Here’s how interest rates could affect Canada’s housing market in 2023
Lower interest rates in 2023 could revitalize Canada’s housing market before the end of the year, according to some economists, even as the central bank warns the rate cut conversation is premature.
A report from Desjardins Economics released Thursday expects home sales in Canada to “reach a low in the second half of 2023 before lifting off again.”
Some provinces such as Ontario and British Columbia should see a return to higher prices next year as a result, the report argues, putting a “brake” on any improved housing affordability.
The revised market outlook points to a possible drop in the Bank of Canada’s benchmark interest rate as driving the housing sector’s resurgence, as well as strong demand from immigration and higher purchasing power from robust household savings and a tight labour market.
The Bank of Canada signalled last month it would pause further changes to its policy rate while it lets its aggressive rate hikes from the past year take effect.
The central bank’s own surveys released earlier this week show some market watchers are expecting rate cuts before the end of the year.
Governor Tiff Macklem pushed back on the idea after a speech in Quebec City on Tuesday, telling journalists: “It’s really far too early to be thinking about cutting rates.”
“We are pausing interest rate hikes to assess whether we’ve raised interest rates enough to get inflation all the way back to target,” he said Tuesday. “The question is really whether we’ve done enough. It’s not about whether we’re considering cutting interest rates.”
But Macklem also conceded that the pause in rate hikes might have a stimulating effect on the sector, as buyers and sellers who have been on the sidelines waiting for the peak of rates seize the temporary sense of clarity.
“The fact that we’ve paused may bring people back into the market. These are things we’re going to have to watch,” he said.
Randall Bartlett, Desjardins’ senior director of Canadian economics and one of the report’s authors, tells Global News that the expected pause in rate hikes is already driving down some mortgage rates, opening the door for some prospective buyers.
When markets anticipate future cuts, that drives down longer-term bond yields, he explained in an email, which feeds into fixed-rate mortgage products.
Desjardins expects five-year fixed-rate mortgages on offer to continue to drop as the Bank of Canada maintains its key rate, with variable-rate products following suit if and when cuts eventually begin.
“Falling borrowing costs should be a major driver of the (housing market) rebound,” the Desjardins report says.
How much further does the housing correction have to go?
The Desjardins report notes the housing correction has already been pronounced: existing home sales are down 38 per cent from the peak roughly a year ago, with the average sale price down 20 per cent from the market’s latest highs.
There’s still further to go, the report’s authors argue, as high interest rates will “continue to weigh on housing market activity.”
“As such, there is likely more pain ahead for Canadians, including a recession in 2023,” the report states.
For the Bank of Canada’s part, it said in a revised outlook last month that the housing market is expected to continue cooling through to mid-2023 before rebounding slightly.
Royal Bank of Canada’s assistant chief economist Robert Hogue, meanwhile, said in a note Tuesday that Canada’s housing correction appears to be “broadly easing.”
He said he expects the housing market to bottom out around the spring or summer, with the timing varying from market to market.
“The recovery that will follow, however, is poised to be very gradual at first,” he wrote. “We expect the massive increase in interest rates will continue to hold back activity and compress purchasing budgets for some time.”
What could housing look like across Canada this year?
The Desjardins report also expects the housing correction and subsequent rebound will vary by province.
The report puts Ontario and B.C. in similar boats, classified as the “most vulnerable” to further corrections in their housing markets in 2023.
Ontario, for instance, is expected to finish 2023 with home prices down 25 per cent from their peak, with housing activity returning to pre-pandemic levels by the end of next year.
But the two provinces’ reputations as attractive hubs for immigration will “underpin” the recovery for their respective sectors, the report argues.
Quebec is meanwhile expected to see a further 20 per cent decline in home sales before hitting a 10-year low, the report projects, before starting a gradual climb back up in 2024.
While Desjardins’ economists remark that the Maritime housing markets have shown some resiliency in the correction with little price decline through 2022, there might be early signs of a downturn heading as the pandemic-related migration boom starts to wane.
Strong commodity activity and prices are expected to boost economic output in the Prairie provinces, per the report, and the housing market should get a lift accordingly.
The relative affordability of Calgary, Edmonton and Winnipeg will make each city an attractive destination for immigration as well, Desjardins’ economists argue.
Air Canada: Wheelchair storage issue prompts complaint – CTV News
Flying over the Grand Canyon was a highlight for the Gellisen family during their trip to Phoenix — but their flight home to Toronto was a much different experience, with several family members forced off of the flight over tensions related to a teen’s wheelchair.
Now, the family is speaking out about the experience, saying that Air Canada needs to make amends for the way they were treated.
When preparing for a trip, Kadey Schultz knows to check ahead of time what the accommodations are for wheelchairs.
Her son, Emery, has Duchenne muscular dystrophy, a rare disease that mostly affects boys. It means that he can only walk short distances.
In order to conserve his energy, he uses a wheelchair the rest of the time.
“I primarily use it at school to get in between classes,” he told CTV National News. “Because … I need to save the muscles for more important things, like making the heart beat and stuff.”
Without the wheelchair, he can only walk a few blocks before needing to take a break.
To Emery, his wheelchair is considered an extension of his body, so his mother spent hours arranging for the wheelchair to be stowed in cabin.
“We had made all the arrangements with Air Canada for mobility requirements for Emery’s wheelchair in advance,” Schultz said. “I had spoken with Air Canada on the telephone as well as emailed with them.”
They had received an email from Air Canada with the U.S. regulations and measurement requirements and confirmed that Emery’s chair met them.
But when they got to the gate and met with an Air Canada employee to make the arrangements for Emery to board the airplane and have his chair stowed properly, the careful plan began to unravel.
“One of the flight attendants said that she would not make the closet available for Emery’s wheelchair. And I asked her, ‘Why not?’ And she said because she had stuff in it,” Schultz said.
It turned out that there had been a mixup with the dimensions of Emery’s chair during the email communications, and Schultz was told to deal with gate staff to clear up the problem.
But she says that staff at the gate and crew on the flight were unaccommodating, refusing to look at documents that demonstrated Emery’s wheelchair had been approved to be stored in cabin and met the requirements.
“They had no training. The flight attendant, who was so difficult and retaliatory with me, she actually said, ‘I don’t know what you’re talking about, I’ve never heard of this before,’ which is why I offered her the email,” Schultz said.
She says the employee would not look at the email from Air Canada about the requirements for accommodation, so she began reading it out loud.
Schultz was then told she wasn’t welcome on the flight, and says when her daughter asked for the attendant’s last name, she too was kicked off the plane.
She believes that a lack of training is one of the big problems.
“I think that when people don’t know what they’re doing, and feel intimidated, that they can lash out,” she said.
“The reason why we never ever want to put Emery’s wheelchair down below when it can be avoided is because it gets damaged. And these wheelchairs costs so many thousands of dollars and they are not luggage. They are part of the user’s body.”
Emery was able to remain on that flight home with his dad, but only after his mother pleaded with staff to let them fly home, she said, citing medical reasons as well as his birthday party, which was set to occur in Toronto the next day.
Emery turns 16 on Monday, and celebrated on Sunday. Schultz and her daughter almost missed his party because they had to take a new flight the next day.
“It was kind of frustrating and I did not enjoy it,” Emery said about the situation. “I’m usually the person at the airport that’s cool as a cucumber but like, that’s kind of hard to be cool when a frustrating (thing) like that happens.”
Air Canada says it will be following up with the customer directly, and that, “Generally, we fully appreciate the importance of mobility devices and make every effort to transport these devices safely in a manner convenient for customers.”
Emery said it was concerning to realize that even his mother, who has extensive experience in advocating for people with disabilities, had to “stand down in a situation like this.”
“I’m pretty sturdy, but it did upset me in a frustrating way, because I just want to travel in peace and not have any problems happen,” he said.
“Because I’m not the only one who has these … challenges. Other people use chairs too, and some of them don’t have moms like mine that can like stand up for them and fight for them and stuff and also that know their stuff.”
His mother is an award-winning litigation lawyer and disability advocate.
Schultz is acting as council for Maayan Ziv, a Toronto woman whose chair was damaged by Air Canada. Ziv, who has spinal muscular atrophy, went as far as bubble-wrapping her wheelchair before handing it over to staff before her flight in 2022, but still found it broken when the plane landed.
“I have to question whether Air Canada has a cultural problem,” Schultz said.
“I am concerned that Air Canada has a cultural problem in terms of its commitment to equity for people with disabilities. I’m concerned because this is a repetitive negative experience for people with disabilities, not just my family, and so is it coming from the top or is a lack of training and a lack of commitment to that training, I don’t know. But it’s rampant and it needs to stop.”
She said that families already have to deal with so much more stress to ensure a trip goes smoothly when a family member has a disability, and for all of that work to be thrown out at the gate of the airplane is hugely upsetting.
“Emery has a degenerative disease. We want Emery to live the fullest, most rich and successful and happy life that he can and we put in a tremendous amount of effort in order to make that happen,” she said. “To be able to go on a family holiday, we have to work three times harder to ensure that everything goes safely and smoothly.”
Schultz says she’d only fly with Air Canada again under certain assurances of how her family will be treated.
The transport minister has said major changes are coming this spring to strengthen the rules for passenger protection, something this family says is long overdue.
Schultz wants to ensure that no one else has to deal with “the fear that we experienced dealing with Air Canada, the uncertainty that we experienced, but also the loss of the time wrapping up our amazing family holiday.”
Those With Rare Diseases Need to Wait, as Usual
Science has developed the ability to research, develop and create functional cures for many of our so-called “incurable diseases”, but having the ability to do something and actually doing it are two different things. Medicine has always suffered from a problem with “knowing-doing”. It is the difference between what a doctor actually does for a patient and what can be done with all that we know. Developmental breakthroughs in medicine are allowing doctors to do things they never could imagine before. Sometimes these break-thoughts don’t fit into businesses/governmental financial or regulatory systems, meaning that it can take a long time for patients to actually benefit, a time many patients may not have.
The National Institutes of Health in America invest more than $40 Billion in biomedical research each year, and the private sector twice as much. The discoveries are valued by all, but why is it so hard to use these discoveries?
Science’s ability to engineer medicines has far outpaced how these medicines are actually built, tested, and put into human beings. Artificial Intelligence has assisted the community by mapping the human genome in efforts to cure various diseases. The US Government defines rare diseases as those that affect fewer than 200,000 people in America. Some affect only a handful of people. There are over 7000 different rare diseases, with more than 30 million people in America diagnosed with one of them. That is 10% of the US population. So improving how society can find and care for these patients could have a great impact. Problem is that the health system is not flagging enough people with these diseases, while many individuals don’t even know what disease they may have, or that they indeed have a disease. A.I. steps up front to assist in the recognition, tracking, analyzing, and identifying of these patients through computer-programmed systems. Put one’s symptoms into the machine, and often voila, a point from which a doctor can begin his medical investigation and treatment. A diagnostic odyssey in each individual case.
Artificial Intelligence has a prominent place within our health system, including helping design new treatments, helping predict which treatment is better for which patient, and screening for rare diseases with suggested diagnoses to boot. Why are many with rare diseases often left out in the cold, to search on their own for a cure? Money! Simple.
Who makes medicines, and invests millions in treatments and research for diseases? Pharmaceutical Firms.
What are they but profit centers for investment bankers, massive corporations, and a financial structure centered upon the shareholder, and not the average joe? Solutions can be found, but the willingness to spend way beyond what a firm can make in profits needs to be there. Sure our DNA is constantly changing, and evolving biologically. Making a drug that cures cancer, may cure some, but certainly not all forms since each person is unique, their biology specific to that person. Many doctors realize that their methods are much like witch Doctors, forever experimenting with the specific individual’s condition.
Our Health system is tied to our financial system. That is the root of it. So long as the doctors, hospitals, and researchers are tied to profit (our financial system) the necessary technology, research, and investment will not be found for those with rare diseases. I have a disease that has no cure. My immune system is attacking the tissue in my mouth. It is sorely painful, personally transformative, and damn if you could find a doctor who is a real expert in the field. Since it is rare, the institutions of the industry will not find proper medicine for its management, let alone its cure. I live with it, and the disease manages the way I eat, what I eat, how I clean my teeth, how I sleep, and interact with my partner too. This disease can transfer to another. Great eh!
For those of you who have or know of someone who has a rare disease, all I can say is to be patient. The present-day financial and healthcare systems need to change drastically, with governmental intervention in all aspects of research, planning, and manufacturing of medicines. Out of the hands who care for themselves, and hopefully into the hands of those who care about you and those you love.
Canada is set for its largest alcohol tax increase yet. Here’s what to know
Canadians could soon be paying around a quarter more for a 24-pack of beer thanks to the largest increase yet to a federal tax on alcohol.
The “escalator tax” is set to increase by 6.4 per cent on April 1 unless a change is announced before then, such as when the federal budget is revealed on March 28, according to food distribution professor at Dalhousie University, Sylvain Charlebois.
Charlebois told Global News that the tax, which was introduced in 2017, was designed to automatically increase over time based on the rate of inflation to avoid renegotiating it too often.
Given the amount of inflation Canada has experienced recently, the tax is now set for its biggest increase ever, he noted. Last year, the tax went up 2.4 per cent.
And while a penny a beer might not sound like much of a hike, industry experts say it’s one more factor pushing up costs for producers and distributors that’s likely to have ripple effects on what consumers pay.
Breaking down the cost increase
Charlebois predicts the tax will increase the price of a single beer by one cent, while the finance ministry told Global News in a statement that the amount would be three-quarters of a cent. Charlebois said that the price increase would be visible immediately after the tax is scheduled to be implemented on April 1.
Beer Canada told Global News in a statement that the tax increase will bring up the price of a 12-pack by 10 cents. For a 750 ml bottle of wine, the price could increase close to three cents, according to figures from the Canadian Revenue Agency.
In a statement to the Canadian Press, the Liquor Control Board of Ontario (LCBO) said that a 750 ml bottle of a spirit of 40 per cent alcohol by volume (ABV) may increase 70 cents. Charlebois said that the tax may have a smaller impact on the price of craft beer since it is lower volume and usually at a higher price, but could affect larger manufacturers more.
The tax could have a ripple effect on costs, as well.
Beer Canada said since the tax is a production tax imposed on the brewer at the point and time of production, “it is then magnified by other fees and taxes imposed by distributors, retailers, and provinces, including sales taxes,” making the impact on a 12-pack likely closer to 20 cents.
Along with other inflation factors, beer retail prices are projected to rise 10 per cent in 2023, according to the organization.
Beer Canada notes there has been a 60-per cent increase in barley prices, 40-per cent increase in packaging costs, and a doubling of freight costs.
Industry group Restaurants Canada told Canadian Press it estimates the tax increase will cost Canada’s food-service industry about $750 million a year, with the average casual dining restaurant expected to pay an extra $30,000 towards alcohol.
The carbon tax is also set to increase April 1 to $65 a metric ton of carbon from $50, which Charlebois said could impact alcohol prices as well since most producers do not have completely green supply chains. In addition, provinces individually typically increase their tax on alcohol, as well.
Overall, the escalator tax alone will amount to an extra $125 million a year that Canadians will pay to the government.
“It’s just one tax people don’t need right now,” Charlebois said. “It doesn’t seem like much, but it’s more that the tax burden is only increasing.”
“It’s a lot of pressure,” he added.
Industry calls for no tax increase
There is still the possibility the tax could be scrapped, Sylvain said, as lobbyists are moving against it.
Beer Canada says that Canada has the highest alcohol taxes among G7 nations, with about half the cost of a typical can of beer going to taxes, while up to 80 per cent of a bottle of alcohol is taxed, according to Spirits Canada.
The organization is calling on the federal government to freeze current alcohol taxes until inflation reaches closer to the Bank of Canada’s two per cent target.
“It’s do or die time in terms of action,” CJ Hélie, president of Beer Canada, told Global News. “April 1 is right around the corner and the question will be, does the government’s actions live up to their commitment.”
On March 22, MPs voted 170 to 149 in favour of a motion calling on the government to cancel the alcohol tax increase, sponsored by Conservative Leader Pierre Poilievre.
Helie told The Canadian Press that the escalator tax used to be “digestible” when it was around two per cent, but with more than triple the usual increase, it should now be reconsidered.
“When inflation is through the roof, we need to rethink this automatic formula,” Helie said. “The industry is already in dire straits. Using a rigid formula in a time like this is unacceptable.”
— with files from The Canadian Press
© 2023 Global News, a division of Corus Entertainment Inc.
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