Real eState
Canada’s Largest Real Estate Markets See A Big Drop In New Permanent Residents – Better Dwelling
Canada’s immigration has slowed due to the pandemic, at least for a few months. Immigration, Refugees and Citizenship Canada (IRCC) data shows a steep decline in the number of new permanent residents in April. The drop is one of the sharpest in recent history, with large real estate markets most impacted.
Fewer Permanent Residents Admitted To Canada
The pandemic didn’t quite halt new permanent residents, but it came pretty close over the past few months. Canada saw just 4,140 permanent residents admitted in April, down 78% from the month before. This is an 85% decrease compared to the same month last year. The drop over the past few months has put Canada significantly behind its target.
Canadian Permanent Resident Admissions
The monthly number of permanent residents admitted to Canada.
Source: IRCC, Better Dwelling.
The year to date (YTD) numbers aren’t quite as bad, but are down significantly from last year. In the first four months there were 73,920 newly admitted permanent residents, down 20% from last year. The sharp decline is due almost entirely to a drop in March and April numbers. As you may have guessed, some real estate markets will be impacted more than others with this shift.
Toronto Sees 84% Fewer Permanent Residents In April
Newly admitted permanent residents moving to Toronto saw a big drop. There were just 1,520 in April, down 77% from a month before. This is an 84% decline compared to the same month last year. For the month of April, this movement is pretty much in line with the national average.
Canadian Permanent Resident Admissions Change
The year-over-year percent change in monthly permanent residents admitted to Canada.
Source: IRCC, Better Dwelling.
The YTD numbers also show a substantial decline for the first third of the year. Toronto added 26,080 new permanent residents April YTD, down 22% compared to the same period last year. This is a very big drop due entirely to declines in March and April, with the other two months higher than last year. The decline is inline with the national average.
Vancouver Sees 91% Fewer Permanent Residents In April
Just a handful of permanent residents settled in Vancouver in the most recent month of data. The region saw 270 new permanent residents in April, down 88% from a month before. This works out to a 91% decline compared to the same month last year. For those keeping track, that’s worse than the national average.
Canadian Permanent Resident Admissions By Market
The monthly number of permanent residents admitted to Canada, , by major real estate market.
Source: IRCC, Better Dwelling.
When looking at YTD numbers, Vancouver is actually seeing smaller declines than most regions. There were 9,370 new permanent residents in April YTD, down 6.6% from last year. This is one of the smallest declines for the first third of the year, and is due to much higher growth in January and February than the rest of the country.
Montreal Sees 94% Fewer Permanent Residents In April
Montreal is seeing one of the biggest declines of any major city across Canada. The region saw just 165 new permanent residents in April, down 89% from a month before. This works out to a decline of 94% when compared to the same month last year. This is worse than the national average, but generally Montreal has been seeing a decline of permanent residents over the past year.
Canadian Permanent Resident Admissions Change By Market
The year-over-year percent change in monthly permanent residents admitted to Canada, by major real estate market.
Source: IRCC, Better Dwelling.
Montreal’s YTD permanent resident numbers show one of the biggest declines in the country. The region added 6,615 new permanent residents this year ending in April, down 31% compared to the same period last year. This is a much bigger decline than the national average. Once again, these numbers have been declining since last year. The pandemic accelerated these declines.
Immigration is cyclical, and tends to move with employment trends. National Bank of Canada has even forecasted a decline later this year. However, the decline we’re currently seeing is likely due to the direct impact of the pandemic. The additional forecasted declines aren’t expected to arrive until later this year, or early next year.
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Despite a rough few days for the S&P 500, which is still comfortably in the green this year (up 6%), one sector of the stock market is feeling more pain than the rest.
The perception that rates might stay higher for longer is hammering the real estate sector, even as debate rages about how many times — if any — the Federal Reserve will cut rates this year.
The group is far and away the worst performer in the S&P 500 for 2024, down more than 10%. The bulk of those declines have come in the past two weeks, as Treasury yields have climbed to their highest level since November and investors traverse the acceptance phase that the hoped-for cuts are not on their way.
Now investors are faced with the question of whether to buy the dip or, to quote another market cliché, risk trying to catch a falling knife.
One real estate investor said the rent indicators she’s seeing in real time are encouraging on the inflation front. That’s in contrast to the much-criticized rental barometers that the Fed relies on.
“If you take into account real-time shelter costs, it’s much lower than what’s in the prints,” Uma Moriarity, senior investment strategist at CenterSquare, told Yahoo Finance. “We think inflation is trending in the right direction.”
That’s why she’s still confident in three rate cuts this year — a view, of course, that the market has been moving away from. It’s also why she’s still confident in real estate. That, plus the fact that stocks are relatively cheap.
Read more: What the Fed rate decision means for loans and mortgages
The reasons that real estate stocks suffer when rates are on the rise are twofold. First off, the companies tend to carry a lot of debt, and as rates go higher, it becomes more difficult to service or refinance that debt. Secondly, with relatively high dividend yields, the stocks compete with instruments like money market funds for investing dollars.
It’s traditionally been tough for real estate stocks to rally in the face of rising rates. But if Moriarty — and Citigroup — are right, they might not be rising for as long as the broader market anticipates.
Julie Hyman is the co-anchor of Yahoo Finance Live, weekdays 9 a.m.-11 a.m. ET. Follow her on Twitter @juleshyman, and read her other stories.
Click here for in-depth analysis of the latest stock market news and events moving stock prices.
Read the latest financial and business news from Yahoo Finance
Real eState
Celebrity real estate agent Mauricio Umansky explains when housing prices will come down – Fox Business
Real eState
Real Estate Stocks Fall As Mortgage Rates Rise To 4-Month Highs: 'Inflation Is Proving Tougher To Bring D – Benzinga
Real estate stocks slid at Wednesday’s market open, weighed down by the latest disappointing data on housing starts and a spike in mortgage rates, darkening the outlook for the sector.
By 9:00 a.m. EST, the Real Estate Select Sector SPDR Fund XLRE had dropped by 0.3%. This marked its fourth consecutive day of losses and set a course for its lowest close since the end of November 2023.
The fund has also slipped below its 200-day moving average, a critical long-term benchmark, signaling that investor sentiment has turned negative.
The average interest rate for 30-year fixed-rate mortgages with loan balances up to $766,550 climbed by 12 basis points to 7.13% for the week ending Apr. 12, 2024, according to the latest figures from the Mortgage Bankers Association. This rate is the highest recorded since early December.
On Wednesday, the yield on a 30-year Treasury bond, a key benchmark for long-term mortgage rates, traded at 4.75%, at the highest since mid-November 2023, as Fed Chair Powell admitted that there has been a lack of progress in the disinflation trend.
Chart: Real Estate Stocks Fall Below Key Long-Term Moving Average As Inflation Bites Again
Weaknesses In Multifamily Segment Continue
Joel Kan, MBA’s Vice President and Deputy Chief Economist, explained the rise in rates, stating, “Rates increased for the second consecutive week, driven by incoming data indicating that the economy remains strong and inflation is proving tougher to bring down.”
Despite the uptick in mortgage rates, there was a 3.3% week-over-week increase in the Market Composite Index, which measures mortgage loan application volume.
Kan further noted, “Application activity picked up, possibly as some borrowers decided to act in case rates continue to rise. Purchase applications were the primary driver of this increase, although they are still about 10% lower than last year’s levels. There was a slight uptick in refinance applications, mainly due to a 3% rise in conventional applications.”
Chart: US 30-Year Mortgage Rates Rose To The Highest Level Since Late November
The real estate market’s challenges are linked to affordability and a shrinking availability as the supply of new homes falls.
Andrew Foran, an economist at Toronto Dominion Securities, commented on the trend in home building, “Homebuilding activity moderated in March as weakness in the multifamily segment persisted and the single-family segment gave back most of its considerable gain from the prior month.”
Data revealed a 14.7% month-over-month decline in housing starts in March, with the figures dropping to 1.32 million annualized units, significantly below the anticipated 1.49 million.
Both the single-family and multifamily sectors experienced declines, with single-family starts down by 12.4% (or 145,000 units) and multifamily starts plummeting by 21.7% (or 83,000 units). This retreat in multifamily starts marked the lowest level since April 2020.
Additionally, residential permits decreased more than expected in March, falling by 4.3% month-over-month to 1.46 million annualized units. This included a 5.7% drop in single-family permits—the first decline in fifteen months—and a 1.2% reduction in multifamily permits.
Rising & Falling
The weakest performers among real estate stocks with a market cap of at least $1 billion on Wednesday were:
| Name | 1-day %chg |
|---|---|
| Prologis, Inc. PLD | -6.55% |
| First Industrial Realty Trust, Inc. FR | -3.33% |
| STAG Industrial, Inc. STAG | -2.89% |
| EastGroup Properties, Inc. EGP | -2.89% |
| Rexford Industrial Realty, Inc. REXR | -2.35% |
Those showing the highest gains were:
| Name | 1-day %chg |
|---|---|
| SL Green Realty Corp. SLG | 3.18% |
| Opendoor Technologies Inc. OPEN | 2.55% |
| Medical Properties Trust, Inc. MPW | 2.49% |
| eXp World Holdings, Inc. EXPI | 2.32% |
| Vornado Realty Trust VNO | 2.25% |
Now Read: Best REITs to Buy in April
Image: Midjourney
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