Weekly Digest

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August 11th, 2023

Jobs Report

July numbers are in:

• Employment shrunk by 6,400. The consensus however, was for a +20,000 reduction.

• Unemployment climbed to 5.50%. This is the highest in 18 months.

Perhaps the most troubling stat is the construction industry lost 45,000 jobs. This further fuels the housing shortage.

Developers Are Dropping Condo Prices

Developers of new units are dealing with a perfect storm. Increased financing costs, softening demand, and increasing development costs. With new units priced above resale values, the softening condo markets in the GTA will continue to pose challengers for many developers. This in turn, releases less units to market and further constrains supply.

Combined Q1 and Q2 condo sales were 42% below the 10-year average for the first half of the year, according to new data from Urbanation.

Greenbelt Scandal

The Chief of Staff for Ontario’s Housing Minister is under hot water for the Greenbelt land removal process. According to a report byAuditor General Bonnie Lysyk, the selection was “not transparent,objective, or fully informed,” and showed “bias” and “preferentialtreatment” to certain developers.

Estimates show that the landowners of these 15 sites could see their valuations increase by over 8 billion dollars.

USA Loses AAA Credit Rating

A second “big 3” credit agency has downgraded the US from AAA to AA+. Fitch believes fiscal deterioration over the next 3 years will hinder the USA. The last timethe USA was downgraded was in 2011.

US has 4 concerns;

1.       Federal debt to GDP ratio is 123%.It was 95% in the last downgrade.

2.       US debt is up to 32.70 trillion. It was 14.80 trillion in the last downgrade.

3.       Debt issuance is expected to grow.

4.       5 year bond yields are at a 16 year high.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 6.04%

• 3 year fixed, 30 yr amortization – 6.26%

• 5 year variable, 30 yr amortization – Prime – 0.60% = 6.60%

• 5 year fixed, 25 yr amortization – 5.94%

• 3 year fixed, 25 yr amortization – 6.19%

• 5 year variable, 25 yr amortization – Prime – 0.70% = 6.50%

INSURED

• 5 year fixed, 25 yr amortization – 5.64%

• 4 year fixed, 25 yr amortization – 5.54%

• 3 year fixed, 25 yr amortization – 5.94%

• 5 year variable, 25 yr amortization – Prime – .90% = 6.30%

Fast Facts

• US $218,000 – That’s how much an unknown bidder paid for Steve Jobs’ beat-up Birkenstocks.