After the Bank of Canada on Wednesday gave its clearest hints yet that its interest rate cycle might have peaked, some real estate experts are expecting hope for lower borrowing costs will set up a busy spring housing market.
The Bank of Canada held its benchmark interest rate at 5.0 per cent for the fourth consecutive time on Wednesday, with governor Tiff Macklem saying that conversations at the central bank have shifted from whether rates need to rise higher to how long they need to stay at current levels.
Macklem was asked by reporters for a timeline for rate cuts, but he pushed back, arguing he didn’t want to give Canadians a “false sense of precision.” The bank’s rate path is still dependent on inflation, with additional hikes not off the table if price pressures reignite.
Many economists said, however, that the Bank of Canada’s shift in tone away from emphasizing the need for future tightening is in line with calls for interest rate cuts to begin sometime in the spring or summer of this year.
“We believe this will provide Canadians with more comfort that home prices in their city have stabilized and the next step will be a return to home price appreciation,” he says.
Signs of an early start to the spring housing market
After more than a year of housing correction tied to the Bank of Canada’s rapid rate hike campaign that began in March 2022, there are already signs of life in the Canadian housing market.
December’s home sales figures showed an uptick in activity to end 2023, with market watchers pointing to warmer weather and a pullback in borrowing costs driving deals before the end of the year.
TD Bank chief economist Beata Caranci told Global BC on Wednesday that declining bond yields have fed through to fixed mortgage rates on offer in the market, pulling buyers off the sidelines as they qualify for cheaper mortgages.
“We are already seeing homebuyers jump back into the market,” she said.
If the Bank of Canada delivers on expectations for interest rate cuts – TD Bank expects a decline of 100-150 basis points this year – that will serve to ignite housing activity, particularly in the second half of the year, Caranci said.
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Soper, too, reports that clients have been contacting Royal LePage agents in greater numbers since mid-November, which he says sets up more activity for the start of 2024. Coming off a slow 2023, he expects the spring housing market to be “more or less balanced” for buyers and sellers.
But if lower mortgage rates mean a rising number of homes change hands, expect that prices won’t be far behind, Soper says.
That sets up a conundrum for homebuyers who are debating jumping into the housing market at today’s rates in hopes of timing the bottoming for home prices, he says.
“The decision that consumers need to make is, do I wait for cheaper money or do I get in ahead of rising home prices?”
Soper expects that buyers in some of Canada’s largest housing markets – the greater Toronto and Vancouver areas, Victoria and Ottawa to name a few – will be most keen to jump into the market early, worried that they’ll miss their “window.”
On the year, he expects Calgary will remain the leading housing market for sales activity with a still-strong economy underpinned by interprovincial migration. He expects Toronto and southern Ontario, which saw some of the steepest corrections over the past year and a half, will similarly see a “stronger rebound” in 2024.
Soper expects a “sharp increase” in the number of first-time homebuyers as well this year. This cohort was missing during the housing correction in 2023, he says, but lower borrowing costs could be more favourable to those who have been able to build up savings as interest rates were rising.
Growing entry of first-timers into the housing market will likely put more pressure on home prices, however, because they’re not adding to the supply of resale listings, Soper says.
“When a first-time buyer comes to market, they’re not bringing a property. It’s like someone coming to a party without a bottle of wine,” he says.
“They’re just consuming, they’re not contributing. And it puts pressure on inventory.”
Be wary of putting stake in rate cut forecasts
For Canadians on the sidelines of the housing market debating whether now is the time to buy their first home or upsize, some experts urge caution about putting too much stake in rate forecasts.
“People like to gamble on rates. But when it’s your whole life savings at stake, it’s just not worth it,” says Clay Jarvis, financial expert with Nerdwallet Canada.
Expectations for interest rate cuts can also influence the decision between a variable mortgage, which sees payments or the loan’s amortization rate rise and fall directly in line with the Bank of Canada’s policy rate, and a fixed-rate option, which is typically set based on the bond market and steady through the contract term.
Jarvis notes that many Canadians were likely keen to jump into the housing market for the first time during the COVID-19 pandemic, when rock-bottom interest rates made variable mortgages particularly affordable. Those same homeowners have since faced ballooning payments during the Bank of Canada’s interest rate hike cycle, Jarvis notes.
Canadians eyeing variable-rate mortgages today based on expectations that rates are going to fall in the year to come will have some tricky calculations to consider.
Jarvis says that with the spread between variable rates and fixed rates around one percentage point currently, prospective buyers and those with mortgages up for renewal will have to consider how long they’re willing to wait before the central bank’s interest rate falls enough to hit a break-even point on the fixed alternatives.
“You also have to think about the stability offered by a fixed rate. If the risk of a variable rate freaks you out, that might be the best course for you,” he says.
While economists are holding to their forecasts for interest rate cuts now, Jarvis emphasizes that there is no guarantee that rates will drop soon or they won’t rise again.
The annual rate of inflation ticked back up to 3.4 per cent in December, a move that Soper says gave forecasters like him some slight pause that the Bank of Canada could be forced back to rate hikes to reach its two per cent target.
Yields on the five-year government of Canada bond, which informs the popular five-year fixed mortgage, have increased since the start of 2024, though not quite erasing recent easing towards the end of last year.
James Laird, co-CEO of Ratehub.ca, noted in a statement Wednesday that lenders had held off on raising fixed mortgage rates in response to those moves in anticipation of the Bank of Canada’s rate decision.
He said lenders will now consider raising those rates again with no timeline for rate cuts yet offered from the central bank.
If a prospective buyer’s financial plan to enter the housing market hinges on interest rates or home prices heading in a certain direction, Jarvis advises taking a step back.
Speak to a lending or real estate professional to get a better sense of the kind of home you can afford in today’s market and decide where to go from there, he suggests. Focusing on a down payment savings strategy, for example, instead of hoping for interest rate cuts, can help to maximize your buying potential when conditions are right for you to enter the housing market on solid footing.
“You need to focus on the things that you can control,” Jarvis says.
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
“Communication is one of the most important skills you require for a successful life.” — Catherine Pulsifer, author.
I’m one hundred percent in agreement with Pulsifer, which is why my evaluation of candidates begins with their writing skills. If a candidate’s writing skills and verbal communication skills, which I’ll assess when interviewing, aren’t well above average, I’ll pass on them regardless of their skills and experience.
Why?
Because business is fundamentally about getting other people to do things—getting employees to be productive, getting customers to buy your products or services, and getting vendors to agree to a counteroffer price. In business, as in life in general, you can’t make anything happen without effective communication; this is especially true when job searching when your writing is often an employer’s first impression of you.
Think of all the writing you engage in during a job search (resumes, cover letters, emails, texts) and all your other writing (LinkedIn profile, as well as posts and comments, blogs, articles, tweets, etc.) employers will read when they Google you to determine if you’re interview-worthy.
With so much of our communication today taking place via writing (email, text, collaboration platforms such as Microsoft Teams, Slack, ClickUp, WhatsApp and Rocket.Chat), the importance of proficient writing skills can’t be overstated.
When assessing a candidate’s writing skills, you probably think I’m looking for grammar and spelling errors. Although error-free writing is important—it shows professionalism and attention to detail—it’s not the primary reason I look at a candidate’s writing skills.
The way someone writes reveals how they think.
Clear writing = Clear thinking
Structured paragraphs = Structured mind
Impactful sentences = Impactful ideas
Effective writing isn’t about using sophisticated vocabulary. Hemingway demonstrated that deceptively simple, stripped-down prose can captivate readers. Effective writing takes intricate thoughts and presents them in a way that makes the reader think, “Damn! Why didn’t I see it that way?” A good writer is a dead giveaway for a good thinker. More than ever, the business world needs “good thinkers.”
Therefore, when I come across a candidate who’s a good writer, hence a good thinker, I know they’re likely to be able to write:
Emails that don’t get deleted immediately and are responded to
Simple, concise, and unambiguous instructions
Pitches that are likely to get read
Social media content that stops thumbs
Human-sounding website copy
Persuasively, while attuned to the reader’s possible sensitivities
Now, let’s talk about the elephant in the room: AI, which job seekers are using en masse. Earlier this year, I wrote that AI’s ability to hyper-increase an employee’s productivity—AI is still in its infancy; we’ve seen nothing yet—in certain professions, such as writing, sales and marketing, computer programming, office and admin, and customer service, makes it a “fewer employees needed” tool, which understandably greatly appeals to employers. In my opinion, the recent layoffs aren’t related to the economy; they’re due to employers adopting AI. Additionally, companies are trying to balance investing in AI with cost-cutting measures. CEOs who’ve previously said, “Our people are everything,” have arguably created today’s job market by obsessively focusing on AI to gain competitive advantages and reduce their largest expense, their payroll.
It wouldn’t be a stretch to assume that most AI usage involves generating written content, content that’s obvious to me, and likely to you as well, to have been written by AI. However, here’s the twist: I don’t particularly care.
Why?
Because the fundamental skill I’m looking for is the ability to organize thoughts and communicate effectively. What I care about is whether the candidate can take AI-generated content and transform it into something uniquely valuable. If they can, they’re demonstrating the skills of being a good thinker and communicator. It’s like being a great DJ; anyone can push play, but it takes skill to read a room and mix music that gets people pumped.
Using AI requires prompting effectively, which requires good writing skills to write clear and precise instructions that guide the AI to produce desired outcomes. Prompting AI effectively requires understanding structure, flow and impact. You need to know how to shape raw information, such as milestones throughout your career when you achieved quantitative results, into a compelling narrative.
So, what’s the best way to gain and enhance your writing skills? As with any skill, you’ve got to work at it.
Two rules guide my writing:
Use strong verbs and nouns instead of relying on adverbs, such as “She dashed to the store.” instead of “She ran quickly to the store.” or “He whispered to the child.” instead of “He spoke softly to the child.”
Avoid using long words when a shorter one will do, such as “use” instead of “utilize” or “ask” instead of “inquire.” As attention spans get shorter, I aim for clarity, simplicity and, most importantly, brevity in my writing.
Don’t just string words together; learn to organize your thoughts, think critically, and communicate clearly. Solid writing skills will significantly set you apart from your competition, giving you an advantage in your job search and career.
Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.
MONTREAL – Politics, public opinion and salary hikes south of the border helped push Air Canada toward a deal that secures major pay gains for pilots, experts say.
Hammered out over the weekend, the would-be agreement includes a cumulative wage hike of nearly 42 per cent over four years — an enormous bump by historical standards — according to one source who was not authorized to speak publicly on the matter. The previous 10-year contract granted increases of just two per cent annually.
The federal government’s stated unwillingness to step in paved the way for a deal, noted John Gradek, after Prime Minister Justin Trudeau made it plain the two sides should hash one out themselves.
“Public opinion basically pressed the federal cabinet, including the prime minister, to keep their hands clear of negotiations and looking at imposing a settlement,” said Gradek, who teaches aviation management at McGill University.
After late-night talks at a hotel near Toronto’s Pearson airport, the country’s biggest airline and the union representing 5,200-plus aviators announced early Sunday morning they had reached a tentative agreement, averting a strike that would have grounded flights and affected some 110,000 passengers daily.
The relative precariousness of the Liberal minority government as well as a push to appear more pro-labour underlay the prime minister’s hands-off approach to the negotiations.
Trudeau said Friday the government would not step in to fix the impasse — unlike during a massive railway work stoppage last month and a strike by WestJet mechanics over the Canada Day long weekend that workers claimed road roughshod over their constitutional right to collective bargaining. Trudeau said the government respects the right to strike and would only intervene if it became apparent no negotiated deal was possible.
“They felt that they really didn’t want to try for a third attempt at intervention and basically said, ‘Let’s let the airline decide how they want to deal with this one,'” said Gradek.
“Air Canada ran out of support as the week wore on, and by the time they got to Friday night, Saturday morning, there was nothing left for them to do but to basically try to get a deal set up and accepted by ALPA (Air Line Pilots Association).”
Trudeau’s government was also unlikely to consider back-to-work legislation after the NDP tore up its agreement to support the Liberal minority in Parliament, Gradek said. Conservative Leader Pierre Poilievre, whose party has traditionally toed a more pro-business line, also said last week that Tories “stand with the pilots” and swore off “pre-empting” the negotiations.
Air Canada CEO Michael Rousseau had asked Ottawa on Thursday to impose binding arbitration pre-emptively — “before any travel disruption starts” — if talks failed. Backed by business leaders, he’d hoped for an effective repeat of the Conservatives’ move to head off a strike in 2012 by legislating Air Canada pilots and ground crew to stick to their posts before any work stoppage could start.
The request may have fallen flat, however. Gradek said he believes there was less anxiety over the fallout from an airline strike than from the countrywide railway shutdown.
He also speculated that public frustration over thousands of cancelled flights would have flowed toward Air Canada rather than Ottawa, prompting the carrier to concede to a deal yielding “unheard of” gains for employees.
“It really was a total collapse of the Air Canada bargaining position,” he said.
Pilots are slated to vote in the coming weeks on the four-year contract.
Last year, pilots at Delta Air Lines, United Airlines and American Airlines secured agreements that included four-year pay boosts ranging from 34 per cent to 40 per cent, ramping up pressure on other carriers to raise wages.
After more than a year of bargaining, Air Canada put forward an offer in August centred around a 30 per cent wage hike over four years.
But the final deal, should union members approve it, grants a 26 per cent increase in the first year alone, retroactive to September 2023, according to the source. Three wage bumps of four per cent would follow in 2024 through 2026.
Passengers may wind up shouldering some of that financial load, one expert noted.
“At the end of the day, it’s all us consumers who are paying,” said Barry Prentice, who heads the University of Manitoba’s transport institute.
Higher fares may be mitigated by the persistence of budget carrier Flair Airlines and the rapid expansion of Porter Airlines — a growing Air Canada rival — as well as waning demand for leisure trips. Corporate travel also remains below pre-COVID-19 levels.
Air Canada said Sunday the tentative contract “recognizes the contributions and professionalism of Air Canada’s pilot group, while providing a framework for the future growth of the airline.”
The union issued a statement saying that, if ratified, the agreement will generate about $1.9 billion of additional value for Air Canada pilots over the course of the deal.
Meanwhile, labour tension with cabin crew looms on the horizon. Air Canada is poised to kick off negotiations with the union representing more than 10,000 flight attendants this year before the contract expires on March 31.
This report by The Canadian Press was first published Sept. 16, 2024.
