This Week’s Top Stories: Canadian Real Estate Prices Rise Sharply In Some Markets, BoC Sees Further Declines
Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
What Canadian Real Estate Correction? Detached Market Surges Up To $52k Higher
Canadian real estate is showing signs of a firming market. The price of a typical single-family home across Canada fell 1.2% to $748,800 in December. Five markets bucked the trend, with Oakville-Milton seeing prices surge $50,000 higher. Just five markets and a single month, doesn’t make a trend. However, a big jump in home prices bucks the intentions of tighter monetary policy. It’s a big problem for the Bank of Canada, that’s desperately trying to cool expectations.
Canadian Real Estate Prices Expected To Fall Further: Bank of Canada
The Bank of Canada revealed they expect home prices to fall further in the near term. In its latest Monetary Policy Report, they shared their view that housing will be weak in the near term. Higher interest rates cool demand, limiting credit leverage. The reduced activity is forecast to drag GDP growth this year, and return to mild growth next year.
Bank of Canada Raises Rates, “Conditional Pause” Due To Strong Economy
The Bank of Canada raised interest rates to combat the overheated economy. A full rate hike of 0.25 points was made on Wednesday, bringing the overnight rate to 4.25 percent. The central bank said they’ll be pausing at this level, which is tied for the highest level in a generation. They warn the pause is conditional, pending ambitious targets for inflation reduction.
Canadian New Home Prices Stall, Stat Can Makes Baseless Bullish Price Forecast
Canadian new home prices stalled in December, according to the national statistics agency. The stall has helped to decelerate annual growth, though it does still show growth. More interesting was the agency sharing the belief home prices will rise in the second half of the year. The forecast didn’t provide much reason as to why they see the trend reversing. It also bucks most forecasts and historical data regarding these circumstances.
The Housing Market Explained By The Fed’s Bubble Expert
This week we interviewed Enrique Martinez-Garcia, the US Federal Reserve’s housing bubble expert. He took time from his role doing cutting edge bubble research, and broke down the current market for us. He also dives into the role of credit and immigration when it comes to home prices, and disassembles some myths.
Bank of Canada To Hike Rates, Leave Door Open For More: BMO
BMO Capital Markets is telling investors not to discount the possibility of future interest rate hikes. Earlier this week, they correctly forecast the BoC will raise the overnight rate by 0.25 points. The market is now expecting rate cuts, but BMO warned not so fast. If markets expect falling rates before inflation calms, it can be counterproductive. In this case, the BoC might be forced to hike rates again, the bank explained to investors. In other words, this might be the last rate hike, but don’t count on that.