Canada housing market showing signs of ‘cooling’ as more interest rate hikes loom - Global News | Canada News Media
Connect with us

News

Canada housing market showing signs of ‘cooling’ as more interest rate hikes loom – Global News

Published

 on


Real estate watchers say rising interest rates are already starting to have a “cooling effect” on Canada’s hot housing market, but some economists are warning that the Bank of Canada will have to strike a tough balance with monetary policy tightening or risk a market crash.

Central banks across the world have signalled plans to hike interest rates through 2022 in an effort to tame global inflation, with the Bank of Canada kicking off what’s expected to be a series of increases to the key overnight right earlier this month.

The Bank of Montreal said in its latest interest rate forecast Monday that it now expects the Bank of Canada to hike rates by 50 basis points to one per cent at its next two meetings.

BMO economists cited Bank of Canada deputy governor Sharon Kozicki’s speech on March 24, in which she said the central bank “is prepared to act forcefully” to tame inflation.

Read more:

Some Canadians struggle to enter housing market as costs rise — ‘Nothing we can do’

CIBC said in its updated forecast on Monday that interest rates could hit 1.5 per cent by the end of the year and reach the 2.25 per cent mark by September 2023.

Some have already observed a slowdown spurred from the central bank’s move to an overnight target of 0.5 per cent, the first hike to interest rates since 2018.

Realtor Nasma Ali has noted a marked slowdown in housing demand in the red-hot Greater Toronto Area over the past few weeks, which she sees as a likely precursor to a reckoning in the suburbs and surrounding towns that have seen blistering price growth over the past two years.

“I had listings that, in January, would have had 100-plus showings,” Ali, chief executive of broker One Group, said. “All of a sudden, we’re only getting five to six in four days. This is a transition period and it’s not for all markets or price points. But we’re seeing it.”

Interest rates not the only factor affecting home prices

James Laird, co-founder of Ratehub.ca, told Global News that there’s no question rising interest rates will have a “cooling effect” on home prices, as the record-low rates seen during the COVID-19 pandemic were among the reasons prices grew so quickly in the first place.

“It does feel like homes might moderate a little bit as far as month-to-month appreciation. We might see stability as opposed to (prices being) up 10 per cent year-over-year,” he said.

But he questions whether interest rates will be enough to completely cool Canada’s hottest real estate markets.

He’s not alone.

Representatives from the Canadian Real Estate Association (CREA) were among those who spoke to the federal finance committee Monday morning on the topic of inflation.






4:35
Fuel prices impacting real estate industry


Fuel prices impacting real estate industry – Mar 14, 2022

CREA CEO Michael Bourque told the committee Monday that the upward pressure on home prices in Canada will increase as the country’s population — growing at the fastest rate among G7 nations, largely thanks to immigration — continues to outpace available inventory.

“The supply of new homes is not even close to keeping up with demographic changes and population growth,” Bourque said. “With housing becoming a scarce asset, prices will continue to increase.”

Until barriers to rapid housing construction are removed — Bourque cited “NIMBYism, red tape, high fees, delays for permitting at the municipal level” — Canada won’t see housing prices drop off any time soon, he argued.

Housing market in ‘full-blown mania’

But others still argue that interest rates do in fact have the ability to stem surging prices in Canada’s housing market.

Author and portfolio manager Hilliard MacBeth warned the finance committee Monday that not only is such a correction — a rapid change in an asset’s market price, usually of 10 per cent of more — on the horizon, but it’s needed to effectively tamp down on inflation.

MacBeth first wrote a book about a looming burst of Canada’s “housing bubble” in 2015. Though the collapse has not come to pass, MacBeth stated in his opening remarks to the finance committee that he’s confident his prediction wasn’t wrong, just “early.”

He said he’s become increasingly convinced of the housing bubble’s existence the more he hears people talk about a seemingly unending climb to home prices in the country.

MacBeth argued the conviction that housing as an asset class is immune to market correction has become a “full-blown mania, probably unsurpassed anywhere in the world” since the COVID-19 pandemic began.






2:31
Will the BOC’s interest rate hike halt inflation? Some experts don’t believe so


Will the BOC’s interest rate hike halt inflation? Some experts don’t believe so – Mar 2, 2022

Interest rates will need to continue to increase to correct rampant price appreciation, he said, even at the risk of dealing a harsh blow to the economy. He said central banks globally will need to show the “backbone” to impart short-term pain on consumers by continuing to hike rates.

“Inflation must be lowered, even if it means bursting the housing bubble and triggering a recession,” MacBeth said.

Senior economist Stephen Brown with Capital Economics wrote last week that surging interest rates could “topple” the housing market.

But he also argued in an interview with Global News last week that the Bank of Canada might be willing to risk a slight dip in the housing market to tackle inflation.

He said a modest drop in housing prices of five to 10 per cent would probably be tolerable as it would “take some heat out of the economy.” The housing market could handle that, he said, because home prices rapidly appreciated over the course of the pandemic, up roughly 50 per cent over the past two years.

Read more:

‘Year of the condo’ — Waning pandemic could see migration back to big cities

“The concern would be even if we had a five-per cent fall in house prices… that could then trigger this spiral. And that’s really not a situation we want to be in,” Brown noted.

“That’s a very hard thing to manage because as everyone knows, psychology plays such a huge role in the housing market.”

Brown said last week he doesn’t believe the Bank of Canada will be quite as hawkish as the Federal Reserve in the United States, which said earlier this month that it anticipates raising interest rates at every meeting for the rest of the year.

He said he thinks Canada’s central bank will raise its target overnight rate to as high as 1.25 per cent before pausing to see the effect of its hike on inflation.

“I think my strong view at the moment is that the bank is very unlikely to be able to get its policy rate above two per cent without causing some pretty major problems in the housing market,” he said.

— with files from Reuters






1:47
No conditions, offers over asking, homes snatched up fast: Edmonton’s real estate market heating up


No conditions, offers over asking, homes snatched up fast: Edmonton’s real estate market heating up – Mar 3, 2022

© 2022 Global News, a division of Corus Entertainment Inc.

Adblock test (Why?)



Source link

Continue Reading

News

Canada’s Denis Shapovalov wins Belgrade Open for his second ATP Tour title

Published

 on

BELGRADE, Serbia – Canada’s Denis Shapovalov is back in the winner’s circle.

The 25-year-old Shapovalov beat Serbia’s Hamad Medjedovic 6-4, 6-4 in the Belgrade Open final on Saturday.

It’s Shapovalov’s second ATP Tour title after winning the Stockholm Open in 2019. He is the first Canadian to win an ATP Tour-level title this season.

His last appearance in a tournament final was in Vienna in 2022.

Shapovalov missed the second half of last season due to injury and spent most of this year regaining his best level of play.

He came through qualifying in Belgrade and dropped just one set on his way to winning the trophy.

Shapovalov’s best results this season were at ATP 500 events in Washington and Basel, where he reached the quarterfinals.

Medjedovic was playing in his first-ever ATP Tour final.

The 21-year-old, who won the Next Gen ATP Finals presented by PIF title last year, ends 2024 holding a 9-8 tour-level record on the season.

This report by The Canadian Press was first published Nov. 9, 2024.

The Canadian Press. All rights reserved.



Source link

Continue Reading

News

Talks to resume in B.C. port dispute in bid to end multi-day lockout

Published

 on

VANCOUVER – Contract negotiations resume today in Vancouver in a labour dispute that has paralyzed container cargo shipping at British Columbia’s ports since Monday.

The BC Maritime Employers Association and International Longshore and Warehouse Union Local 514 are scheduled to meet for the next three days in mediated talks to try to break a deadlock in negotiations.

The union, which represents more than 700 longshore supervisors at ports, including Vancouver, Prince Rupert and Nanaimo, has been without a contract since March last year.

The latest talks come after employers locked out workers in response to what it said was “strike activity” by union members.

The start of the lockout was then followed by several days of no engagement between the two parties, prompting federal Labour Minister Steven MacKinnon to speak with leaders on both sides, asking them to restart talks.

MacKinnon had said that the talks were “progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved” — a sentiment echoed by several business groups across Canada.

In a joint letter, more than 100 organizations, including the Canadian Chamber of Commerce, Business Council of Canada and associations representing industries from automotive and fertilizer to retail and mining, urged the government to do whatever it takes to end the work stoppage.

“While we acknowledge efforts to continue with mediation, parties have not been able to come to a negotiated agreement,” the letter says. “So, the federal government must take decisive action, using every tool at its disposal to resolve this dispute and limit the damage caused by this disruption.

“We simply cannot afford to once again put Canadian businesses at risk, which in turn puts Canadian livelihoods at risk.”

In the meantime, the union says it has filed a complaint to the Canada Industrial Relations Board against the employers, alleging the association threatened to pull existing conditions out of the last contract in direct contact with its members.

“The BCMEA is trying to undermine the union by attempting to turn members against its democratically elected leadership and bargaining committee — despite the fact that the BCMEA knows full well we received a 96 per cent mandate to take job action if needed,” union president Frank Morena said in a statement.

The employers have responded by calling the complaint “another meritless claim,” adding the final offer to the union that includes a 19.2 per cent wage increase over a four-year term remains on the table.

“The final offer has been on the table for over a week and represents a fair and balanced proposal for employees, and if accepted would end this dispute,” the employers’ statement says. “The offer does not require any concessions from the union.”

The union says the offer does not address the key issue of staffing requirement at the terminals as the port introduces more automation to cargo loading and unloading, which could potentially require fewer workers to operate than older systems.

The Port of Vancouver is the largest in Canada and has seen a number of labour disruptions, including two instances involving the rail and grain storage sectors earlier this year.

A 13-day strike by another group of workers at the port last year resulted in the disruption of a significant amount of shipping and trade.

This report by The Canadian Press was first published Nov. 9, 2024.

The Canadian Press. All rights reserved.



Source link

Continue Reading

News

The Royal Canadian Legion turns to Amazon for annual poppy campaign boost

Published

 on

The Royal Canadian Legion says a new partnership with e-commerce giant Amazon is helping boost its veterans’ fund, and will hopefully expand its donor base in the digital world.

Since the Oct. 25 launch of its Amazon.ca storefront, the legion says it has received nearly 10,000 orders for poppies.

Online shoppers can order lapel poppies on Amazon in exchange for donations or buy items such as “We Remember” lawn signs, Remembrance Day pins and other accessories, with all proceeds going to the legion’s Poppy Trust Fund for Canadian veterans and their families.

Nujma Bond, the legion’s national spokesperson, said the organization sees this move as keeping up with modern purchasing habits.

“As the world around us evolves we have been looking at different ways to distribute poppies and to make it easier for people to access them,” she said in an interview.

“This is definitely a way to reach a wider number of Canadians of all ages. And certainly younger Canadians are much more active on the web, on social media in general, so we’re also engaging in that way.”

Al Plume, a member of a legion branch in Trenton, Ont., said the online store can also help with outreach to veterans who are far from home.

“For veterans that are overseas and are away, (or) can’t get to a store they can order them online, it’s Amazon.” Plume said.

Plume spent 35 years in the military with the Royal Engineers, and retired eight years ago. He said making sure veterans are looked after is his passion.

“I’ve seen the struggles that our veterans have had with Veterans Affairs … and that’s why I got involved, with making sure that the people get to them and help the veterans with their paperwork.”

But the message about the Amazon storefront didn’t appear to reach all of the legion’s locations, with volunteers at Branch 179 on Vancouver’s Commercial Drive saying they hadn’t heard about the online push.

Holly Paddon, the branch’s poppy campaign co-ordinator and bartender, said the Amazon partnership never came up in meetings with other legion volunteers and officials.

“I work at the legion, I work with the Vancouver poppy office and I go to the meetings for the Vancouver poppy campaign — which includes all the legions in Vancouver — and not once has this been mentioned,” she said.

Paddon said the initiative is a great idea, but she would like to have known more about it.

The legion also sells a larger collection of items at poppystore.ca.

This report by The Canadian Press was first published Nov. 9, 2024.

The Canadian Press. All rights reserved.



Source link

Continue Reading

Trending

Exit mobile version