Canadian banks announced they were raising their prime lending rates after the Bank of Canada surprised markets by hiking it benchmark interest rate on June 7.
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Average home price to end the year 4.8% lower than 2022, will rise 4.7% in 2024: CREA
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The Canadian Real Estate Association expects the average price of a home to end the year 4.8 per cent lower than 2022, but says prices will rise by roughly the same amount in 2024.
The association’s prediction revealed Friday amounts to an average price of $670,389 this year and $702,214 next year, when prices are expected to increase by 4.7 per cent.
The board also foresees home sales falling 1.1 per cent to 492,674 this year and then rising 13.9 per cent to 561,090 in 2024.
The forecast accounts for little change in month-over-month sales seen since summer 2022 and the modest monthly gains recorded in February and March, as buyers edged closer to make purchases.
“As the spring market heats up and it looks as though some buyers are coming off the sidelines, it’s important to remember that the intense market conditions of recent years have not gone anywhere, they’ve just been on pause,” said Jill Oudil, CREA’s chair, in a press release.
The market Canadians are re-entering has seen months of falling sales, lower listings and dampened buyer sentiment as eight successive interest rate hikes weighed on the cost of borrowing.
But in recent months, the rate has been held twice in a row, prompting some to eye purchases once more, while prices are still low.
These trends left March home sales down 34.4 per cent to 41,636 from the year before.
On a seasonally-adjusted basis, sales reached 33,833, about one per cent higher than they had been in February.
March marks the second consecutive month of higher sales, Rishi Sondhi of TD Economics pointed out.
Sondhi attributed much of the boost to interest rates stabilizing, which helped “buyer psychology” and a solid job market.
“Our forecast assumes further sales gains are in the cards this year, although an important downside risk stems from looming regulatory changes that will make it harder to qualify for mortgage,” he said, in a note to investors.
As month-over-month sales ticked up new listings remain at 20-year lows, said CREA.
On a seasonally-adjusted basis, new listings totalled 53,298 in March, down 5.8 per cent from February. Actual new listings hit 68,597, a 27.4 per cent drop from a year ago.
With supply at historic lows, Oudil said homes are not only selling but selling faster, but it has not been enough to entice some sellers to list their properties.
“Sellers will likely need to see more evidence of a sustained pickup in activity and prices before listings turn meaningfully higher,” Sondhi said.
People don’t sell during a down market for several reasons, said Robert Kavcic, a senior economist with BMO Capital Markets.
Some don’t have to sell because the job market is strong and there are fewer mortgage delinquencies because the Office of the Superintendent of Financial Institutions has stress-tested most buyers and investors have a strong rental market to fall back on.
“Potential sellers don’t want to sell into a down market, and expectations are building that the worst of the correction is over,” he added, in a note to investors.
“The Bank of Canada’s guidance has helped establish this improved market psychology.”
As that shift in thinking took shape, CREA found the average home price was $686,371 in March, down 13.7 per cent from the year prior.
Excluding the Greater Toronto and Greater Vancouver Areas, which tend to be the country’s hottest markets, from the calculation cuts more than $136,000 from the national average price.
On a seasonally-adjusted basis, the average home price ticked up two per cent from February to $648,088.
CREA also said the average price was up almost $75,000 from its January 2023 level.
This report by The Canadian Press was first published April 14, 2023.
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The company says director Chika Stacy Oriuwa indicated she resigned “because of her loss of confidence in board leadership and because of mistreatment.”
In addition to Oriuwa, Indigo says Frank Clegg, Howard Grosfield and Anne Marie O’Donovan have also stepped down as directors. No explanation for their departures was given.
6:05
Indigo CEO Heather Reisman talks about creating a happier planet in her new book ‘Imagine It!’
Indigo wished the departing directors well and thanked them for their contributions.
The retailer says Reisman will retire as executive chair and from the board effective Aug. 22.
Reisman stepped down as chief executive of Indigo last year as part a transition that saw Peter Ruis, who had been the retailer’s president, promoted to chief executive.
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Big banks follow suit after surprise quarter-point hike
Royal Bank of Canada, TD Canada Trust, Canadian Imperial Bank of Commerce (CIBC), Bank of Montreal, National Bank of Canada and Bank of Nova Scotia all said they were increasing the prime rate by 25 basis points to 6.95 per cent from 6.70 per cent, effective June 8, 2023.
Desjardins Group and Equitable Bank also announced it would raise its Canadian prime rate by the same amount.
The Bank of Canada surprised markets and observers when it raised its benchmark policy rate by a quarter percentage point to 4.75 per cent earlier in the day.
The central bank has raised its rate nine times, and 4.5 percentage points, since March 2022, and the commercial banks’ prime rate has moved in lockstep from 2.7 per cent to 6.95 per cent.
Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. Check out the latest episode below:
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Last Updated 4:00 PM EST
Stock indices finished today’s trading session mixed. The Nasdaq 100 (NDX) and the S&P 500 (SPX) fell 1.75% and 0.38%, respectively. Meanwhile, Dow Jones Industrial Average (DJIA) gained 0.28%.
Furthermore, the U.S. 10-Year Treasury yield increased to 3.79%, an increase of more than 12 basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 4.56%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real-time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 2.2% in the second quarter.
This is higher than its previous estimate of 2%, which can be attributed to recent releases from the U.S. Census Bureau, the Institute for Supply Management, and the U.S. Bureau of Labor Statistics.
Last updated: 1:50PM EST
Stocks are mixed so far in today’s trading session. As of 1:50 p.m. EST, the Nasdaq 100 (NDX) and the S&P 500 (SPX) are down 1.5% and 0.4%, respectively. Meanwhile, Dow Jones Industrial Average (DJIA) is up 0.2%.
Surprising market observers, the Bank of Canada hiked its primary policy rate by 25 basis points, raising it to 4.75% on Wednesday. The bank cited persistent underlying inflation as the main driver for this decision, marking a departure from two consecutive meetings where the rate was held steady.
The bank also continues with its policy of quantitative tightening, indicating a response to worldwide economic growth that’s weakening due to increased interest rates. “Major central banks are signaling that interest rates may have to rise further to restore price stability,” the bank stated.
This unexpected move initially boosted the Canadian dollar but has since lost some ground as it hovers around C$1.338 per US$1. The rate increase follows a rise in CPI inflation to 4.4% in April, its first surge in 10 months, and a stronger-than-anticipated GDP of 3.1% in Q1.
The Bank of Canada’s Governing Council asserts that the rate hike is in response to previous policy not being restrictive enough to balance supply and demand and bring inflation sustainably back to the 2% target.
As a major trading partner, what happens in Canada usually has ripple effects in the U.S. Thus, this could be a sign that the Federal Reserve might have to continue hiking as well going forward.
Last updated: 10:55AM EST
Stocks have turned red so far in today’s trading session after a positive start. As of 10:55 a.m. EST, the Nasdaq 100 (NDX) and the S&P 500 (SPX) are down 0.9% and 0.2%, respectively. Meanwhile, Dow Jones Industrial Average (DJIA) is near the flatline.
Last updated: 9:50AM EST
Stocks ticked higher at open on Wednesday morning even as the trade deficit data showed that the United States’ trade deficit jumped 23% in April to $74.6 billion – a six-month high indicating a surge in imports. Imports were up 1.5% in April to $323.6 billion while exports fell by 3.6% to $249 billion.
The Nasdaq 100 (NDX), S&P 500 (SPX), and Dow Jones Industrial Average (DJIA) were all up by 0.6%, 0.32%, and 0.11%, respectively, at 9:50 a.m., EST, June 7.
First published: 4:38AM EST
U.S. Futures are in the red this morning after the SPX marked its highest close in trading since August 2022 yesterday. We are almost halfway through the trading week, and markets remain elevated in the absence of any negative news. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and Dow Jones Industrial Average (DJIA) are down 0.26%, 0.15%, and 0.18%, respectively, at 4:00 a.m., EST, June 7.
On the economic front, traders await reports on the U.S. trade deficit and consumer credit due today, as well as the weekly initial jobless claims data scheduled for June 8. Meanwhile, the Chinese economy is showing signs of slowing, with May exports falling 7.5% year-over-year against the expected 0.4% decline. Also, imports fell 4.5% year-over-year, much lower than the expected 8% decline.
On the earnings front, fewer companies remain to report their quarterly results. Shares of Casey’s General Stores (NYSE:CASY) dropped 4.5% in extended trading yesterday, after missing both sales and earnings expectations. On the other hand, Dave & Buster’s (NASDAQ:PLAY) stock was up over 4% in yesterday’s extended trade following its report of mixed results, with earnings surpassing but sales missing estimates.
Furthermore, meme stock GameStop (NYSE:GME), travel service provider Trip.com Group (NASDAQ:TCOM), e-commerce platform Rent the Runway (NASDAQ:RENT), and discount chain Ollie’s Bargain Outlet (NASDAQ:OLLI) will report their results today.
Elsewhere, European indices are trading in the red today, following weaker-than-expected data from German industrial production for April. After a disastrous March, April seems to continue bleeding from poor performance. Industrial production in April grew by a marginal 0.3% month-over-month, against an expected rise of 0.7%. Economists worry that if data remains weak in May and June, the economy’s recession will spill well into the second quarter.
Asia-Pacific Markets Trade Mixed on Wednesday
Asia-Pacific indices ended the trading session mixed today, following economic data sets from different nations. Mainland Chinese and Hong Kong indices closed mixed on signs that the economy is going into a continued slowdown. At the same time, Australian indices continue their downward spiral after reporting poor GDP growth and following the Reserve Bank of Australia’s unexpected rate hike to a record high yesterday.
Hong Kong’s Hang Seng index and China’s Shanghai Composite ended the day up 0.80% and 0.08%, respectively, while the Shenzhen Component index closed down by 0.60%.
At the same time, Japan’s Nikkei and Topix indices ended down by 1.82% and 1.34%, respectively.
Interested in more economic insights? Tune in to our LIVE webinar.
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