Weekly Digest

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February 29th, 2024

March Volume Run’s

Each year, we notice a large market uptick in the real estate market come March. Seasonality, and lowering rates should lead to a very busy spring for Canada’s real estate market in 2024.

More Inflation Data Sets

Canada has a major housing problem and the Bank’s policy now risks making it worse. High interest rates have weighed heavily on the pre-construction sales that developers rely on to fund their projects. As a result, housing starts have continued to trend lower in recent months, despite the potential boost from unseasonably mild weather. The case to make policy less restrictive is therefore more compelling.

The overshoot in headline inflation is now entirely due to mortgage interest costs

Population Shifts

Millennials now out number the baby boomer demographic in Canada. Millennial population sits at 9.2 million and boomers are at 9.1 million.

Spend, Spend, Spend

Canada’s government budget deficit widened to 4.47 billion in December 2023 up from 1.98 billion December 2022. Program expenses surged by 6.6% across all major spending categories, while public debt charges spiked by 35.6% due to higher interest rates.

On the other hand, government revenues increased by 2.6%, driven by growth in personal income tax revenue and other taxes and duties. We can’t tax our way out of over spending.  

Tax, Tax, Tax

British Columbia has introduced a new tax to “discourage” home flipping. The tax will apply to the income from selling a residential property within two years of purchase. The tax starts at 20% on profit from properties sold within one year, gradually declining to zero for those sold between 366 and 730 days.

Will a similar tax be introduced in Ontario? Lets hope not.

Full Story

Hire, Hire, Hire

The below chart represents the number of public vs total employees for Canada, USA and the UK from a period of 1976-2024.

• 1976-2000: Decline in public employee %

• 2000-2010: Public employee % rises slightly

• 2010-2023: CAN increased to 21.5%

It is the highest since Oct 1995 (excluding April & May 2020).

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 5.09%

• 3 year fixed, 30 yr amortization – 5.29%

• 2 year fixed, 30 yr amortization – 6.00%

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

• 5 year fixed, 25 yr amortization – 4.99%

• 3 year fixed, 25 yr amortization – 5.19%

• 2 year fixed, 25 yr amortization – 5.90%

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

INSURED

• 5 year fixed, 25 yr amortization – 4.89%

• 4 year fixed, 25 yr amortization – 4.89%

• 3 year fixed, 25 yr amortization – 4.99%

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

Fast Facts

• 2014 – The year Apple began quietly working on an electric car, a project that they are now shutting down. Nearly 2,000 employees were working on the product.

• $1Billion USD – The amount a former professor donated to a New York medical school to cover tuition for all students. Dr. Ruth Gottesman inherited money from her husband, who was a billionaire investor in Warren Buffett’s Berkshire Hathaway. The gift is the largest ever to a U.S. medical school.