Homebuyers hope 'patience pays off' as prices drop, recession predictions loom | Canada News Media
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Homebuyers hope ‘patience pays off’ as prices drop, recession predictions loom

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TORONTO –

Andrew Hamilton and his wife bid farewell to their home in Toronto’s Junction neighbourhood roughly a year and a half ago, when housing prices were soaring, but finding a new abode proved tricky.

With no available homes meeting their needs or price range, the couple opted to temporarily use the equity they got from selling their house on a rental property in Etobicoke.

But they still have one eye on the market and are hoping the current cool-down will deepen enough for them to snag another home.

“Patience, I think, will pay off,” said Hamilton.

His sentiments are common throughout the sector, especially with prospective buyers, who have lamented the torrid pace Canada’s real estate market has moved at in recent years.

But many feel 2023 may be the year their luck changes. Prices have steadily declined since last spring, bidding wars are less frequent and economists foresee an end to the Bank of Canada’s quick succession of interest rate hikes that have added hundreds, if not thousands, of dollars to monthly mortgage payments.

“It just takes time,” said Despina Zanganas, a Toronto Realtor with PSR Brokerage.

She expects buyers who delayed purchases will feel more comfortable this year as the changed housing market sinks in.

“They’re getting used to it,” she said.

“People are saying that they don’t have to go into bidding wars and put in unconditional offers. Now they have the freedom to put in conditional offers, so that’s giving a lot of people a bit more confidence.”

But there’s at least one major change that could be on the horizon. Economists have been predicting 2023 will be the year Canada enters another recession, though it’s unclear how severe the downturn will be.

Douglas Porter sees a 25 to 30 per cent chance Canada’s economy nails a soft landing when inflation and interest rate hikes gently end, helping avoid a recession. There’s a 50 per cent chance of a shallow downturn and a 20 to 25 per cent chance of “something more serious.”

“All of those have implications for the housing market,” said the chief economist at BMO Capital Markets.

“Clearly, the less intense the hit to the economy, the better the news is for the housing market.”

Even in current conditions, he sees the housing market as one of the weakest parts of the economy — a phenomenon unseen in years, if not, decades.

His forecast predicts that by the time the current economic cycle is complete, home prices will have fallen by between 20 and 25 per cent from their peak, noting they have already dropped 10 per cent.

The Canadian Real Estate Association said last month that the actual national average home price was $632,802 in November, a 12 per cent decline from the same month last year.

As prices tick down, Porter said the market sits in “suspended animation” with sellers wary of listing their properties because they won’t fetch what neighbours did last year and buyers sitting on the sidelines waiting for better mortgage rates and more inventory.

“Certainly, you don’t want to jump in and buy when it looks as if prices can drop a whole lot more,” Porter said.

The decreases seen so far have been offset by a rapid string of hikes to the Bank of Canada’s key interest rate, which sits at 4.25 per cent — the highest it’s been since January 2008.

Allison Van Rooijen, vice-president of consumer credit at Meridian Credit Union, estimated the latest hike — half a percentage point in December — would bump payments on a $450,000 variable-rate mortgage on a 25-year amortization up another $130 or so every month. Since the beginning of 2022, rising rates have amounted to roughly $1,000 more per month for the same mortgage.

“To me the interest rates story is the biggest one this year that will have the biggest effect by far,” said Porter.

“The reality is the price correction we’ve seen so far really hasn’t even made up for the run up in interest rates. I would still assert that the market is still digesting the interest rate increase and we haven’t seen it fully reflected in prices yet.”

The Toronto Regional Real Estate Board said Thursday that the average price sat at $1,051,216 in December, a 9.2 per cent fall from a year ago.

A day earlier, the Real Estate Board of Greater Vancouver reported the composite benchmark price now sits at $1,114,300, a three per cent decrease from December 2021, and on Tuesday, the Calgary Real Estate Board revealed the average price was up four per cent to $495,231.

Porter expects the Prairies to be the most resilient market because it didn’t encounter as much of an overvaluation as other regions did in the first years of the COVID-19 pandemic.

He sees the Atlantic provinces and some parts of British Columbia in the middle of the pack because they didn’t have quite the boom that Ontario had but are now grappling with an increase in immigration.

He’ll be watching medium-sized cities in southwestern Ontario, like Hamilton, Kitchener, London and Windsor, most closely because they “absolutely took off” during the pandemic but have since slid into a “deep” correction.

Porter will be looking to see whether they are showing signs of stabilization, which could be an omen for the broader market.

But he warns the unprecedented nature of the pandemic makes the current housing market tough for anyone to predict.

“The housing market might hold up a bit better than what we’re anticipating just because it is such an unusual cycle,” he said.

“But I don’t think any of us can have a great deal of confidence in our forecasts these days because there’s so many unique aspects to this economy that we’re dealing with.”

This report by The Canadian Press was first published Jan. 8, 2023.

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

The Canadian Press. All rights reserved.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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