The Bank of Canada’s decision to delay a rate hike for five more weeks will add fuel to Canada’s scorching housing market as buyers scramble to clinch deals before borrowing costs rise, realtors said.
The Bank of Canada held its overnight rate at a record low 0.25% on Wednesday, but warned multiple increases would be coming soon. The U.S. Federal Reserve separately also said it would start hiking soon.
“Any hint of interest rate increases, any hint that it’s about to go up, makes people nervous,” said Lisa Bednarski, a Toronto real estate agent. “They want to buy before their buying power diminishes.”
Canada’s housing market has been on a tear throughout much of the pandemic, with prices up 39% nationwide from February 2020 to December 2021. In November and December alone, home prices jumped 4.5%, compared with a 3.7% gain in all of 2019.
Forecasts are mixed for 2022, with the Royal Bank of Canada seeing home prices up 3% this year and brokerage Royal LePage forecasting a 10.5% gain.
While the early rush was mostly end users seeking out larger properties with space for offices, gyms and living, by mid-2021 investors had taken hold of the market, according to agents. A recent Bank of Canada study found investors now account for more than 20% of home purchases.
Supply, meanwhile, has reached historic lows, realtors say.
With few options on the market, many end users are holding back – especially current owners who already have a foothold in the market, said real estate agent Peter Kiriazopoulos.
Investors are another story.
“My investor clients – they’re not too picky,” said Kiriazopoulos, who sells in Toronto’s suburbs. “They just want to move so they can close at a lower interest rate.”
Right now, a typical Toronto area home may have 15 buyers putting in offers. A hike would have cut that by a third, said mortgage broker Ron Butler. Instead, all those bidders will be ready with their best offer for another five weeks, he said.
“It is a little sprinkle of lighter fluid,” said Butler. “In the psychology of the public, it’s a moment of relief.”
The Bank of Canada acknowledged low interest rates play a role in home-price escalation, along with increased investor interest, but suggested the solution was outside their policy mandate.
“The bank’s view is that the most important thing that will restore balance to the housing market in Canada is an increase in supply,” Senior Deputy Governor Carolyn Rogers told reporters on Wednesday. “Supply has not kept pace with demand.”
But some economists disagree. Derek Holt, head of capital markets economics with Scotiabank, expects prices to surge again over the next few weeks until the Bank hikes, likely on March 2.
“The Bank of Canada seems to be dramatically downplaying the role of easy money as a contributor to hot housing markets,” Holt said.
TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.
The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.
Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.
Consolidated comparable sales were up 0.3 per cent.
On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.
The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.
The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.
Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.
Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.
On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.
The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
TORONTO – Thomson Reuters reported its third-quarter profit fell compared with a year ago as its revenue rose eight per cent.
The company, which keeps its books in U.S. dollars, says it earned US$301 million or 67 cents US per diluted share for the quarter ended Sept. 30. The result compared with a profit of US$367 million or 80 cents US per diluted share in the same quarter a year earlier.
Revenue for the quarter totalled US$1.72 billion, up from US$1.59 billion a year earlier.
In its outlook, Thomson Reuters says it now expects organic revenue growth of 7.0 per cent for its full year, up from earlier expectations for growth of 6.5 per cent.
On an adjusted basis, Thomson Reuters says it earned 80 cents US per share in its latest quarter, down from an adjusted profit of 82 cents US per share in the same quarter last year.
The average analyst estimate had been for a profit of 76 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
