Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Scotiabank real estate analysts and quantitative strategists combined for a timely report called CRE Situation Worsening; Office in the Spotlight – Implications for Portfolio Strategy, REITs, Banks. Here are some excerpts,
“Within CRE, Office is receiving the most scrutiny due to some high-profile defaults and vacancy rates challenging the early ‘90s levels. A higher-for-longer interest rate scenario is likely to inflict more pain on the CRE space … The CRE situation is likely to get worse, adding to our macro concerns. We still expect challenging equity markets, and would reiterate our UW [underweight] stance on RE and [financials]/Banks. Within RE, Office is least appealing, while Industrial could do better. Banks lending will keep slowing with PCL [provisions for capital loss] rising … We see access to capital (via new debt or asset sales) as the biggest issue facing the sector. In our view, REIT valuation metrics that are real-estate-centric, (P/NAV, implied cap rate, implied price-per-foot) are now less relevant for Office REITs in a declining asset value market (we estimate office values have declined 30 per cent to 50 per cent since 2021 … The large Canadian banks all have a very small exposure to office loans (and an even smaller exposure to U.S. office loans) when measured as a percentage of total loans, but that exposure does become more meaningful when scaled against earnings. What that means is that while the risk to capital from a potential CRE credit cycle is very low, the potential for losses to materially impact earnings in any given quarter is real. Based on commentary from this past Q2 earnings season, that earnings risk is manageable for now, but we think that investors should not remain complacent”
***
BMO chief strategist Brian Belski is disappointed in TSX earnings,
“The negative earnings headlines and results from Canadian banks dampened an otherwise strong first-quarter earnings season for the TSX. In fact, if we exclude the Financials sector, the S&P/TSX is beating expectations by 6 per cent on average with the more cyclical areas of the market continuing to recover. However, the net miss by the big three sectors has been a key drag on S&P/TSX bottom up 2023 EPS estimates which are now 3 per cent below our 2023 EPS target. .. While we continue to expect earnings to normalize in the back half of 2023, our models suggest the earnings contraction could be slightly deeper than initially expected. This could be exacerbated further if Financials and Resources continue to see net negative revisions, as these three sectors make up 59 per cent of the index … In our opinion, the earnings contraction in 2023 and subsequent recovery in 2024 will not be smooth and synchronized across sectors, which highlights the importance of a more selective investment approach and more emphasis on active portfolio management”
“BMO strategist disappointed in TSX earnings” – (research excerpt) Twitter
***
Citi analyst Maximilian Layton recommends investors add to copper holdings over the next six months,
“We recommend consumers and long-term investors gradually build copper exposure over the next 6 months or so, depending on the timing of a potential substantial easing in China policy. We see good risk-reward with this strategy due to our expectations of 50 percent upside and 10 percent downside from current price levels by 2025… We suggest remaining cautious in 2H’23 through 1Q’24 on a base case assumption of extended ex-China growth weakness and a gradual, services-led, China growth recovery that is less metals intensive… We see a cyclical global growth upswing driving prices to an average of $12k/t in 2025 in our base case. If the pace of decarbonization-related investment accelerates at least in line with a 2-degrees pathway, then we see $15k/t in this bull case by 2025. Our base case of $9-10k/t copper long-term is enough to ensure sufficient supply if the world decarbonizes at its current pace, on average.”
***
Diversion: “Eating Disorder Helpline Takes Down Chatbot After Its Advice Goes Horribly Wrong” – Gizmodo
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
/cloudfront-us-east-1.images.arcpublishing.com/tgam/WWROSC6TLROQRK5X326SP4N7CQ.jpg)
