Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s Capital Flight Accelerates As Investors Dump Domestic Assets
Canadian investment capital is leaving, despite the recent outperformance from the TSX. Securities data shows an outflow of $16.2 billion in May, marking the fourth consecutive month of capital flight. Over the past four months total net outflows hit $83.9 billion, confirming an investor exodus. Even Canadians,
who have become vocally opposed to American industry, poured a net inflow of $14.2 billion into US stocks in May—the largest monthly flow since February.
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Canadian Real Estate Demand Balance Weakest Since 90s Crash
Canadian real estate just saw one of the worst demand balances on record. The sales to new listings ratio (SNLR) dropped to 49.3% in June, the lowest ratio for the month since 1995. Annual growth of sales (+3.5%) saw a minor improvement, but new listings (+8%) grew at more than double the rate. The balanced ratio may not seem concerning, but peak-to-trough the SNLR has fallen 23.8 points—the fastest decline since right before the 1990s crash.
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Canadian Condo Prices Just Kicked Off Another Wave of Corrections
The Canadian condo market is starting to crack under the pressure of weak sales and rising inventory. The price of a typical condo across the country fell 0.7% to $488,400 in June. It marked the 20th consecutive monthly drop, with prices back to where they were 4 years ago. While rising inventory and historically weak sales aren’t new for the segment, larger price declines indicate a shift in sentiment and a second wave of correction might be here.
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Canadian Rental Bear Market Is Just Getting Started: BMO
Canadian new housing starts are accelerating, especially in the apartment segment—despite weak condo sales. According to a new BMO analysis, this is due to a surge in purpose-built rental apartments. The bank sees this surge of new construction delivering a wave of downward pressure on rents in the future. This is likely to drive valuation down, a potential problem since most of these units are backed by taxpayer-funded incentives.
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Canadian Real Estate Price Floor Breaks, Prices Plunge To 4-Year Low
Canadian real estate has spent months moving sideways, deciding where to head. It finally made a decision last month, with prices falling 0.2% to $698,600 in June. The drop might be small, but it was enough to send prices to a 4 year low. Home prices have corrected 18% since hitting a record high, but remain 28% higher than they were when prices took off in 2020.
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Canadian Youth Unemployment at Recession Levels. The Kids Are Not Alright: BMO
Canadians are debating whether a recession is coming, but for the country’s young adults—it’s already begun. The youth unemployment rate (ages 15-24) sat at 14.2% in June, indicating 1 in 7 young adults ready, willing, and able to work—are unable to find a job. BMO notes this is a level that’s never been seen outside of recession, but the country’s on the right path with tapering immigration to historic levels.
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