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Housing market slowdown continues with sales and average prices well down from last year

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New numbers from the Canadian Real Estate Association confirm what buyers, sellers and owners have known for a while: the housing market is in a funk.

The group that represents more than 155,000 Realtors across the country said in a release Friday that sales for September were down by more than 30 per cent compared to the same period a year ago.

Prices are down on an annual basis, too, with the average selling price of a home listed on the MLS system going for $640,479. That’s down by 6.6 per cent compared to a year ago, and down by more than 21 per cent from the all-time high of $816,720 reached in February.

That was before the Bank of Canada began its aggressive campaign of rate hikes to rein in runaway inflation. The central bank has moved its benchmark lending rate up by more than three percentage points in the past six months, pushing rates on variable rate loans above five and even six per cent.

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That’s poured cold water on the once red-hot housing market.

“The important thing to remember is we’re still in the middle of a period of rapid adjustment, with buyers and sellers trying to feel each other out while a lot of people have had to take their home search plans back to the drawing board,” CREA’s chief economist Shaun Cathcart said in a release.

“As such, resale markets may remain on the quiet side for some time yet, with the flipside of that coin being even more pressure on rental markets.”

Rental market is hot

That’s the case in many markets across the country, including Brampton, Ont., where realtor Shaun Ghulam said he’s noticed an interesting dichotomy: the market to own has cooled, but competition for rentals is red hot.

“Lease prices are ridiculous now,” he said in an interview. “If it’s $3,000 a month, people are coming in at $3,500.”

A man, woman and a baby sit on a couch in a living room.
Earl Hypolite and Naomi Zitt-James rent an apartment in Toronto, but they say they are getting ready to buy, and most likely they will purchase a fixer-upper somewhere outside the downtown core. (Darek Zdzienicki/CBC)

That uncertainty in the rental market is one reason why Earl Hypolite and Naomi Zitt-James say they’re looking to buy a house of their own, sooner rather than later. The couple rents an apartment in downtown Toronto, but with a seven-month-old baby and a large dog, they feel it’s time to make the leap.

“When it was just the two of us, I think it was really appealing,” Zitt-James said of renting.

“But now to have that amount of money … go into renting as opposed to paying down something that we own, it’s a little bit more unappealing than it was when we first moved in.”

While they have no imminent plans to buy, they have been looking at properties outside the city, where prices have come down a lot.

“I’m feeling a lot better now that I know that the prices have come down a little bit,” Zitt-James said. “I just feel a little sad for those people that went in and got those houses only to have it come down.”

Realtor Ghulam said selling prices have declined considerably in Brampton since the spring. Sellers are still asking for prices they might have gotten six months ago, and when they don’t get any offers, they delist their home and try again at a lower price, hoping to spark a bidding war that rarely comes.

“Check how many times the property has been listed,” Ghulam said. “If it’s been listed for four or five times, you know the seller is not serious to sell and they’re just playing.”

The result is a wide gap between seller expectations and those of buyers. “Sellers are holding off, they’re waiting to see where the interest rates go,” he said. “Buyers are a little hesitant because they want to wait until the prices drop more.”

TD Bank economist James Orlando says the numbers make it clear that recent rate hikes have taken a lot of momentum out of the market, spooking buyers but also would-be sellers.

“Listings fell for the third straight month, indicating that a softening economy and higher interest rates have yet to force a meaningful increase in supply,” he said of the numbers. “If anything, soft price conditions are keeping potential sellers on the sidelines.”

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Consumer debt tops $2.36 trillion in third quarter, up 7.3 per cent from last year

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Equifax Canada says an increase in borrowers helped push total consumer debt to $2.36 trillion in the third quarter for a 7.3 per cent rise from last year, even as mortgage volumes decline.

It says average non-mortgage debt rose to $21,183 for the highest level since the second quarter of 2020, with early signs of strain starting to show in auto loans and credit cards.

Overall non-mortgage debt came in at $599.9 billion for a 5.3 per cent climb from last year, and up 1.9 per cent from the third quarter of 2019, as the number of borrowers rose by 3.1 per cent.

Rebecca Oakes, Equifax Canada’s head of advanced analytics, says the rising debt stems from a combination of growth from immigration, pent-up spending, as well as increased borrowing as consumers feel the strain of higher living costs.

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Credit card spending in the quarter was up 17.3 per cent from last year to an all-time high for the time period.

Average spending put on credit cards was almost $2,447, a 21.8 per cent jump from the third quarter of 2019.

There’s been an increase in credit card spending and new cards issued across all consumer segments, including the sub-prime segments, said Oakes in a statement.

She said there are some signs that borrowers are starting to have trouble covering the bills, with average payment rates for those who carry a balance down from a year ago, she said.

“Consumers have been making strong payments, but we are starting to see a shift in payment behaviour especially for credit card revolvers — those who carry a balance on their card and don’t pay it off in full each month.”

Delinquencies on auto loans have also started to trend up, especially those opened since late 2021, she said.

The overall rate of more than 90 day delinquencies for non-mortgage debt was 0.93 per cent, up from 0.87 last year, though insolvencies are still well below pre-pandemic levels.

New mortgage volume dropped 22.7 per cent in the quarter compared with last year and by 14.9 per cent compared with the third quarter of 2019. First-time home buyers are paying over $500 more for almost the same loan amounts as first-time buyers last year.

Overall insolvency rates are up from a year ago but from a relatively low starting point, and there are some areas of concern including a rise in consumer proposals by seniors, said Oakes.

“The true impact of interest rate hikes could be visible by the end of 2023.”

 This report by The Canadian Press was first published Dec. 6, 2022.

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Trudeau, Ford mark opening of Canada’s first full-scale electric vehicle plant

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The Canadian Press


Published Monday, December 5, 2022 5:06AM EST


Last Updated Monday, December 5, 2022 1:17PM EST

Prime Minister Justin Trudeau and Ontario Premier Doug Ford are celebrating the opening today of Canada’s first full-scale electric vehicle manufacturing plant.

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Trudeau says electric delivery vans have started rolling off the line today at the General Motors CAMI production plant in Ingersoll, Ont., which has been retooled to build the company’s BrightDrop all-electric vehicle brand.

The prime minister was joined by Ford and the province’s Economic Development Minister Vic Fedeli to mark the milestone.

The provincial and federal governments each invested $259 million toward GM’s $2-billion plan to transform its Ingersoll plant and overhaul its Oshawa, Ont., plant to make it EV-ready.

The federal government says the Ingersoll plant is expected to manufacture 50,000 electric vehicles by 2025.

Canada intends to bar the sale of new internal-combustion engines in passenger vehicles by 2035.

This report by The Canadian Press was first published Dec. 5, 2022.

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Food prices in Canada: Families to pay $1,065 more in 2023

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HALIFAX –

Canadians won’t escape food inflation any time soon.

Food prices in Canada will continue to escalate in the new year, with grocery costs forecast to rise up to seven per cent in 2023, new research predicts.

For a family of four, the total annual grocery bill is expected to be $16,288 — $1,065 more than it was this year, the 13th edition of Canada’s Food Price Report released Monday said.

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A single woman in her 40s — the average age in Canada — will pay about $3,740 for groceries next year while a single man the same age would pay $4,168, according to the report and Statistics Canada.

Food inflation is set to remain stubbornly high in the first half of 2023 before it starts to ease, said Sylvain Charlebois, lead author of the report and Dalhousie University professor of food distribution and policy.

“When you look at the current food inflation cycle we’re in right now, we’re probably in the seventh-inning stretch,” he said in an interview. “The first part of 2023 will remain challenging … but we’re starting to see the end of this.”

Multiple factors could influence food prices next year, including climate change, geopolitical conflicts, rising energy costs and the lingering effects of COVID-19, the report said.

Currency fluctuations could also play a role in food prices. A weaker Canadian dollar could make importing goods like lettuce more expensive, for example.

Earlier this year the loonie was worth more than 80 cents US, but it then dropped to a low of 72.17 cents US in October amid a strengthening U.S. dollar. It has hovered near the 74 cent mark in recent weeks, ending Friday at 74.25 cents US.

“The produce section is going to be the wild card,” Charlebois said. “Currency is one of the key things that could throw things off early in the winter and that’s why produce is the highest category.”

Vegetables could see the biggest price spikes, with estimates pegging cost increases will rise as high as eight per cent, the report said.

In addition to currency risks, much of the produce sold in Canada comes from the United States, which has been struggling with extremely dry conditions.

“The western U.S., particularly California, has seen strong El Nino weather patterns and droughts and bacterial contaminations, and that’s impacted our fruit and vegetable suppliers and prices,” said Simon Somogyi, campus lead at the University of Guelph and professor at the Gordon S. Lang School of Business and Economics.

“The drought is making the production of lettuce more expensive,” he said. “It’s reducing the crop size but it’s also causing bacterial contamination, which is lessening the supply in the marketplace.”

Prices in other key food categories like meat, dairy and bakery are predicted to soar up to seven per cent, the researchers found.

The Canadian Dairy Commission has approved a farm gate milk price increase of about 2.2 per cent, or just under two cents per litre, for Feb. 1, 2023.

“The increase for February is reasonable but it comes after the unprecedented increases in 2022, which are continuing to work their way through the supply chain,” Charlebois said of the two price hikes of nearly 11 per cent combined in 2022.

Meanwhile, seafood is expected to increase up to six per cent, while fruit could increase up to five per cent, the report said.

Restaurant costs are expected to increase four to six per cent, less than supermarket prices, the report said.

Rising prices will push food security and affordability even further out of reach of Canadians a year after food bank use reached a record high, the report said.

The increasing reliance on food banks is expected to continue, with 20 per cent of Canadians reporting they will likely turn to community organizations in 2023 for help feeding their families, a survey included in the report found.

Use of weekly flyers, coupons, bulk buying and food rescuing apps also ticked up this year and is expected to continue growing in 2023, the report said.

“We’re in the era now of the smart shopper,” said Somogyi, also the Arrell Chair in the Business of Food.

“For certain generations, it’s the first time that they’ve had to make a list, not impulse buy, read the weekly flyers, use coupons, buy in volume and freeze what they don’t use.”

Last year’s report predicted food prices would increase five to seven per cent in 2022 — the biggest jump ever predicted by the annual food price report.

Food costs actually far exceeded that forecast. Grocery prices were up 11 per cent in October compared with a year before while overall food costs were up 10.1 per cent, according to Statistics Canada.

“We were called alarmists,” Charlebois said of the prediction that food prices could rise seven per cent in 2022. Critics called the report an “exaggeration,” he said.

“You’re always one crisis away from throwing everything out the window,” Charlebois said. “We didn’t predict the war in Ukraine, and that really affected markets.”

This report by The Canadian Press was first published Dec. 5, 2022.

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