k units in June, showing a 17% increase from June 2022 levels. While there is an overall upward trend in housing starts, they have not fully recovered from the lows observed in mid-2020 and 2022. Additionally, despite the current level of construction, it is not keeping up with population growth.   Details of the MultiPlex Report have come to light this week, with the COV posting the report to its website.  The plan, which allows for 4-8 units on most RS-1 lots, aims to create additional housing options and density. Staff recommend council add multiple dwellings as a permitted use to facilitate the construction of multiplexes, reduce the maximum size of new single-detached houses, increase the maximum size of new laneway houses, simplify laneway house regulations, reduce zoning regulations for RS residential zones, and consolidate nine RS residential zones into a new R1-1 Residential Inclusive zone, making it easier and quicker to build multifamily homes on single-family lots.  This would help the private sector increasing housing via the ‘missing middle’, though any tangible outcomes from this plan won’t be known for 2-3 years at least.   Affordability remains a concern due to high interest rates. Purchasing the average priced GVRD home at $1.2 million with 20% down requires a buyer to have an annual income of $215,000 and carry no debt. This has led many potential buyers into the rental market, driving up rental prices. Canada's average rent reached a new all-time high in June at $2042, with average annual rents increasing by 20% over the last two years. In Vancouver, one-bedroom rents were up by 18% year over year and two-bedroom rents by 14% year over year.   Short-term rentals have seen a significant increase, with 4,100 active listings, up by 37% year over year. This surge comes at a time when many people are struggling to find long-term rental accommodations, creating further challenges in the rental market.   Regarding the local market update, housing prices have declined for the second consecutive month, with median prices down by $5,000 and average prices down by $12,000. Despite the year-over-year increase of 10% in sales, there is a 25% month-over-month decrease, and inventory is slowly creeping up, reaching 10,500 units. However, there is still no indication of a spike in inventory.   High interest rates are keeping people in their homes, resulting in limited housing inventory in the immediate future. The cost to build new housing is prohibitive, leading to concerns about affordability. The population continues to grow at a record pace each quarter. As interest rates are expected to remain high for an extended period, more individuals may face financial strain, and many who bought homes in the last five years may no longer qualify for their current properties.   No matter what type of housing you are in, looking for, renting, building or selling - it’s a struggle for almost everyone out there.

  The Bank of Canada (BOC) announced a 0.25% interest rate hike, marking the 10th increase since March 2022 and bringing the overnight rate to 5%, the highest in 22 years!   The move comes as the Canadian economy, which has been stronger than expected, is expected to slow down due to the impact of higher interest rates. Although recent inflation rates have eased to 3.4% in Canada and 3% in the United States, the core inflation rate remains at 3-4% and has been more persistent than anticipated. The BOC now forecasts a return to its 2% inflation target in mid-2025, instead of the previously projected 2024.   The increase in interest rates has had a significant impact on the bond and mortgage markets. The 5-year bond rate has surged to 4%, the highest since 2007, leading to fixed mortgage rates around 5.2% and variable rates around 5.9%. These rates are the highest in 15 years and have further challenged affordability, with monthly mortgage payments increasing significantly.   The sentiment in the housing market has also shifted, as sentiment levels have dropped, resulting in reduced spending and housing demand. The labor market has shown signs of weakening, with the unemployment rate increasing over the past three months, which is the largest increase since 2019.   Population growth in Canada has reached a record high of 1.2 million in the last 12 months, with non-permanent residents accounting for 60% of the increase. This has put extreme pressure on the rental market, with high rental rates and landlords resorting to renting out individual beds to meet the demand.   In the Toronto market, sales have declined by 7% and inventory has increased by 19%. However, sales are still up 15% year-over-year, with a 20% increase in condo volume. Prices have risen by 2.5% in the last month and 9% in the past four months. The investment condo market has become less attractive for investors, with negative cash flow and decreasing rental returns.   Looking at Calgary, the housing market continues to strengthen, with home sales rising 5% month-over-month and setting a record for the month. Sales in Calgary were up approximately 10% year-over-year, particularly in the condo segment, which experienced a 50% surge. Overall inventory is at a 10-year low, leading to increased prices.   These developments indicate that the already financially strained marketplace is facing further pressure due to the recent interest rate hike, with talks of additional increases and higher rates for the foreseeable future. The housing and business sectors are likely to experience significant shifts if interest rates remain high for an extended period.

  The real estate market experienced notable trends and shifts in June 2023. This episode focuses on key metrics for the month of June. We take a look at total sales, new listings, inventory, the current sales-to-active ratio, and pricing trends. By examining these factors, we gain insights into the current state of the market and can make informed projections for the future. In June, the total sales reached 2,988 units, marking a 21% increase compared to the same month in the previous year. However, sales experienced a significant decline of 14% from the previous month, making it the first decrease in five months. A common theme we see in June is a typical summer slowdown, which was likely exacerbated by a surprise rate hike and the heightened anticipation of another hike the following week. Overall, the total sales were 8.5% below the 10-year average; however this does not reflect the change in pricing we’ve seen so far this year. This downward trend indicates a temporary cooling of the market that we tend to see in the summer months. June saw 5,348 new listings, reflecting a 1.3% increase compared to June 2022. However, there was a slight decrease of 0.5% from the previous month. Interestingly, this was only the second time this year that month-to-month sales volumes declined. The new listings were 3% below the 10-year seasonal average, and it is expected that listings will further decrease in July and August, following the typical summer trend. The inventory rose to 9,327 units in June, representing an increase of 300 units or 3%. This milestone marked the first time in six months that the inventory broke the 9,000 mark. Although there has been a six-month period of increases, the total increase during that time was only 1,800 units. Despite a 12-month high in new listings, demand managed to keep the overall inventory relatively flat. The inventory in June 2023 was 8% less than the inventory in June 2022 and 17% below the 10-year average. However, it is important to note that these figures are not adjusted for population growth. Continued low inventory is expected to keep prices stable or flat through the summer, unless there is a rate hike, which could exert downward pressure. The sales-to-active ratio for June stood at 31.5%, representing a 7.5% decrease and the first decrease in five months. Despite the decline, the market remained in a seller's market territory. Detached homes had a sales-to-active ratio of 21%, down 7.5% and approaching a balanced market. Townhomes and condos also experienced declines, with ratios of 38.5% (down 6.5%) and 39.5% (down 6%), respectively. The Home Price Index (HPI) continued its upward trajectory for the sixth consecutive month, increasing by $15,000 or 1.3% to reach $1,203,000 in June. This milestone marked the first time in 12 months that the HPI surpassed the $1.2 million mark. Throughout 2023, the HPI has experienced a significant increase of $90,400, representing an 8% rise. However, when compared to June 2022, the HPI was down 2.4%, and it currently sits 4% below the peak reached in April 2022. The lagging nature of the HPI suggests that it is essential to examine other metrics for a comprehensive understanding of the market. The median price experienced a decrease of $23,000 to $957,000 in June, marking the first decrease in six months. Similarly, the average price declined by $41,000 to $1,270,000, the first decrease in five months. Projections for the future indicate a flat HPI, with a potential 1% drop by the end of August. The median and average prices are expected to remain stable. However, a rate hike could extend the downward trend. It is worth noting that low inventory remains a significant factor in keeping prices buoyant. The real estate market observed a slowdown in sales, a moderate decline in new listings, and a gradual increase in inventory during June 2023. While the market remains in a seller's market overall, the sales-to-active ratio decreased, indicating a potential shift towards a balanced market, particularly in the detached homes segment over the summer. The HPI continued to rise, reaching a new milestone, but lagged behind previous year figures and the peak in April 2022, not to mention this is a lagging price indicator. Median and average prices experienced their first decreases in several months. Looking ahead, the market will continue to stabilize, with the HPI remaining flat and a potential 1% drop by the end of August. However, the trajectory may be influenced by external factors such as another rate hike. The foundation of low inventory is likely to support price stability in the coming months despite what we could see from the BoC.

  In recent months, inflation in Canada has shown a downward trend, with the rate dropping from 4.4% to 3.4%, the lowest it has been since June 2021! The decrease can be attributed primarily to a significant drop in gas prices, which have declined by an average of 18%. However, despite this overall decline, several items in the consumer price index (CPI) basket have registered higher prices. Groceries have seen a significant increase of 9%, while rent has risen by 5.7%. The most notable contributor to the year-over-year CPI increase is the surge in mortgage interest costs, which have skyrocketed by 30%. When these self-inflicted mortgage interest costs are excluded, the CPI stands at 2.5% in May, down from 3.7% in April. This is important because if the Bank of Canada (BOC) lowers rates and removes the mortgage interest cost element, it could bring inflation closer to their target. It is anticipated that the June inflation print may be below 3% according to the BOC's forecast from a few months ago. The timing of interest rate drops depends on the BOC's main mandate, which is to control inflation. To lower interest rates, the BOC requires prolonged sub 3% inflation, along with solid GDP growth, a robust labor market, and a rebounding housing market. However, financial markets currently expect the BOC to raise its benchmark interest rate by another 25 basis points to 5% at its next meeting on July 12th. Canada has experienced a significant population growth, with an increase of 1.2 million people in the past year as of Q2. This growth is approximately 3X the 10-year average and raises concerns about the sustainability and impact of such rapid population growth. In particular, the growth in non-permanent residents (NPR) has reached 725,000 in the four-quarter rolling average, surpassing the previous record of under 200,000! It is worth noting that the majority of non-permanent residents are renters, which exacerbates the ongoing rental crisis in the country. Furthermore, a comparison between Canada and the United States shows that Canada's population grew at a rate of 3.5% last year, while the USA's population grew at a rate of 0.5%. The need for more housing is evident due to the population growth, but there are challenges to meet this demand. Residential construction costs in Canada have soared by 50% since the start of the pandemic. Additionally, development lending costs have increased by 250% in just 18 months due to rising interest rates. Moreover, the money paid to various levels of government now represents 31% of building costs. These factors have led to a decline in housing starts, reaching the lowest levels since December 2020. With a record 1.2 million people added to the population over the past year, the shortage of housing is a pressing issue that needs to be addressed. The City of Vancouver is facing its own financial difficulties that will almost certainly result in significant property tax increases for homeowners. The projected budget shortfall is driven by high inflation, upcoming collective bargaining with employees, and various council initiatives, including plans to hire 100 additional police officers. As a result, homeowners in Vancouver may experience property tax increases of close to 10% annually for the next five years. These increases can have a substantial impact on homeowners' finances and raise concerns about the affordability of living in the city. We also dive into some of the stats for the month of June and Buyers should be somewhat happy to hear that supply has increased to just over 10,000 active units. With that said, we also take a glimpse into the office space sector in Vancouver which has a vacancy rate of near 9% with major REIT’s looking to offload entire buildings.

  This week we look at how the Canadian economy is grappling with a series of troubling indicators that raise concerns about a potential recession. Our podcast discussion explores the key factors contributing to the heightened risks, including skyrocketing household debt, surging mortgage payments, escalating rental rates, declining mortgage growth, mounting credit card debt, plummeting housing starts, and weakening sentiment towards real estate. We shed light on the various economic challenges and the potential impact on businesses and employment. Primarily household debt burdens are reaching unprecedented levels. Canadian households are experiencing an alarming rise in debt service ratios, reaching their highest levels since 1990. With Canada ranking third globally in terms of household debt, the diversion of disposable income towards interest costs is hampering consumer spending, which poses a significant risk to the overall economy. Monthly mortgage payments have surged to all-time highs, primarily driven by deep discount fixed-rate mortgages. This increase limits the amount of money available for expenditure on goods and services, potentially triggering a slowdown in economic growth. Rental rates have reached record levels, particularly in cities like Vancouver, making affordable housing increasingly scarce. The limited financial capacity of individuals to afford higher rent negatively impacts their overall disposable income, creating a drag on consumer spending. The growth rate of mortgage debt has been steadily declining, largely due to reduced originations in the first quarter. Stricter lending requirements imposed by regulatory authorities, such as the Office of the Superintendent of Financial Institutions (OSFI), may further hinder borrowing capacity, potentially leading to a shift from homebuyers to renters. While mortgage lending faces tighter regulations, credit card debt continues to surge, hitting record highs. The rise in credit card loans might indicate that consumers are using credit to remain solvent in other areas of their expenses before potential defaults occur, presenting a concerning sign for the economy. The construction industry is witnessing a significant decline in housing starts, marking the sharpest drop since the 2008 financial crisis. This decline is mirrored by a substantial decrease in building permits, which typically precede housing starts, signifying a slowdown in the sector and its potential impact on the broader economy.  Canadian sentiment towards real estate has started to decline, following a period of recovery driven by expectations of a Bank of Canada "pause." However, with uncertainties regarding the future course of central bank policies, sentiment is expected to soften further in the coming months, potentially affecting economic outlook and decision-making. The Canadian economy could be headed for a "run of the mill" recession characterized by negative growth for multiple quarters and a rise in the unemployment rate or perhaps something a little steeper depending on the industry and what data points you’re considering. Although the unemployment rate currently remains low, even a moderate increase to the average levels seen between 2010 and 2016 could have detrimental consequences. Businesses across various sectors, including technology and construction, are already contemplating layoffs and seeking capital infusion to navigate the potential challenges ahead. The economy is facing a confluence of factors that increase the risk of a recession. The alarming levels of household debt, soaring mortgage payments, rising rental rates, declining mortgage growth, mounting credit card debt, plummeting housing starts, and weakening sentiment towards real estate all contribute to the economic uncertainties. As businesses and individuals grapple with these challenges, proactive measures and prudent policy decisions will be crucial to mitigate the potential negative effects and ensure the resilience of the Canadian economy.

  This week we explore the inflation and interest rate factors affecting the United States and how they are impacting us here Vancouver. We take a close look at inflation, interest rates, new mortgage originations, rental rates, and the affordability index - all of which have changed significantly in the last few months. The Federal Reserve (Fed) in the United States decided to hold interest rates for the first time in 15 months, ending a period of significant cumulative hikes. Although inflation in the US dropped to its lowest level in two years, Fed Chairman Jerome Powell suggested that two more rate hikes might occur in 2023 to manage inflationary pressures effectively. The US stock market responded positively to the news, indicating there’s a slight sense of optimism about the economy's prospects. The mortgage market in Canada however is a different story and experienced its weakest growth in two decades during the first quarter of the year, with newly issued mortgages reaching their lowest point since 2003. High interest rates affected homebuyers, causing many to delay their purchases. Furthermore, the percentage of new mortgages in Canada with borrowers spending 25% or more of their gross income on payments increased significantly compared to previous years. The effects of these trends are starting to emerge in Greater Vancouver, where active inventory reached its highest level since November 2022. Sales are expected to be 25% higher than the same period the previous year, while prices remained relatively stable. Rental rates in Vancouver continue to rise due to record-breaking population growth and tight supply. Demand for rental units is so high that bidding wars are becoming common, with prospective renters given limited time to view a property and submit their applications. In fact, it’s become so expensive that the average rent in Vancouver is no $2,649 per month. The Mercer Report, which ranks global cities based on affordability, reveals that Vancouver has dropped eight places to 116th out of 227 cities. This indicates that there are 115 cities worldwide with a higher cost of living than Vancouver - which we found somewhat confusing as it certainly doesn’t feel that way. In conclusion, the episode highlights the potential impact of the Fed's interest rate decisions on the economy, the challenges faced by homebuyers due to high mortgage rates, the increasing rental rates in Vancouver, and the city's relative affordability compared to other global cities. It suggests that the effects of recent economic developments may continue to be felt in the coming months as we aren’t out of the woods just yet.