Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada To Face 2nd Largest Recession Ever If It Enters A Trade War: BoC
Canada isn’t responding well to American tariff threats, and it can cost both countries a lot. National Bank of Canada (NBF) looked at the BOC modeling done back in 2019 to assess the unlikely scenario we’re facing. NBF analysts warn a broad 25% tariff as threatened, would lead to a 6% drop for Canada’s GDP. This would make it the largest non-pandemic recession in the country’s history. While the US wouldn’t experience an impact nearly as large, it would still impact a number of industries. Neither country gains from this posturing from policymakers, so ideally cooler heads prevail.
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The Great Canadian Real Estate Stagnation Has Just Begun: BMO
Canadian interest rates are falling but home prices are barely moving. Get used to it, is the take from BMO Capital Markets which sees a slow, long recovery back to the record all-time high reached in 2022. Home prices rose 65% before rates began climbing, but they only contracted ~20% since. Even with falling rates and cheaper mortgages, home prices still remain unaffordable. Falling rates and rising incomes should help that affordability return, with the bank seeing prices recover in 2029.
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Canadian Real Estate Prices Make A Bigger Drop As Reality Sets In
Canadian real estate prices slipped as the reality of rate cuts was worse than the anticipation. Home prices began to rise as buyers bid up homes ahead of a rate cut that many believed would spark a surge of buying similar to 2020. That buyer surge didn’t materialize when rate cuts actually arrived, resulting in a cold dose of reality. This helped prices to fall at double the rate it did just a month prior.
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Canadian Real Estate Prices Won’t Recover Peak Until 2029: BMO
Canadian real estate prices won’t return to record highs until 2029, and that’s optimistic according to BMO. The bank’s economists argue 7 years from trough back to the record high is actually a historically short recovery. Market conditions are far from the 90s, so they currently don’t see any further contractions in the cards. However, the market does have a lot in common with the 90s—such as record population growth, an immigration dispute, and a whole lot of investors crowding a generation of end users out for years.
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Canada’s Immigration Exodus Kicks Off W/Record NPR Outflows
Canada’s immigration exodus has kicked off way ahead of schedule, though policymakers are well aware. Recently released data shows 250k non-permanent residents left the country in Q3 2024, the largest outflow ever. In Q4, the country announced it would taper visas for this demographic in 2025, requiring up to a million people to leave when their visa expires. Policymakers were met with skepticism, believing it would be difficult to get people to leave voluntarily since no one would ever leave, right? It turns out that was the volume leaving before the announcement, and the person making that change would have known that at the time.
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Global Real Estate
Global Real Estate Recovery Threatened By Surging Bond Yields: Ox Econ
According to Oxford Economics, the global real estate recovery may be derailed by rising bond yields. A new report from the global research firm argues that bond yields kicked the year off with a sharp increase as investors fear rising inflation. Climbing yields will raise financing costs, lower leverage, and attract more capital from risk assets to safer assets like fixed income. This can lead to second-order effects, helping to boost unemployment, slow new business formation, and increase delinquencies—especially in the commercial real estate segment. It’s not a bullish outlook for an industry that’s been reeling for the past couple of years.
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