Business
How Canadians are coping with a correcting housing market – CTV News
Less than a year after purchasing their four-bedroom townhouse in Surrey, B.C. for $870,000, Aneesh Bhandari and his wife decided to sell their home in early May.
They were both were looking forward to their first open house, Bhandari said, making bets on how many showings the home would get. They later discovered only one person came to view the property.
“It was an eye-opener,” Bhandari told CTVNews.ca in a telephone interview on Thursday. “My realtor didn’t expect that, nobody expected that.”
Bhandari and his wife are planning to move from British Columbia to Ontario to be closer to his employer’s office in Mississauga. But the process of selling their current home and purchasing a new one has been a struggle, the 36-year-old said.
After 30 days on the market, the 167-square-metre home listed for $1.15 million still had not sold, despite being listed for $50,000 below similar homes in the area, said Bhandari. In mid-June, he took the home off the market.
“At that point in time, the sellers were expecting yesterday’s price and buyers were wanting tomorrow’s price,” said Bhandari.
After getting an extension from his employer to work from home until December, Bhandari now plans to re-list his home in October in an effort to sell before the end of the year.
Bhandari is one of several Canadians who wrote to CTVNews.ca about the impact Canada’s housing correction is having on their decisions to buy or sell a home. After a series of interest rate hikes implemented by the Bank of Canada, housing markets are now facing a correction that “runs far and wide” across the country, according to a new report by the Royal Bank of Canada (RBC).
A drop in house prices, combined with less resale activity, shows that housing markets Canada-wide are now cooling down. According to RBC’s forecast, average home prices in Canada are expected to fall throughout the rest of 2022, eventually dropping 12 per cent by the middle of 2023 compared to their peak in February.
“[This] would rank as a very significant correction,” Robert Hogue, assistant chief economist at RBC, told CTVNews.ca in a telephone interview on Wednesday. “We rarely see this type of double-digit price decline on a national basis.”
Rising interest rates have played a key role in correcting some of the extraordinary gains in house prices Canadians saw during the pandemic, said James Laird, co-CEO of Ratehub.ca.
“The last few years were irrational and some rationality in correcting that exuberance is happening at the moment,” Laird told CTVNews.ca in a telephone interview on Wednesday. “Given the red-hot pace of the last two and a half years, it feels logical now that we should be taking a breather.”
After hitting a record high of $816,720 in February, national average home prices have been on a steady decline, data from the Canadian Real Estate Association (CREA) shows. The average price of a home in Canada for the month of June was $665,849, not seasonally adjusted.
The lack of certainty in terms of what to expect from the Bank of Canada regarding further interest hikes may also be encouraging some Canadians to sit on the market sidelines, Laird said.
“With the central bank still in a transition period from the pandemic rate policy … to the post-pandemic inflation rate policy, we don’t know exactly where the bank wants to get to,” Laird said.
In the face of a changing market driven by shrinking house prices, Hogue said current sellers must be pragmatic and recognize the market is much different than it was just a few months ago.
“Prices are likely to continue to decline in the coming months, so the market is unlikely to become friendlier to sellers in the short term,” Hogue said. “Buyers are coming into the market with less of a budget … They have stricter limitations as far as [how much they can afford].”
TORONTO, VANCOUVER AREAS MORE BALANCED
According to the RBC report, large housing markets across Ontario and British Columbia are expected to see some of the heaviest corrections compared to other regions in Canada. The reason for this lies in the sky-high house prices that have characterized these areas during most of the COVID-19 pandemic. Hogue said these areas are therefore more sensitive to interest rate hikes.
According to data compiled by the CREA, average home prices in Ontario and British Columbia peaked in February at $1,086,493 and $1,104,098, respectively. Both figures are not seasonally adjusted.
Since then, activity has plunged to its slowest pace in more than 13 years — excluding pandemic lockdowns. This leaves room for more negotiations between buyers and sellers as the market balances out, said Frank Clayton, an economist and senior research fellow at Toronto Metropolitan University.
“[Buyers] should keep their eye open because … there’s always people that have to sell,” he told CTVNews.ca in a telephone interview on Wednesday. “Some people aren’t going to want to wait six or eight weeks and hope their house is going to sell, they may want the cash right away.”
While it may not be a buyer’s market in parts of Southern Ontario just yet, Clayton said, markets are appearing more balanced. This is also the case in the Greater Vancouver area, according to RBC’s report. Housing activity in the region has decreased 40 per cent over the last four months, and home prices for all home types have also dropped 4.5 per cent since April.
It’s also important to understand some areas of these regions will feel the effects of a correction differently than others, Laird said.
“[Prices in] the suburbs and more rural properties went up the most during the two years of pandemic exuberance … and those are the places [where] the prices are correcting the most,” said Laird. “[But] the urban cores did not go up nearly as much as the surrounding suburbs [so] they’re also not correcting as much.”
HOUSES STILL ‘LESS AFFORABLE,’ SAYS REAL ESTATE EXPERT
A real estate outlook from Desjardins also points to New Brunswick, Nova Scotia and Prince Edward Island as facing significant corrections, after home prices ballooned during the pandemic.
Parts of Alberta, however, are expected to be more resilient. Despite seeing price declines, the correction in this part of Canada is expected to be milder in comparison to others, Hogue said.
While average home prices may have been dropping on a national basis, this doesn’t mean houses have become more affordable for Canadians, Laird said.
Lower house prices have been driven by higher interest rates, which force homeowners to pay more interest on their mortgages. With a higher borrowing cost, those looking to buy a home are likely to qualify for less of a mortgage as a result, Hogue said. This makes it especially tough for homebuyers looking to get into the housing market for the first time.
Taylor Wright and her fiancé are currently renting a one-bedroom apartment as they search for a new home. Looking to purchase in either Ajax, Ont. or Whitby, Ont., with a budget of $800,000, Wright said she and her fiancé remain priced out of the market.
“Every house we go look at is still going for close to $100,000 over the asking price, and we are not willing to get into a bidding war and overpaying for a home,” Wright wrote in an email to CTVNews.ca on Thursday.
Having kept an eye on the province’s housing market since the beginning of the pandemic, Wright said she saw home prices “climb further and further out of reach.” Still, she said rising interest rates and cooling prices are giving her hope that in six months’ time, she may be able to buy a home.
Diordan Svelander and his wife are looking to purchase a home in the Greater Vancouver area. With sky-high house prices, he said they could not afford a down payment on a home despite working two full-time jobs.
Svelander said he and his family tried looking north of the city, in the municipality of Chetwynd, B.C. The couple had their eyes on one house, but as interest rates climbed throughout the year, they could no longer afford it.
“The money we had saved was not enough to withstand the stress tests, and we had exhausted all of our options trying to buy,” Svelander wrote in an email to CTVNews.ca on Wednesday.
As a result, the couple is now renting a two-bedroom unit with their two young children and pets, Svelander said.
A recent report by Ratehub.ca assessed the income required to purchase an average home in different Canadian cities. So far, financial losses from higher interest rates have not been offset by gains from lower home prices, Laird said. In all Canadian cities included in the report, residents required more income, on average, to afford a typical home.
“You had a better chance of buying a home a year ago with those elevated prices but with lower mortgage rates … than you do with the more modest home prices but higher mortgage rates,” Laird said. “It actually means that everything is less affordable than it’s ever been.”
Since moving to B.C. from Colombia to go to university, Marylin Moreno has been a regular at Tim Hortons – and she always scans her app so she can play the iconic Roll Up To Win contest.
“I start to roll to see if I can win something, sometimes I have a coffee or a donut,” said Moreno.
On Wednesday, she got an email from Tim Hortons that stopped her in her tracks. “It said, ‘Congratulations, you’ve won four coffees, one donut, and a boat.’ I was like, a boat! Really?” said Moreno.
The prize was a $55,000 fishing boat and trailer. Shaking, Moreno went to the nearest Tim Hortons.
“And I asked them, is this real? I’m not sure it’s real. And they told me yes, it’s real,” said Moreno, who was told to call customer service and wait for further instructions on claiming her prize.
The let down came in an email hours later. “They said, ‘I’m so sorry, we made a mistake, you didn’t win the boat. Please ignore the email.’ And I went oh, my heart! I can’t believe it,“ said Moreno.
She learned she was among hundreds of Roll Up To Win players across the country who got the same email, congratulating them on winning the boat. In the email explaining the error, Tim Hortons said it was meant to be a simple recap of the contest.
The apology email went on to say: “Unfortunately, some of the prizes that you did not win may have been included in the recap email you received. If this was the case, today’s email does not mean you won those prizes.”
Moreno said she understands humans make mistakes, but pointed out this isn’t the first time. In 2023, some Roll Up To Win players were mistakenly told they won a $10,000 prize.
Lindsey Meredith, an SFU marketing professor emeritus, said the fact it’s now happened twice is troubling.
Marylin Moreno was among the false winners of the latest Tim Hortons Roll Up To Win promotion.
“If you start to get a bad reputation, collectively it starts to build. It hurts your brand, it hurts your ability to run future promotions, and it certainly can hurt market segments who get really annoyed when that fishing boat just sunk right underneath them,”said Meredith.
Last time, Tims offered $50 gift cards to the customers who were told they won the big prize and didn’t. Moreno said she hasn’t been offered anything.
“I’m waiting for at least something. Make a customer feel better, so OK you make a mistake, at least you give this customer something good, a gift card, something,” Moreno said.
Meredith agrees, saying: “We start to look at what can we do to make that customer happy again, and if that means giving out a lot of coffee cards, get ‘em out, gang. Because you’ve got a problem on your hands, and it’s lot more than a cup of coffee.”
Moreno said she won’t stop going to Tims, and she will continue to play Roll Up To Win, adding “I want to get a free coffee or free donut.”
But if she gets an email saying she won a bigger prize, she won’t get excited. “I don’t trust them,” she said. “It would be hard for me to believe this.”
Business
Bitcoin's latest 'halving' has arrived. Here's what you need to know – Business News – Castanet.net
The “miners” who chisel bitcoins out of complex mathematics are taking a 50% pay cut — effectively reducing new production of the world’s largest cryptocurrency, again.
Bitcoin’s latest “halving” appeared to occur Friday night. Soon after the highly anticipated event, the price of bitcoin held steady at about $63,907.
Now, all eyes are on what will happen down the road. Beyond bitcoin’s long-term price behavior, which relies heavily on other market conditions, experts point to potential impacts on the day-to-day operations of the asset’s miners themselves. But, as with everything in the volatile cryptoverse, the future is hard to predict.
Here’s what you need to know.
WHAT IS BITCOIN HALVING AND WHY DOES IT MATTER?
Bitcoin “halving,” a preprogrammed event that occurs roughly every four years, impacts the production of bitcoin. Miners use farms of noisy, specialized computers to solve convoluted math puzzles; and when they complete one, they get a fixed number of bitcoins as a reward.
Halving does exactly what it sounds like — it cuts that fixed income in half. And when the mining reward falls, so does the number of new bitcoins entering the market. That means the supply of coins available to satisfy demand grows more slowly.
Limited supply is one of bitcoin’s key features. Only 21 million bitcoins will ever exist, and more than 19.5 million of them have already been mined, leaving fewer than 1.5 million left to pull from.
So long as demand remains the same or climbs faster than supply, bitcoin prices should rise as halving limits output. Because of this, some argue that bitcoin can counteract inflation — still, experts stress that future gains are never guaranteed.
HOW OFTEN DOES HALVING OCCUR?
Per bitcoin’s code, halving occurs after the creation of every 210,000 “blocks” — where transactions are recorded — during the mining process.
No calendar dates are set in stone, but that divvies out to roughly once every four years.
WILL HALVING IMPACT BITCOIN’S PRICE?
Only time will tell. Following each of the three previous halvings, the price of bitcoin was mixed in the first few months and wound up significantly higher one year later. But as investors well know, past performance is not an indicator of future results.
“I don’t know how significant we can say halving is just yet,” said Adam Morgan McCarthy, a research analyst at Kaiko. “The sample size of three (previous halvings) isn’t big enough to say ‘It’s going to go up 500% again,’ or something.”
At the time of the last halving in May 2020, for example, bitcoin’s price stood at around $8,602, according to CoinMarketCap — and climbed almost seven-fold to nearly $56,705 by May 2021. Bitcoin prices nearly quadrupled a year after July 2016’s halving and shot up by almost 80 times one year out from bitcoin’s first halving in November 2012. Experts like McCarthy stress that other bullish market conditions contributed to those returns.
Friday’s halving also arrives after a year of steep increases for bitcoin. As of Friday night, bitcoin’s price stood at $63,907 per CoinMarketCap. That’s down from the all-time-high of about $73,750 hit last month, but still double the asset’s price from a year ago.
Much of the credit for bitcoin’s recent rally is given to the early success of a new way to invest in the asset — spot bitcoin ETFs, which were only approved by U.S. regulators in January. A research report from crypto fund manager Bitwise found that these spot ETFs, short for exchange-traded funds, saw $12.1 billion in inflows during the first quarter.
Bitwise senior crypto research analyst Ryan Rasmussen said persistent or growing ETF demand, when paired with the “supply shock” resulting from the coming halving, could help propel bitcoin’s price further.
“We would expect the price of Bitcoin to have a strong performance over the next 12 months,” he said. Rasmussen notes that he’s seen some predict gains reaching as high as $400,000, but the more “consensus estimate” is closer to the $100,000-$175,000 range.
Other experts stress caution, pointing to the possibility the gains have already been realized.
In a Wednesday research note, JPMorgan analysts maintained that they don’t expect to see post-halving price increases because the event “has already been already priced in” — noting that the market is still in overbought conditions per their analysis of bitcoin futures.
WHAT ABOUT MINERS?
Miners, meanwhile, will be challenged with compensating for the reduction in rewards while also keeping operating costs down.
“Even if there’s a slight increase in bitcoin price, (halving) can really impact a miner’s ability to pay bills,” Andrew W. Balthazor, a Miami-based attorney who specializes in digital assets at Holland & Knight, said. “You can’t assume that bitcoin is just going to go to the moon. As your business model, you have to plan for extreme volatility.”
Better-prepared miners have likely laid the groundwork ahead of time, perhaps by increasing energy efficiency or raising new capital. But cracks may arise for less-efficient, struggling firms.
One likely outcome: Consolidation. That’s become increasingly common in the bitcoin mining industry, particularly following a major crypto crash in 2022.
In its recent research report, Bitwise found that total miner revenue slumped one month after each of the three previous halvings. But those figures had rebounded significantly after a full year — thanks to spikes in the price of bitcoin as well as larger miners expanding their operations.
Time will tell how mining companies fare following this latest halving. But Rasmussen is betting that big players will continue to expand and utilize the industry’s technology advances to make operations more efficient.
WHAT ABOUT THE ENVIRONMENT?
Pinpointing definitive data on the environmental impacts directly tied to bitcoin halving is still a bit of a question mark. But it’s no secret that crypto mining consumes a lot of energy overall — and operations relying on pollutive sources have drawn particular concern over the years.
Recent research published by the United Nations University and Earth’s Future journal found that the carbon footprint of 2020-2021 bitcoin mining across 76 nations was equivalent to emissions of burning 84 billion pounds of coal or running 190 natural gas-fired power plants. Coal satisfied the bulk of bitcoin’s electricity demands (45%), followed by natural gas (21%) and hydropower (16%).
Environmental impacts of bitcoin mining boil largely down to the energy source used. Industry analysts have maintained that pushes towards the use of more clean energy have increased in recent years, coinciding with rising calls for climate protections from regulators around the world.
Production pressures could result in miners looking to cut costs. Ahead of the latest halving, JPMorgan cautioned that some bitcoin mining firms may “look to diversify into low energy cost regions” to deploy inefficient mining rigs.
Business
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