Housing Demand Outpaces Supply

General Greg Weaver 16 Dec

Today the Canadian Real Estate Association (CREA) released statistics showing national existing-home sales rose 0.6% in November following the whopping 8.6% surge the month before. Sales could have been higher had it not been for the limited supply of homes for sale. Homebuyers are anxious to finalize purchases before the Bank of Canada hikes interest rates next year. Across the country, sales gains in Calgary, Edmonton, the B.C. interior, Regina, and Saskatoon offset declines in activity in the GTA and Montreal.

The actual (not seasonally adjusted) number of transactions in November 2021 was firm historically, edging down a scant 0.7% on a year-over-year basis, missing the 2020 record for that month by just a few hundred transactions.

On a year-to-date basis, some 630,634 residential properties have traded hands via Canadian MLS® Systems between January and November 2021, far surpassing the annual record 552,423 sales for all of 2020.

“The fact is that the supply issues we faced going into 2020, which became much worse heading into 2021, are even tighter as we move into 2022. Interest rate hikes will make it even harder for new entrants to break into the market next year, even though activity may remain robust as existing owners continue to move around in response to all of the changes to our lives since COVID showed up on the scene. As such, the issue of inequality in the housing space will remain top of mind. One wildcard will be what policymakers decide to do with the national mortgage stress test, which could act as a kind of cushion against rising rates for young and/or first-time buyers. It could also make things that much harder for them,” said Shaun Cathcart, CREA’s Senior Economist.

New Listings

The number of newly listed homes rose by 3.3% in November compared to October, driven by gains in a little over half of local markets, including the GTA, Lower Mainland, Montreal, and many markets in Ontario’s Greater Golden Horseshoe.

With new listings up by more than sales in November, the sales-to-new listings ratio eased a bit to 77% compared to 79.1% in October. The long-term average for the national sales-to-new listings ratio is 54.9%.

About two-thirds of local markets were seller’s markets based on the sales-to-new listings ratio being more than one standard deviation above its long-term mean. The other one-third of local markets were in balanced market territory.

There were just 1.8 months of inventory on a national basis at the end of November 2021, tied with March 2021 for the lowest level ever recorded. The long-term average for this measure is more than 5 months.

Home Prices

In line with some of the tightest market conditions ever recorded, the Aggregate Composite MLS® Home Price Index (MLS® HPI) was up another 2.7% on a month-over-month basis in November 2021.
The non-seasonally adjusted Aggregate Composite MLS® HPI was up by a record 25.3% year-over-year in November.

Year-over-year price growth has crept back up to nearly 25% in B.C., though it remains lower in Vancouver, on par with the provincial number in Victoria, and higher in other parts of the province.

Year-over-year price gains are still in the mid-to-high single digits in Alberta and Saskatchewan, while gains have risen to about 13% in Manitoba.

Ontario saw year-over-year price growth hit 30% in November, with the GTA continuing to surge ahead after trailing most other parts of the province for most of the pandemic.

Greater Montreal’s year-over-year price growth remains at a little over 20%, while Quebec City was only about half that.

Price growth is running above 30% in New Brunswick (higher in Greater Moncton, lower in Fredericton and Saint John), while Newfoundland and Labrador is now at 10% year-over-year (lower in St. John’s).

Bottom Line–Lots of News Today

Canada continues to contend with one of the developed world’s most severe housing shortages; as our borders open to a resurgence of immigration, excess demand for housing will mount. The impediments to a rapid rise in housing supply, both for rent and purchase, are primarily in the planning and approvals process at the municipal and provincial levels. Liberal Party election promises do not address these issues.

Inflation pressures are mounting everywhere. The US posted a year-over-year inflation rate for November at 6.8%, up from 6.2% posted the month before. This undoubtedly led the US Federal Reserve to issue a hawkish statement today, intensifying their battle against inflation. They announced that they will double the pace at which it’s scaling back purchases of Treasuries and mortgage-backed securities to $30 billion a month, putting it on track to conclude the program in early 2022, rather than mid-year as initially planned.

Projections published alongside the statement showed officials expect three quarter-point increases in the benchmark federal funds rate will be appropriate next year, according to the median estimate, after holding borrowing costs near zero since March 2020.

According to Bloomberg News, “The faster pullback puts Powell in a position to raise rates earlier than previously anticipated to counter price pressures if necessary, even as the pandemic poses an ongoing challenge to the economic recovery. The Fed flagged concerns over the new omicron strain, saying that risks to the economic outlook remain, including from new variants of the virus.”

On more positive news, Canada’s inflation rate held steady at 4.7% y/y in November, well below the pace in the US. Excluding food and energy products, CPI ticked slightly lower to 3.1% from a year ago in November, or 2.7% on an annualized seasonally adjusted basis relative to the pre-shock February 2020 level. Roughly half of that 2.7% can still be attributed to rising expenses related to home-owning and car purchase or leasing. But the breadth of inflation pressure has also widened, with 58% of the consumer basket seeing faster-than-2% annualized growth in November from pre-pandemic (2019) levels on average over the last three months. That compares to 47% in February 2020. The broadening is expected to carry on in 2022 as rising input, transport and labour expenses continue to flow through supply chains for a wider swath of goods and services. Further disruptions to supply chains and energy markets from Omicron and the BC flood later in November are expected to add to price uncertainties in the near term.

In a speech today, Governor Tiff Macklem of the Bank of Canada assured the public that the Bank of Canada would remain the country’s number-one inflation fighter. Macklem clarified that flexibility in their new mandate won’t apply in situations — like now — when inflation is considerably above target.

At a press conference after the speech, Macklem noted he wasn’t comfortable with current elevated levels of inflation and the “time is getting closer” for policymakers to move away from the forward guidance. Markets are pricing in five interest rate hikes next year by the Bank of Canada.

 

 

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

The source of this article is from SherryCooper.com/category/articles/

Millennials vs Gen X’ers

General Greg Weaver 16 Dec

Are millennials better or worse off than Gen-Xers at the same age?

Millennials are now the largest generation of people in Canada. They’re the most educated and diverse generation, but they face unique challenges…

  1. Millennials had higher after-tax household incomes than young Gen-Xers. Median after-tax household income between 25 and 34 years old
    • Millennials in 2016 $66,500
    • Young Gen-Xers in 1999 $51,000
  2. Millennials had higher assets and net worth than young Gen-Xers, but they also carried more debt.
    • Homeownership, living in Toronto or Vancouver, and having a higher education were three factors associated with higher net worth.
  3. Millennials are relatively more indebted… Debt-to-after-tax income ratio
    • 216% Millennials in 2016
    • 125% Young Gen-Xers in 1999
  4. Though millennials are entering the housing market at similar rates as previous younger generations, they are taking on larger mortgages.
  • Though their median net worth is higher, there are greater differences in economic well-being among millennials. Millennials in the top 10% held 55% of all total net worth accumulated by their generation.

Notes: Unless otherwise notes, millennials represent those between 25 and 34 years old in 2016, and young Gen X-ers indicate those between 25 and 34 years old in 1999.

Results are presented in 2016 current dollars and adjusted for inflation to allow a comparison over time. Statistics provided refer to the age and generation of the major income earner in the household or family.

ASSETS VS. LIABILITIES

Assets are what you own:

  • Cash
  • The value of your residence
  • Artwork
  • Automobile
  • Checking account
  • Collectibles
  • Electronics
  • Jewelry
  • Investment accounts
  • Retirement account
  • Savings account

Liabilities are what you owe:

  • Unsecured debts
  • Car loan
  • Mortgage
  • Student loans
  • Accounts payable
  • Income taxes payable
  • Bills payable
  • Bank account overdrafts
  • Accrued expenses
  • Short-term loans

 

 

Article Published by DLC Marketing Team

Tis the Season of Staying Motivated.

General Greg Weaver 13 Dec

The winter holiday season is often said to be the most wonderful time of the year. However, it is also one of the busiest and most stressful times of the year. There are increased demands at work or in your business. The holidays tend to be socially demanding too. With all this going on at work and in your personal life, it can be very emotionally draining. This time of year is often centered on celebration, family, and friends. The fact is some people find themselves mired in family conflict or feeling lonely, heightening their levels of emotional stress.

Unfortunately, the pressure during these months can cause us to get distracted from some of our most important goals. No matter what your goals may be, many people find it difficult to stay motivated.

TIPS TO STAY MOTIVATED

Here are six tips I use to help me stay motivated during the holidays:

  1. Write your goals down. Carve out 30 minutes of your time to sit down without any distractions (turn your phone on airplane mode if you have to) and write down each goal you have on one side of a cue card. You should keep it to three goals or else your mind gets overwhelmed.
  2. Know why. Review each goal and write down why you want to achieve it. On the back of your cue card, write down how it will make you feel once you accomplish your goal, and also add any new opportunities that might arise through the process of achieving what you set out to do.
  3. Goal planning. The reason we normally forget about our goals during the holidays is that there is so much going on and there are so many distractions. Make sure to look at your goals and review them each morning when you wake up. Pro tip: keep them on your bedside table and read them when you first wake up (before checking your phone)!
  4. Break them down. Instead of just focusing on the end goal, break the steps toward the goal down into manageable tasks that you can complete within 10 minutes or less. If you are able to break each goal up into that time frame then you will be able to move forward with your goals each and every day with no excuses!
  5. Involve family and friends. It will be much easier to achieve your goals if your family and friends are onboard and cheering you on. However, they cannot support you if you don’t tell them. Share your goals along with the reasons behind them so you can have people keep you on track.
  6. Allow yourself to enjoy the holidays. Whether your goals are work-, life- or health-related, focusing and moving forward on your goals doesn’t mean you can’t also enjoy yourself! If you have a health goal, still allow yourself to enjoy that pie (in moderation, of course). If the goal is more career-centered, take time away from your laptop to enjoy social events and holiday parties. You will feel more refreshed and inspired when you take time away.

Above all, give yourself some grace during the holidays, remembering that the reason you want to work hard for this life is to experience more of it! Don’t be too rigid in making it all about productivity; celebrate the small steps and reward yourself often! You will see the results which will motivate you to do more and make you feel confident as you enter the New Year.

 

 

Published by DLC Marketing Team

Let’s Get House Hunting

General Greg Weaver 2 Dec

Have you ever checked out an open house in the neighborhood, which you had no intention of buying? Or checking out listings online for your dream home? Of course you have! We’ve all looked at houses for fun, even just to examine the possibilities! In reality though, it can actually be quite stressful when you start legitimately house hunting for a place for yourself.

To help minimize the stress, it is important to get past the excitement and narrow down what it is you really need in a home. One way to do this is to consider the long-term; what will you need in a house five or ten years down the road?

Some things to consider when you’re finally ready to pursue a new home should include:

  • What type of home you are looking for (single-family dwelling, condo, townhouse). This can be determined by your budget, as well as your needs.
  • The size of the property. Be honest about how much maintenance you’re willing to do.
  • The location and neighbourhood. Is your commute reasonable? Is the neighbourhood safe? Is it the right level of bustling or peaceful that you’re looking for?
  • Any special features you might need, such as accessibility upgrades.

Another point of consideration if you are looking for a condo or apartment, is the view. It is important to remember that it is not protected; there is nothing to stop another building from going up and obstructing this. It is not a bad idea to ask your realtor if they know about any current or future developments in the area, or even check out future plans at your local city hall. You’ll also want to make sure you examine all the financial and technical minutes for the condominium corporation to avoid any issues or special assessments in the future.

In a hot housing market, there is a temptation to act quickly and make an offer after one visit. But if you can, take a second look a few days later before making an offer. You would be surprised how much detail you miss in the first showing! You may be living in this home for decades, so an extra 30 minutes to take a second look won’t hurt.

If you do find a home that you really love, we have put together a house hunting checklist to help you evaluate the home! This list includes a few of the major items that you should consider when looking for your dream home and is designed to help you determine what areas may require attention, and whether or not it really fits your needs! Want another copy? Let me know and I will send you a print ready version for your next showing or open house!

 

 

Published by DLC Marketing Team