Real Estate Braces For Impact As Bay Street Warns of A Hard Landing
Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Brace For Impact, Because There’s No Retreat From A Hard Landing : BMO
BMO Capital Markets warned clients to expect a North American recession. Risk is now well over 50%, and inflation is forcing interest rates to make a steep climb. Never before have interest rates increased at this rate without a hard landing. These are amongst the reasons Canada is expected to see a recession within 6 months, and a 30% drop in home prices.
WAY OVERVALUED
Canada Is Heading For A Hard Landing, Real Estate Prices To Drop 30%: Oxford Econ
Oxford Economics is one of the big forecasters to call a hard landing soon. The firm expects a recession to kick off within the next six months, with prices falling 30% from peak. It sounds like a sharp drop, but they remind investors this still won’t bring prices back to 2019 levels. Housing has so much froth that the biggest drop in history won’t be enough to get rid of it.
HUGE CRASH FORESEEN
Canadian Real Estate Prices Just Made A Record Price Drop: Teranet-National Bank
The Teranet-National Bank House Price Index (HPI) shows a record drop for home prices. A typical home fell 2.4% in August, the largest monthly drop since the index began in 1998. The data goes further than the CREA HPI, but still not far enough to see the sharp declines in the early 90s. In any case, some of those lofty gains made recently are reversing.
THE CRISIS ONLY GOING TO GET WORSE
Canadian Real Estate Hasn’t Been This Unaffordable Since The 90s Bubble: BoC Data
Canadian real estate affordability is worsening, according to the country’s central bank. The Bank of Canada (BoC) Housing Affordability Index (HAI) showed a sharp climb in Q2 2022. The index shows today’s household would spend half its income on a mortgage if they bought today. That’s not in Toronto or Vancouver either, but right across the country. Historically, a lack of affordability at such an extreme isn’t expected to last long.
HEADING TOWARD A MAJOR GLOBAL FINANCIAL MELTDOWN
WARNING: NOT IMMUNE
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