Spring housing market looms over the Bank of Canada’s rate decision. Here’s why - Global News | Canada News Media
Connect with us

News

Spring housing market looms over the Bank of Canada’s rate decision. Here’s why – Global News

Published

 on


Fears that the spring housing market could “overheat” will be in the background as the Bank of Canada readies for its interest rate decision on Wednesday, experts say.

The spring housing market, which kicks off in March, is typically one of the busiest times of the year for home buyers and sellers in Canada.

So far, the spring housing season is a “mixed picture,” according to RBC assistant chief economist Robert Hogue, as the Bank of Canada’s benchmark interest rate remains high and boxes out some prospective buyers.

Preliminary data from local housing boards show some western markets, particularly in Alberta, saw a strong uptick in home sales in March. In Toronto, housing activity has declined for two consecutive months.



2:19
Business Matters: Toronto home prices rise in March, 2nd monthly increase since July


Average home prices are meanwhile ticking up in some regions including the GTA after a correction in the market tied to the central bank’s rate tightening cycle over the past few years.

“In some parts of the country, that recovery seems to be relatively robust,” Hogue tells Global News. “Prices are going up, but not that rapidly.”

Rishi Sondhi, economist with TD Bank, said in a housing market report released Monday that the first quarter of the year is “tracking stronger than anticipated.”

Unseasonably warm weather helped to fuel a hot start to housing activity in January and February, he noted, and some of those early sales pulled demand forward from the typically busy spring season. The Easter long weekend falling at the end of March also dampened overall sales in that month, he said.



2:13
Bank of Canada to make rate interest decision, release monetary policy report


Like Hogue, Sondhi said he’s expecting a “modest” uptick in home sales and prices this spring, driven by pent-up demand in Ontario and British Columbia.

But both market watchers tell Global News they’re expecting many sidelined homebuyers will maintain their holding patterns until they get a clearer sign of lower borrowing costs on the way from the Bank of Canada.

Worried the housing market could ‘stoke’ inflation

The Bank of Canada, too, has made clear that its eyes are on the spring housing market as it weighs whether it’s done enough to ensure inflation will keep cooling all the way back to its two-per cent target.


Financial news and insights
delivered to your email every Saturday.

In the deliberations released after the central bank’s latest interest rate hold in March, monetary policymakers “expressed concern that the housing market continued to pose upside risks to the inflation outlook.”

While overall inflation cooled to 2.8 per cent annually in February, shelter inflation has remained a thorn in the side of the Bank of Canada, remaining above six per cent in the month. While the shelter component of the consumer price index (CPI) includes inputs like rents and mortgage interest costs tied to the central bank’s own policy rate, it also factors in home prices.



2:44
‘Robust’ GDP growth in early 2024 puts Bank of Canada in tough spot


A hot housing market could therefore “stoke shelter price inflation,” the Bank of Canada warned in March.

“If the housing sector rebounds in the spring, shelter price inflation could be pushed up, delaying the return of CPI inflation to the (two per cent) target,” the deliberations read. “If inflation proves more persistent than expected, monetary policy would likely need to remain restrictive for longer.”

But recent economic data has been largely positive for the Bank of Canada’s inflation fight.

Annual inflation data has cooled more than anticipated in two consecutive months. While real gross domestic product to start 2024 has been hotter than expected, the March jobs report released on Friday showed relative easing, with the unemployment rate jumping to 6.1 per cent.

More on Money

If the Bank of Canada cuts its policy rate on Wednesday, prospective buyers would likely come off the sidelines, Hogue says. A spring cut could give Canadians and market watchers expectations that the central bank’s rate cut cycle “could be a bit more aggressive” than currently anticipated, he says, fuelling a bit more activity in the market.

Such a scenario would not align with the Bank of Canada’s goal to avoid a reacceleration in price pressures, Hogue says.

“If the housing market were to overheat again, that could be counterproductive. So (the central bank) is mindful of that.”

There’s a “coiled spring” effect in the housing market right now, Sondhi wrote in his report, which poses a risk that sales and prices could rise higher than in the current TD Bank forecast.



9:32
Housing crisis: Will new federal supports go far enough to help Canadians?


Even during the Bank of Canada’s current tightening cycle, buyers have driven sales activity higher in response to cheaper borrowing rates in the market. That happened last spring when the Bank of Canada announced a “conditional pause” in its rate hike campaign and at the end of 2023, with bond yields declining and driving down fixed mortgage rates in response.

Sondhi told Global News in an interview on Monday the market is “responsive” to these developments that are positive for demand.

Rate cuts expected to skip spring housing market

But neither Hogue nor Sondhi have a rate cut from the Bank of Canada this week in their baseline housing forecasts.

Most economists are expecting the Bank of Canada will hold its policy rate steady again at 5.0 per cent on Wednesday, with calls for cuts to begin in either June or July.

Hogue says the central bank likes to signal its pivots well in advance, which would make a change in stance on Wednesday premature. But he adds that the latest economic data could allow the Bank of Canada to be a bit clearer that “an inflection point is imminent in its monetary policy.”

In addition to the dampening effect of higher interest rates, Sondhi said the lack of certainty from the Bank of Canada about where interest rates are heading is another factor constraining buyers. He agreed that this week could see the central bank provide clearer signals about a possible rate cut timeline, something monetary policymakers have so far been tight-lipped about.

“The economic conditions that we see are supportive of cuts so they might open the door for that possibility in their April statement,” he told Global News.

But Hogue also warns not to expect a clear direction from the Bank of Canada one way or another. Monetary policymakers will want to “keep some options open” should inflation progress stall, or if the housing market trends hotter than economists are currently forecasting, he says.

“If the market does not behave the way we expect and starts to jump up very quickly and overheat, it could make the Bank of Canada take a step back and reassess its game plan,” Hogue says.



1:41
BoC monetary policy targets inflation, not housing: Macklem


TD Bank is expecting the housing market to pick up in the second half of the year after interest rate cuts begin in July. Sales and prices are primed to increase, according to the forecast, but in many markets — particularly those most constrained by affordability — price appreciation will be limited.

Even when interest rate cuts begin, Sondhi said he doesn’t expect housing to become meaningfully more affordable over the coming years as cheaper borrowing costs fuel rising prices, offsetting improvements in affordability.

For Hogue’s part, he says it won’t be until late 2024 and into 2025 that more buyers come off the sidelines, empowered by interest rate drops of one to two percentage points over the next few years.

“A drop in interest rates will help affordability and will bring more people, more buyers into the housing market,” Hogue says.

“But we will need a string of cuts before it makes a real difference to a lot of people.”

Adblock test (Why?)



Source link

Continue Reading

News

Bad traffic, changed plans: Toronto braces for uncertainty of its Taylor Swift Era

Published

 on

TORONTO – Will Taylor Swift bring chaos or do we all need to calm down?

It’s a question many Torontonians are asking this week as the city braces for the arrival of Swifties, the massive fan base of one of the world’s biggest pop stars.

Hundreds of thousands are expected to descend on the downtown core for the singer’s six concerts which kick off Thursday at the Rogers Centre and run until Nov. 23.

And while their arrival will be a boon to tourism dollars — the city estimates more than $282 million in economic impact — some worry it could worsen Toronto’s gridlock by clogging streets that already come to a standstill during rush hour.

Swift’s shows are set to collide with sports events at the nearby Scotiabank Arena, including a Raptors game on Friday and a Leafs game on Saturday.

Some residents and local businesses have already adjusted their plans to avoid the area and its planned road closures.

Aahil Dayani says he and some friends intended to throw a birthday bash for one of their pals until they realized it would overlap with the concerts.

“Something as simple as getting together and having dinner is now thrown out the window,” he said.

Dayani says the group rescheduled the gathering for after Swift leaves town. In the meantime, he plans to hunker down at his Toronto residence.

“Her coming into town has kind of changed up my social life,” he added.

“We’re pretty much just not doing anything.”

Max Sinclair, chief executive and founder of A.I. technology firm Ecomtent, suggested his employees avoid the company’s downtown offices on concert days, saying he doesn’t see the point in forcing people to endure potential traffic jams.

“It’s going to be less productive for us, and it’s going to be just a pain for everyone, so it’s easier to avoid it,” Sinclair said.

“We’re a hybrid company, so we can be flexible. It just makes sense.”

Swift’s concerts are the latest pop culture moment to draw attention to Toronto’s notoriously disastrous daily commute.

In June, One Direction singer Niall Horan uploaded a social media video of himself walking through traffic to reach the venue for his concert.

“Traffic’s too bad in Toronto, so we’re walking to the venue,” he wrote in the post.

Toronto Transit Commission spokesperson Stuart Green says the public agency has been working for more than a year on plans to ease the pressure of so many Swifties in one confined area.

“We are preparing for something that would be akin to maybe the Beatles coming in the ‘60s,” he said.

Dozens of buses and streetcars have been added to transit routes around the stadium, and the TTC has consulted the city on potential emergency scenarios.

Green will be part of a command centre operated by the City of Toronto and staffed by Toronto police leaders, emergency services and others who have handled massive gatherings including the Raptors’ NBA championship parade in 2019.

“There may be some who will say we’re over-preparing, and that’s fair,” Green said.

“But we know based on what’s happened in other places, better to be over-prepared than under-prepared.”

Metrolinx, the agency for Ontario’s GO Transit system, has also added extra trips and extended hours in some regions to accommodate fans looking to travel home.

A day before Swift’s first performance, the city began clearing out tents belonging to homeless people near the venue. The city said two people were offered space in a shelter.

“As the area around Rogers Centre is expected to receive a high volume of foot traffic in the coming days, this area has been prioritized for outreach work to ensure the safety of individuals in encampments, other residents, businesses and visitors — as is standard for large-scale events,” city spokesperson Russell Baker said in a statement.

Homeless advocate Diana Chan McNally questioned whether money and optics were behind the measure.

“People (in the area) are already in close proximity to concerts, sports games, and other events that generate massive amounts of traffic — that’s nothing new,” she said in a statement.

“If people were offered and willingly accepted a shelter space, free of coercion, I support that fully — that’s how it should happen.”

This report by The Canadian Press was first published Nov. 13, 2024.



Source link

Continue Reading

News

‘It’s literally incredible’: Swifties line up for merch ahead of Toronto concerts

Published

 on

TORONTO – Hundreds of Taylor Swift fans lined up outside the gates of Toronto’s Rogers Centre Wednesday, with hopes of snagging some of the pop star’s merchandise on the eve of the first of her six sold-out shows in the city.

Swift is slated to perform at the venue from Thursday to Saturday, and the following week from Nov. 21 to Nov. 23, with concert merchandise available for sale on some non-show days.

Swifties were all smiles as they left the merch shop, their arms full of sweaters and posters bearing pictures of the star and her Eras Tour logo.

Among them was Zoe Haronitis, 22, who said she waited in line for about two hours to get $300 worth of merchandise, including some apparel for her friends.

Haronitis endured the autumn cold and the hefty price tag even though she hasn’t secured a concert ticket. She said she’s hunting down a resale ticket and plans to spend up to $600.

“I haven’t really budgeted anything,” Haronitis said. “I don’t care how much money I spent. That was kind of my mindset.”

The megastar’s merchandise costs up to $115 for a sweater, and $30 for tote bags and other accessories.

Rachel Renwick, 28, also waited a couple of hours in line for merchandise, but only spent about $70 after learning that a coveted blue sweater and a crewneck had been snatched up by other eager fans before she got to the shop. She had been prepared to spend much more, she said.

“The two prized items sold out. I think a lot more damage would have been done,” Renwick said, adding she’s still determined to buy a sweater at a later date.

Renwick estimated she’s spent about $500 in total on “all-things Eras Tour,” including her concert outfit and merchandise.

The long queue for Swift merch is just a snapshot of what the city will see in the coming days. It’s estimated that up to 500,000 visitors from outside Toronto will be in town during the concert period.

Tens of thousands more are also expected to attend Taylgate’24, an unofficial Swiftie fan event scheduled to be held at the nearby Metro Toronto Convention Centre.

Meanwhile, Destination Toronto has said it anticipates the economic impact of the Eras Tour could grow to $282 million as the money continues to circulate.

But for fans like Haronitis, the experience in Toronto comes down to the Swiftie community. Knowing that Swift is going to be in the city for six shows and seeing hundreds gather just for merchandise is “awesome,” she said.

Even though Haronitis hasn’t officially bought her ticket yet, she said she’s excited to see the megastar.

“It’s literally incredible.”

This report by The Canadian Press was first published Nov. 13, 2024.

The Canadian Press. All rights reserved.



Source link

Continue Reading

News

Via Rail seeks judicial review on CN’s speed restrictions

Published

 on

OTTAWA – Via Rail is asking for a judicial review on the reasons why Canadian National Railway Co. has imposed speed restrictions on its new passenger trains.

The Crown corporation says it is seeking the review from the Federal Court after many attempts at dialogue with the company did not yield valid reasoning for the change.

It says the restrictions imposed last month are causing daily delays on Via Rail’s Québec City-Windsor corridor, affecting thousands of passengers and damaging Via Rail’s reputation with travellers.

CN says in a statement that it imposed the restrictions at rail crossings given the industry’s experience and known risks associated with similar trains.

The company says Via has asked the courts to weigh in even though Via has agreed to buy the equipment needed to permanently fix the issues.

Via said in October that no incidents at level crossings have been reported in the two years since it put 16 Siemens Venture trains into operation.

This report by The Canadian Press was first published Nov. 13, 2024.

Companies in this story: (TSX:CN)

The Canadian Press. All rights reserved.



Source link

Continue Reading

Trending

Exit mobile version