Fears that the spring housing market could “overheat” will be in the background as the Bank of Canada readies for its interest rate decision on Wednesday, experts say.
The spring housing market, which kicks off in March, is typically one of the busiest times of the year for home buyers and sellers in Canada.
So far, the spring housing season is a “mixed picture,” according to RBC assistant chief economist Robert Hogue, as the Bank of Canada’s benchmark interest rate remains high and boxes out some prospective buyers.
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Average home prices are meanwhile ticking up in some regions including the GTA after a correction in the market tied to the central bank’s rate tightening cycle over the past few years.
“In some parts of the country, that recovery seems to be relatively robust,” Hogue tells Global News. “Prices are going up, but not that rapidly.”
Rishi Sondhi, economist with TD Bank, said in a housing market report released Monday that the first quarter of the year is “tracking stronger than anticipated.”
Unseasonably warm weather helped to fuel a hot start to housing activity in January and February, he noted, and some of those early sales pulled demand forward from the typically busy spring season. The Easter long weekend falling at the end of March also dampened overall sales in that month, he said.
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Like Hogue, Sondhi said he’s expecting a “modest” uptick in home sales and prices this spring, driven by pent-up demand in Ontario and British Columbia.
But both market watchers tell Global News they’re expecting many sidelined homebuyers will maintain their holding patterns until they get a clearer sign of lower borrowing costs on the way from the Bank of Canada.
Worried the housing market could ‘stoke’ inflation
The Bank of Canada, too, has made clear that its eyes are on the spring housing market as it weighs whether it’s done enough to ensure inflation will keep cooling all the way back to its two-per cent target.
While overall inflation cooled to 2.8 per cent annually in February, shelter inflation has remained a thorn in the side of the Bank of Canada, remaining above six per cent in the month. While the shelter component of the consumer price index (CPI) includes inputs like rents and mortgage interest costs tied to the central bank’s own policy rate, it also factors in home prices.
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A hot housing market could therefore “stoke shelter price inflation,” the Bank of Canada warned in March.
“If the housing sector rebounds in the spring, shelter price inflation could be pushed up, delaying the return of CPI inflation to the (two per cent) target,” the deliberations read. “If inflation proves more persistent than expected, monetary policy would likely need to remain restrictive for longer.”
But recent economic data has been largely positive for the Bank of Canada’s inflation fight.
If the Bank of Canada cuts its policy rate on Wednesday, prospective buyers would likely come off the sidelines, Hogue says. A spring cut could give Canadians and market watchers expectations that the central bank’s rate cut cycle “could be a bit more aggressive” than currently anticipated, he says, fuelling a bit more activity in the market.
Such a scenario would not align with the Bank of Canada’s goal to avoid a reacceleration in price pressures, Hogue says.
“If the housing market were to overheat again, that could be counterproductive. So (the central bank) is mindful of that.”
There’s a “coiled spring” effect in the housing market right now, Sondhi wrote in his report, which poses a risk that sales and prices could rise higher than in the current TD Bank forecast.
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Even during the Bank of Canada’s current tightening cycle, buyers have driven sales activity higher in response to cheaper borrowing rates in the market. That happened last spring when the Bank of Canada announced a “conditional pause” in its rate hike campaign and at the end of 2023, with bond yields declining and driving down fixed mortgage rates in response.
Sondhi told Global News in an interview on Monday the market is “responsive” to these developments that are positive for demand.
Rate cuts expected to skip spring housing market
But neither Hogue nor Sondhi have a rate cut from the Bank of Canada this week in their baseline housing forecasts.
Most economists are expecting the Bank of Canada will hold its policy rate steady again at 5.0 per cent on Wednesday, with calls for cuts to begin in either June or July.
Hogue says the central bank likes to signal its pivots well in advance, which would make a change in stance on Wednesday premature. But he adds that the latest economic data could allow the Bank of Canada to be a bit clearer that “an inflection point is imminent in its monetary policy.”
In addition to the dampening effect of higher interest rates, Sondhi said the lack of certainty from the Bank of Canada about where interest rates are heading is another factor constraining buyers. He agreed that this week could see the central bank provide clearer signals about a possible rate cut timeline, something monetary policymakers have so far been tight-lipped about.
“The economic conditions that we see are supportive of cuts so they might open the door for that possibility in their April statement,” he told Global News.
But Hogue also warns not to expect a clear direction from the Bank of Canada one way or another. Monetary policymakers will want to “keep some options open” should inflation progress stall, or if the housing market trends hotter than economists are currently forecasting, he says.
“If the market does not behave the way we expect and starts to jump up very quickly and overheat, it could make the Bank of Canada take a step back and reassess its game plan,” Hogue says.
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TD Bank is expecting the housing market to pick up in the second half of the year after interest rate cuts begin in July. Sales and prices are primed to increase, according to the forecast, but in many markets — particularly those most constrained by affordability — price appreciation will be limited.
Even when interest rate cuts begin, Sondhi said he doesn’t expect housing to become meaningfully more affordable over the coming years as cheaper borrowing costs fuel rising prices, offsetting improvements in affordability.
For Hogue’s part, he says it won’t be until late 2024 and into 2025 that more buyers come off the sidelines, empowered by interest rate drops of one to two percentage points over the next few years.
“A drop in interest rates will help affordability and will bring more people, more buyers into the housing market,” Hogue says.
“But we will need a string of cuts before it makes a real difference to a lot of people.”
VANCOUVER – Jesse Marsch issued Canada’s men’s soccer squad a challenge — get physical.
The edict came after the Canadians surprised many at this summer’s Copa America tournament, making it through to the semifinals. As his players departed for their professional clubs, the head coach wanted them thinking about continued growth.
“I challenged them to be more physically present in the matches that they played in,” Marsch said. “I’ve tried to encourage all the players to sprint more, to win more duels, to win more balls, to be more dynamic in matches.”
When Canada reconvened for a pair of friendlies last week, the coach saw some players had already heeded his call, including Vancouver Whitecaps product Ali Ahmed.
The 23-year-old midfielder started in both Canada’s 2-1 victory over the United States on Saturday and Tuesday’s 0-0 draw against Mexico.
“I’m really happy for him,” Marsch said. “I think he’s still young and still has a lot of room and potential to continue to grow.”
Playing under Marsch — who took over as head coach in May — has been a boon for the young athlete, currently in his second full season with Major League Soccer’s Whitecaps.
“Jesse has a very clear way of playing,” Ahmed said. “And I think the way we’ve been training and the way we’ve been growing as a group, it’s been helpful for me.”
The reward of getting minutes for a national team can spur a player’s growth, including Ahmed, said Whitecaps head coach Vanni Sartini.
“Of course that fuels him inside to say ‘Hey, I want to be a better player. I want to get to that stage,'” said Sartini.
Vancouver had six players — including Ahmed — away on international duty during its 0-0 draw against Dallas FC on Saturday. The absences are a good problem to have, Sartini said.
“Because we have players that are close to the national team, we have a lot of players that development is faster, better, bigger than it would have been if they hadn’t been called,” he said.
Born in Toronto, Ahmed came up through the Whitecaps’ academy system and played for Vancouver’s MLS Next Pro side before cementing his spot on the first team in 2023. He put up two goals and two assists across 22 regular-season games, and added another goal and another helper in 19 appearances this year.
Taking the next step will require the five-foot-11, 154-pound Ahmed to push himself physically, Marsch said.
“Tactically, he’s technically gifted,” the coach said. “I’ve told him he’s got to get in the gym more.
“There’s a lot of these little things where too many guys, they still look like kids and we need to help them look like men and play like men. And that’s what the high standards of the game are about.”
Marsch has quickly adjusted to recalibrating standards in his short time with Team Canada. Since taking over the squad in May, the coach said he’s learned the players are smarter and more capable than he originally thought, which forces the coach to constantly recalibrate his standards.
“That’s my job right now, to keep raising the level of the demands,” he said.
The way 40th-ranked Canada is viewed on the international stage is evolving, too.
“I think we’re changing the perception on the way we’re playing now,” he said. “I think beating the U.S. — it would have been nice to beat Mexico as well — the way we did, the way that we performed at Copa, I think teams are starting to look at us differently.
“Right now, I think we’re focused on ourselves. We’re definitely trying to be the best in CONCACAF and we have higher goals as well.”
This report by The Canadian Press was first published Sept. 12, 2024.
An investigator gave the World Anti-Doping Agency a pass on its handling of the inflammatory case involving Chinese swimmers, but not without hammering away at the “curious” nature of WADA’s “silence” after examining Chinese actions that did not follow rules designed to safeguard global sports.
WADA on Thursday released the full decision from Eric Cottier, the Swiss investigator it appointed to analyze its handling of the case involving the 23 Chinese swimmers who remained eligible despite testing positive for performance enhancers in 2021.
In echoing wording from an interim report issued earlier this summer, Cottier said it was “reasonable” that WADA chose not to appeal the Chinese anti-doping agency’s explanation that the positives came from contamination.
“Taking into consideration the particularities of the case, (WADA) appears … to have acted in accordance with the rules it has itself laid out for anti-doping organizations,” Cottier wrote.
But peppered throughout his granular, 56-page analysis of the case was evidence and reminders of how WADA disregarded some of China’s violations of anti-doping protocols. Cottier concluded this happened more for the sake of expediency than to show favoritism toward the Chinese.
“In retrospect at least, the Agency’s silence is curious, in the face of a procedure that does not respect the fundamental rules, and its lack of reaction is surprising,” Cottier wrote of WADA’s lack of fealty to the world anti-doping code.
Travis Tygart, the CEO of the U.S. Anti-Doping Agency and one of WADA’s fiercest critics, latched onto this dynamic, saying Cottier’s information “clearly shows that China did not follow the rules, and that WADA management did nothing about it.”
One of the chief complaints over the handling of this case was that neither WADA nor the Chinese gave any public notice upon learning of the positive tests for the banned heart medication Temozolomide, known as TMZ.
The athletes also were largely kept in the dark and the burden to prove their innocence was taken up by Chinese authorities, not the athletes themselves, which runs counter to what the rulebook demands.
Despite the criticisms, WADA generally welcomed the report.
“Above all, (Cottier) reiterated that WADA showed no bias towards China and that its decision not to appeal the cases was reasonable based on the evidence,” WADA director general Olivier Niggli said. “There are however certainly lessons to be learned by WADA and others from this situation.”
Tygart said “this report validates our concerns and only raises new questions that must be answered.”
Cottier expanded on doubts WADA’s own chief scientist, Olivier Rabin, had expressed over the Chinese contamination theory — snippets of which were introduced in the interim report. Rabin was wary of the idea that “a few micrograms” of TMZ found in the kitchen at the hotel where the swimmers stayed could be enough to cause the group contamination.
“Since he was not in a position to exclude the scenario of contamination with solid evidence, he saw no other solution than to accept it, even if he continued to have doubts about the reality of contamination as described by the Chinese authorities,” Cottier wrote.
Though recommendations for changes had been expected in the report, Cottier made none, instead referring to several comments he’d made earlier in the report.
Key among them were his misgivings that a case this big was largely handled in private — a breach of custom, if not the rules themselves — both while China was investigating and after the file had been forwarded to WADA. Not until the New York Times and German broadcaster ARD reported on the positives were any details revealed.
“At the very least, the extraordinary nature of the case (23 swimmers, including top-class athletes, 28 positive tests out of 60 for a banned substance of therapeutic origin, etc.), could have led to coordinated and concerted reflection within the Agency, culminating in a formal and clearly expressed decision to take no action,” the report said.
WADA’s executive committee established a working group to address two more of Cottier’s criticisms — the first involving what he said was essentially WADA’s sloppy recordkeeping and lack of formal protocol, especially in cases this complex; and the second a need to better flesh out rules for complex cases involving group contamination.
MANCHESTER, United Kingdom – Canada’s top male tennis players have defeated Finland 3-0 in the group stage of the Davis Cup Final.
Denis Shapovalov of Richmond Hill, Ont., beat Eero Vasa 7-6 (2), 6-2 in Tuesday’s first singles match. Montreal’s Felix Auger-Aliassime then dispatched Otto Virtanen 6-2, 6-3 in the second singles match.
With the tie already won thanks to the two singles victories, Shapovalov and Auger-Aliassime teamed up to best Virtanen and Harri Heliovaara 6-2, 7-5 in doubles play.
There was an element of revenge after Canada lost to Finland in last year’s quarterfinals.
“Everybody’s in good spirits, so it’s very good,” Auger-Aliassime said. “Any motivation is good, but I think it’s a different year, a different time, and (last year’s loss) was behind us. This year we have a full team and everybody’s playing better than last year. Everybody’s improved.”
It’s the second consecutive group-stage tie Canada has won after beating Argentina 2-1 on Tuesday. Canada, the lone seeded team in Group D, will face host Great Britain on Sunday.
Four groups of teams are playing in four cities this week to qualify for the eight-team Finals in Malaga, Spain, in November. The top two countries in each four-team group advance.
Since Canada’s undefeated after two opponents in the group stage, it is set to advance to the Davis Cup Finals.
“Couldn’t ask for more today, super proud of the team,” said captain Frank Dancevic. “Great team spirit, amazing bench team spirit, and fans pushing us through the day.”
It is Canada’s fifth consecutive appearance in the Davis Cup Finals, having won its only title in 2022. The Canadians defeated South Korea 3-1 in February’s Davis Cup qualifiers in Montreal to reach the group stage of the finals.
— With files from The Associated Press.
This report by The Canadian Press was first published Sept. 12, 2024.
