Time for your cheat sheet on this week\u2019s top stories.<\/p>\n
Canadian Real Estate<\/p>\n
Canadian GDP Stalls, Propped Up By Retail And Credit Cards<\/a><\/p>\n Canadian economic output is starting to struggle. Real GDP was flat for a second straight month in August, with only 9 out of 20 industrial sectors showing growth. Stalling appears to be an optimistic take though, as the details are a little more ominous. The pillars supporting the data were higher retail sales (mostly food) and credit card use. In other words, grocery spending and credit card debt are keeping the economy afloat. That\u2019s more concerning given the increasing use of credit cards to make ends meet, according to TransUnion.<\/p>\n Continue Reading\u2026<\/a><\/p>\n Canada\u2019s Housing Agency Forecasts Surge In Mortgage Arrears, But It May Be Worse<\/a><\/p>\n The arrears rate at Canadian banks has made an aggressive climb and it\u2019s not over, warns the CMHC. The CBA arrears rate has more than doubled from record lows over the past 5 years, hitting 0.29% in July\u2014an 11-year high. The rate will climb through mid-2027, the end of the agency\u2019s forecast period. They cite price corrections in BC and Ontario persisting as the key reason. However, prices are near record highs in other provinces and have only just begun to correct, suggesting risk is further to the upside.\u00a0<\/p>\n Continue Reading\u2026<\/a>\u00a0<\/p>\n Bank of Canada Sees Elevated Inflation Into 2028, Housing To Remain Weak<\/a><\/p>\n The Bank of Canada\u2019s (BoC) got 99 problems and inflation\u2019s just one\u2014until 2028, at least that\u2019s what they think. This week the BoC hiked its overnight rate to 2.5%, its first hike in over 3 years. Higher energy prices will trickle into broader consumer inflation, warns the BoC. As a result, headline CPI\u2019s annual growth will remain above 3% into late 2027, returning to the 2% target by mid-2028. Just 2 more years to flatten the (inflation) curve?\u00a0<\/p>\n Continue Reading\u2026<\/a><\/p>\n Canadian Real Estate Correction Now Spreading To Other Provinces<\/a><\/p>\n Prices across the country surged when rates were cut in 2020. The national index has fallen 22.5% since prices peaked in 2022, when rates began to normalize. However, that correction was almost entirely the work of Ontario and\u2014to a lesser extent\u2014BC. The rest of the provinces remain near record highs, but that may be finally changing. Prices in some of those provinces have recently begun to make record-setting declines.\u00a0<\/p>\n Continue Reading\u2026<\/a><\/p>\n Bank of Canada Study Warns Rate Cuts Mostly Create Demand, Not Supply<\/a><\/p>\n BoC researchers looked at the impact of monetary stimulus on housing supply. They found that rate cuts during a housing boom boost home building by 6%, but only 20% of that is due to financing. The remaining 80% of stimulus comes from the excess demand, as profits and prices rise too. They warn ignoring shelter costs during a housing boom can lead to an aggressive climb in prices. However, there\u2019s an area of shelter inflation the BoC should ignore\u2014mortgage interest. Mortgage interest\u2019s inclusion in CPI creates a self-reinforcing feedback loop. Cutting rates reduces mortgage interest, signaling the need for more rate cuts. It\u2019s a problem we\u2019ve noted before, warning the circular logic is avoided by most countries.\u00a0<\/p>\n Continue Reading\u2026<\/a><\/p>\n Ontario Real Estate<\/p>\n