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Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Unemployment Rate Falls, Potential Set Up For Further Rate Hikes
Canada’s unemployment rate bucked expectations and fell for the first time in a year. The unemployment rate dropped 0.1 points to 5.7% in January, with some caveats. Despite less than flattering details, it’s the headline data that typically drives expectations. At least one prominent firm warns the longer this persists, the longer higher interest rates may stick around.
Bank of Canada More Concerned About Inflation Than Speeches Imply
Canada’s central bank’s last announcement led the public to believe inflation was under control. That’s not what the Governing Council’s deliberations notes show, which expressed concerns that inflation isn’t cooling fast enough. More than half the inflation basket saw above target price growth. In addition, their preferred measure (Core CPI) is nearly double the target rate.
Canadian Business Insolvencies Surge To Record Growth, Worse Than Data Shows
Canadian business insolvencies surged to show record growth last year. Regulators received 4,810 business insolvency filings in 2023, up 41.4% from a year before. Insolvency experts warn this is just scratching the surface of small business problems. They warn the vast majority of businesses closing aren’t even trying to mitigate their debt problems. They’re simply closing and not being replaced.
Toronto Real Estate
Toronto Real Estate Recovery Will Takes Years, Not Months: BMO
Greater Toronto real estate activity saw a sharp uptick last month, but don’t expect prices to follow. Prices continued to fall, with at least one bank warning it will take quite some time to return to the all-time high. BMO reminded investors that financing isn’t all that cheap, even with the rate cuts forecast for year-end. At the same time, historical corrections have taken at least a minimum of 3 years to recover the ground recently lost. In the early 90s, it took nearly 12 years in nominal terms—even longer when adjusting for inflation.
Toronto Real Estate Sales Surge 39%, Prices Fall Further W/ Robust Supply
Toronto real estate sales climbed but prices continued to fall. A massive 39% increase for existing home sales in January wasn’t enough to stop falling prices. This is largely due to a massive uptick in inventory over the past few months, that kept the market in balanced territory after climbing sales. With more sellers expected to cash in on the uptick in buying, short-term price growth may be limited, if present at all.
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