Weekly Digest — May 12, 2023

Real estate markets across Canada have surged in April. This is going to make CREA’s data release on Monday one to watch. Stay tuned for that next week. The rumour is, the numbers are going to surprise a lot of people. If sales and prices surge as suspected, it’ll reinforce “buy-the-dip” sentiment and it could even trigger a mini FOMO stampede of buying before the summer.

In Toronto, for example, the sales-to-new-listing ratio is now above its pre-COVID peak. That would typically be consistent with extremely strong house price inflation of more than 25%. Buyers appear more confident heading into the warmer months of 2023.

Outside of Toronto, the same trend is continuing.  All major urban markets in Canada have now moved out of a balanced market into a seller’s market.

This is shown in the inventory drop off in Toronto for April.

Multiplexes Legal in All Toronto Neighbourhoods

Toronto councillors have voted in favour of policy and zoning changes that will allow for multiplex housing to be developed city-wide. Low-rise housing with 2-4 units in a single building will now be permitted in ALL Toronto neighbourhoods.

The April report noted that Toronto is expected to attract 700,000 newcomers by 2051. Despite an uptick in the city’s mid and high rise housing developments, the supply of low-rise housing (and multiplexes), has continually lagged behind actual demand.

Job Growth At Odds With B.O.C.

41,000 new jobs were created in April. The unemployment rate is also holding steady at 5%. Labour markets need to loosen in order for rates to come back down to normalized levels.

First Horizon Merger is Abandoned

TD scrapped its plans for a US$13.4 billion acquisition of First Horizon, which would have made it the sixth-largest lender in the US. TD can now hold on to high quality assets with all signs pointing to a recession. The deal’s collapse leaves with TD with a large amount of capital giving it the balance sheet to potentially seek other deals.  

The CRA Strike is Over

Over 5,000 CRA workers are back on the job after the union representing them reached a deal with the federal government. Wages will increase by 12.6% over four years and pay out a lump sum payment of $2,500 to all workers. The agreement also includes case-by-case remote work allowances.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.99%

• 3 year fixed, 30 yr amortization – 5.14%

• 5 year variable, 30 yr amortization – Prime – 0.60% = 6.10%

• 5 year fixed, 25 yr amortization – 4.89%

• 3 year fixed, 25 yr amortization – 5.04%

• 5 year variable, 25 yr amortization – Prime – 0.70% = 6.00%

INSURED

• 5 year fixed, 25 yr amortization – 4.59%

• 4 year fixed, 25 yr amortization – 4.64%

• 3 year fixed, 25 yr amortization – 4.84%

• 5 year variable, 25 yr amortization – Prime – .90% = 5.80%

Fast Facts

• $35.5 USD billion. Earnings reported by Warren Buffet’s Berkshire Hathaway for the first quarter of the year. This is a six-fold jump from the previous year powered by a healthy return on the company’s investments.

• 9%. The share of the world’s population living under some form of monarchy (including its constitutional variety). That’s down from 35% when King Charles was born in 1948.