GTA REALTORSĀ® Release Monthly Resale Housing Figures For February 2019

March 5, 2019 — Toronto Real Estate Board President Gurcharan (Garry) Bhaura announced that Greater Toronto Area REALTORSĀ® reported 5,025 homes sold through TREB’s MLSĀ® System in February 2019. This sales total was down by 2.4 per cent on a year-over-year basis. Sales were also down compared to January 2019 following preliminary seasonal adjustment.

“The OSFI mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy. The stress test should be reviewed and consideration should be given to bringing back 30 year amortizations for federally insured mortgages. There is a federal budget and election on the horizon. It will be interesting to see what policy measures are announced to help with home ownership affordability,” said Mr. Bhaura.

Despite sales being down year-over-year, new listings actually declined by a greater annual rate. This suggests that market conditions became tighter compared to last year. Tighter market conditions continued to support year-over-year average price growth.

Both the MLSĀ® Home Price Index Composite Benchmark and the average selling price were up modestly on a year-over-year basis in February 2019. The MLSĀ® HPI Composite Benchmark was up by 2.4 per cent year-over-year. The average selling price for all home types combined was up by 1.6 per cent over the same period. Price growth was driven by the condominium apartment segment and higher density low-rise home types. On a preliminary seasonally adjusted basis the average selling price was down compared to January 2019.

“Home sales reported through TREB’s MLSĀ® System have a substantial impact on the Canadian economy. A study conducted by Altus for TREB found that, on average, each home sale reported through TREB resulted in $68,000 in spin-off expenditures accruing to the economy. With sales substantially lower than the 2016 record peak over the last two years, we have experienced a hit to the economy in the billions of dollars, in the GTA alone. This hit has also translated into lower government revenues and, if sustained, could impact the employment picture as well,” said Jason Mercer, TREB’s Director of Market Analysis and Service Channels

Source: Toronto Real Estate Board

GTA REALTORSĀ® Release Monthly Resale Housing Figures For January 2019

February 6, 2019 — TREB President Garry Bhaura announced that Greater Toronto Area REALTORSĀ® reported 4,009 home sales through TREB’s MLSĀ® in January 2019 ā€“ up by 0.6 per cent compared to January 2018. On a preliminary seasonally adjusted basis, sales were up by 3.4 per cent compared to December 2018.

“It is encouraging to see the slight increase in January transactions on a year-overyear basis, even with the inclement weather experienced in the GTA region during the last week of the month. The fact that the number of transactions edged upwards is in line with TREB’s forecast for higher sales in calendar year 2019,” said Mr. Bhaura.

The MLSĀ® HPI Composite Benchmark price was up by 2.7 per cent compared to January 2018. The condominium apartment market segment continued to lead the way in terms of price growth. The average selling price was up by 1.7 per cent on a year-over-year basis. After preliminary seasonal adjustment, the average selling price edged lower compared to December 2018.

“Market conditions in January, as represented by the relationship between sales and listings, continued to support moderate year-over-year price increases, regardless of the price measure considered. Given housing affordability concerns in the GTA, especially as it relates to mortgage qualification standards, we have seen tighter market conditions and stronger price growth associated with higher density low-rise home types and condominium apartments, which have lower average selling prices compared to single detached homes,” said Jason Mercer, TREB’s Director of Market Analysis and Service Channels.

GTA REALTORSĀ® Release Monthly Resale Housing Figures For December 2018

TORONTO, January 4, 2019 — Toronto Real Estate Board President Garry Bhaura announced that Greater Toronto Area REALTORSĀ® reported a total of 77,426 residential transactions through TREB’s MLSĀ® System in 2018.  This result represented a 16.1 per cent decline compared to 92,263 sales reported in 2017.  Total new listings entered into TREB’s MLSĀ® System were down by 12.7 per cent over the same period to 155,823.

The overall average selling price for 2018 transactions, at $787,300, was down by 4.3 per cent year-over-year for all home types combined across the TREB market area.

Home prices were up very slightly in the City of Toronto and down in the surrounding GTA regions.  This dichotomy reflects the fact that the condominium apartment segment, which accounted for a large proportion of sales in the City of Toronto, performed better from a pricing perspective than the detached market segment.  The average price for condominium apartment sales across the TREB market area was up by 7.8 per cent year-over-year.

“Higher borrowing costs coupled with the new mortgage stress test certainly prompted some households to temporarily move to the sidelines to reassess their housing options.  With this said, it is important to note that market conditions were improved in the second half of the year, both from a sales and pricing standpoint,” said Garry Bhaura, TREB President.

“After spiking in 2017, new listings receded markedly in 2018.  In many neighbourhoods, despite fewer sales from a historic perspective, some buyers still struggled to find a home meeting their needs.  The result was a resumption of a moderate year-over-year pace of home price growth in the second half of the year.  Price growth was strongest for less-expensive home types, as many home buyers sought more affordable home ownership options,” said Jason Mercer, TREB’s Director of Market Analysis and Service Channels.

On February 6, TREB will be releasing its fourth annual Market Year-in-Review and Outlook Report.  The report will feature the latest results from the Ipsos surveys of existing home owners and intending home buyers.  The surveys will cover off home buying intentions, impacts of recent government policy decisions, interesting information on investment property ownership, renovation spending and mortgage trends.  The report will also contain information on the new home and commercial real estate markets.  New research on mid-density housing by the Ryerson Centre for Urban Research and Land Development and a study on transit-supportive development by the Pembina Institute will also be presented.


Source; Toronto Real Estate Board

GTA REALTORSĀ® Release Monthly Resale Housing Figures For November 2018

December 5, 2018 — Toronto Real Estate Board President Garry Bhaura announced the continuation of moderate price growth in November 2018 compared to November 2017. The MLSĀ® Home Price Index (HPI) Composite Benchmark was up by 2.7 per cent year-over-year. The average selling price was up by 3.5 per cent year-over-year to $788,345.

Greater Toronto Area REALTORSĀ® reported 6,251 residential transactions through TREB’s MLSĀ® System in November 2018. This result was down by 14.7 per cent compared to November 2017, when we saw a temporary upward shift in demand as the market was distorted by the looming OSFI-mandated stress test at the end of last year.

“New listings were actually down more than sales on a year-over-year basis in November. This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth,” said Mr. Bhaura.

On a preliminary seasonally adjusted basis, sales were down by 3.4 per cent compared to October 2018. The average selling price after preliminary seasonal adjustment was down by 0.8 per cent compared to October 2018.

“Home types with lower average price points have been associated with stronger rates of price growth over the past few months. Given the impact of the OSFI-mandated mortgage stress test and higher borrowing costs on affordability, it makes sense that the condo apartment and semi-detached market segments experienced relatively stronger rates of price growth in November, as market conditions in these segments remained tight or tightened respectively over the past year,” said Jason Mercer, TREB’s Director of Market Analysis.

 

GTA REALTORSĀ® Release Monthly Resale Housing Figures For October 2018

November 5, 2018Ā — Toronto Real Estate Board President Garry Bhaura announced year-over-year increases in home sales and average sale prices reported through TREB’s MLSĀ® System in October 2018.

Greater Toronto Area REALTORSĀ® reported 7,492 sales through TREB’s MLSĀ® System in October 2018 ā€“ a six per cent increase compared to October 2017. On a preliminary seasonally adjusted basis, sales were down by one per cent compared to September 2018.

The average sale price for October 2018 was up 3.5 per cent on a year-over-year basis to $807,340. After preliminary seasonal adjustment, the average selling price was up one per cent compared to September 2018. The MLSĀ® Home Price Index (HPI) Composite Benchmark was up by 2.6 per cent compared to October 2017. Price growth continued to be driven be the condominium apartment and higher density low-rise market segments.

“Annual sales growth has been positive since the late spring. While the OSFI stress test and higher borrowing costs have kept sales below 2016’s record pace, many households in the Greater Toronto Area remain upbeat on home ownership as a quality long-term investment. A strong regional economy and steady population growth will continue to support the demand for housing ownership as we move into 2019,” said Mr. Bhaura.

There were 14,431 new Listings entered into TREB’s MLSĀ® System in October 2018 ā€“ down 2.7 per cent compared to October 2017. The fact that sales were up and new listings were down year-over-year in October suggests that market conditions became tighter.

“Annual sales growth has outstripped annual growth in new listings for the last five months, underpinning the fact that listings supply remains an issue in the Greater Toronto Area. With municipal elections in the rear view mirror, all levels of government need to concentrate on policies that could remove impediments to a better-supplied housing market, including facilitating the development of a broader array of medium density housing choices,” said Jason Mercer, TREB’s Director of Market Analysis.

Source: Toronto Real Estate Board

GTA REALTORSĀ® Release Monthly Resale Housing Figures For September 2018

Ocotber 3, 2018Ā — Toronto Real Estate Board President Garry Bhaura announced that Greater Toronto Area REALTORSĀ® reported 6,455 sales through TREB’s MLSĀ® System in September 2018 ā€“ up 1.9 per cent compared to September 2017. The average selling price for September 2018 sales was up by 2.9 per cent over the same period to $796,786. The MLSĀ® HPI composite benchmark price was up by two per cent year-over-year.

New listings entered into TREB’s MLSĀ® System in September 2018 amounted to 15,920 ā€“ down by 3.1 per cent compared to September 2017. With sales up year-over-year and new listings down, market conditions became tighter. Many buyers may have found it more difficult to find a home meeting their needs.

“It is healthy to see sales and prices in many areas across the Greater Toronto Area up a bit, compared to last year’s lows. At the same, however, it is important to remember that TREB’s market area is made up of over 500 communities. Market conditions have obviously unfolded differently across these communities. This is why it’s important to work with a REALTORĀ® who is familiar with local market conditions in your areas of interest,” said Mr. Bhaura.

“While higher borrowing costs and tougher mortgage qualification rules have kept sales levels off the record pace set in 2016, many households remain positive about home ownership as a quality long-term investment. As the GTA population continues to grow, the real challenge in the housing market will be supply rather than demand. The Toronto Real Estate Board is especially concerned with issues affecting housing supply as we move towards municipal elections across the region,” added Mr. Bhaura.

On a monthly basis, after preliminary seasonal adjustment, sales edged up by 0.2 per cent in September 2018 compared to August 2018. The average selling price, after preliminary seasonal adjustment, edged lower by 0.5 per cent month-over-month.

“Generally speaking, annual rates of price growth have been stronger for higher density home types in 2018, including condominium apartments, townhouses and semi-detached houses. In many neighbourhoods, these home types provide more affordable home ownership options. This is why a policy focus on increasing mid-density housing options throughout the GTA is important,” said Jason Mercer, TREB’s Director of Market Analysis.

Source: Toronto Real Estate Board

GTA REALTORSĀ® Release Monthly Resale Housing Figures For August 2018

TORONTO, September 6, 2018Ā — Toronto Real Estate Board President Garry Bhaura announced sales and price increases on a year-over-year basis in August.Ā  Greater Toronto Area REALTORSĀ® reported 6,839 sales through TREB’s MLSĀ® System in August 2018 ā€“ an 8.5 per cent increase compared to August 2017.

Both the average selling price, at $765,270, and the MLSĀ® Home Price Index Composite Benchmark for August 2018 were up compared to the same month in 2017, by 4.7 per cent and 1.5 per cent respectively.Ā  The average selling price increased by more than theMLSĀ® HPI Composite due, at least in part, to a change in the mix of sales compared to last year.Ā  Detached home sales were up by double digits on a year-over-year percentage basis ā€“ substantially more than many other less-expensive home types.

“It is encouraging to see a continued resurgence in the demand for ownership housing.Ā  Many home buyers who had initially moved to the sidelines due to the Ontario Fair Housing Plan and new mortgage lending guidelines have renewed their search for a home and are getting deals done much more so than last year.Ā  In a region where the economy remains strong and the population continues to grow, ownership housing remains a solid long-term investment,” said Mr. Bhaura.

Month-over-month sales and price growth also continued in August.Ā  On a preliminary seasonally adjusted basis, August 2018 sales were up by two per cent compared to July 2018.Ā  The seasonally adjusted August 2018 average selling price was down slightly by 0.2 per cent compared to July 2018, following strong monthly increases in May, June and July.

“Market conditions in the summer of 2018, including this past August, were tighter than what was experienced in the summer of 2017.Ā  In August, the annual rate of sales growth outpaced the annual rate of new listings growth.Ā  We only have slightly more than two-and-a-half months of inventory in the TREB market area as a whole and less than two months of inventory in the City of Toronto.Ā  This means that despite the fact the sales remain off the record highs from 2016 and 2017, many GTA neighbourhoods continue to suffer from a lack of inventory.Ā  This could present a problem if demand continues to accelerate over the next year, which is expected,” said Jason Mercer, TREB’s Director of Market Analysis.

Source: Toronto Real Estate Board

GTA REALTORSĀ® Release Monthly Resale Housing Figures For July 2018

TORONTO, August 3, 2018Ā — Toronto Real Estate Board President Garry Bhaura announced strong growth in the number of home sales and the average selling price reported by Greater Toronto Area REALTORSĀ® in July 2018.

“Home sales result in substantial spin-off benefits to the economy, so the positive results over the last two months are encouraging.Ā  However, no one will argue that housing supply remains an issue.Ā  The new provincial government and candidates for the upcoming municipal elections need to concentrate on policies focused on enhancing the supply of housing and reducing the upfront tax burden represented by land transfer taxes, province-wide and additionally in the City of Toronto,” said Mr. Bhaura.

Residential sales reported through TREB’s MLSĀ® System for July 2018 amounted to 6,961 ā€“ up 18.6 per cent compared to July 2017.Ā  Over the same period, the average selling price was up by 4.8 per cent to $782,129, including a moderate increase for detached home types.Ā  New listings in July 2018 were down by 1.8 per cent year-over-year.

Preliminary seasonal adjustment pointed to strong month-over-month increases of 6.6 per cent and 3.1 per cent respectively for sales and average price.Ā  Seasonally adjusted sales were at the highest level for 2018 and the seasonally adjusted average price reached the highest level since May 2017.

The MLSĀ® Home Price Index (HPI) Composite Benchmark for July 2018 was down slightly compared to July 2017.Ā  However, the annual growth rate looks to be trending toward positive territory in the near future.

“We have certainly experienced an increase in demand for ownership housing so far this summer.Ā  It appears that some people who initially moved to the sidelines due to the psychological impact of the Fair Housing Plan and changes to mortgage lending guidelines have re-entered the market.Ā  Home buyers in the GTA recognize that ownership housing is a quality long-term investment,” said Jason Mercer, TREB’s Director of Market Analysis.

Source: Toronto Real Estate Board

GTA REALTORSĀ® Release Monthly Resale Housing Figures For June 2018

TORONTO, July 5, 2018Ā — Toronto Real Estate Board President Garry Bhaura, in his first market release as TREB President, is pleased to announce some positive signs with respect to the housing market.

Greater Toronto Area REALTORSĀ® reported 8,082 home sales through TREB’s MLSĀ® System in June 2018 ā€“ up 2.4 per cent compared to the low June 2017 result.Ā  After preliminary seasonal adjustment, sales were also up 17.6 per cent on a monthly basis between May 2018 and June 2018, continuing the trend of somewhat volatile month-over-month changes over the past year as home buyers reacted to various policy changes impacting the market.

“Home ownership has proven to be a positive long-term investment.Ā  After some adjustment to the Fair Housing Plan, the new Office of The Superintendent of Financial Institutions (OSFI) stress test requirement and generally higher borrowing costs, home buyers are starting to move back into the market, with sales trending up from last year’s lows.Ā  Market conditions appear to be tightening, with sales accounting for a greater share of listings, as new listings have dropped compared to last year,” said Mr. Bhaura.

The average selling price edged up by two per cent on a year-over-year basis to $807,871 in June 2018.Ā  After preliminary seasonal adjustment, the average selling price was also up by 3.3 per cent month-over-month between May 2018 and June 2018.Ā  The MLSĀ® Home Price Index (HPI) was down by 4.8 per cent on a year-over-year basis, but remained basically flat month-over-month.Ā  The difference in the year-over-year rates of change between the average price and the MLSĀ® HPI was likely due, at least in part, to a change in the mix of properties sold in June 2018 compared to June 2017, with low-rise home types accounting for a greater share of sales in June 2018.

“The expectation is to see improvement in sales over the next year.Ā  Over the same period, however, it is likely that issues surrounding the supply of listings will persist.Ā  This suggests that competition between buyers could increase, exerting increased upward pressure on home prices.Ā  With a new provincial government in place and municipal elections on the horizon, housing supply should be top-of-mind for policy makers,” said Jason Mercer, TREB’s Director of Market Analysis and Service Channels.

Housing Issues Important to Voters

With a new provincial government at Queen’s Park and municipal election campaigns underway, Toronto REALTORSĀ® are continuing to speak out for home buyers, sellers, and renters.

“We look forward to working with all returning and newly elected MPPs, and speaking out during the municipal election campaign, to ensure that home ownership and housing affordability issues are a top priority for elected officials. In this regard, one of the most important issues is ensuring that no new municipal land transfer taxes are imposed on home buyers. We hope the new provincial government and municipal election candidates will represent the views of the people on this issue, which are clear: they oppose land transfer taxes because they are a barrier to home ownership and discourage individuals and families from ‘right-sizing’, further constraining the supply of homes available for purchase”, said Mr. Bhaura.

A poll conducted by Ipsos Public Affairs, by on-line survey of 1200 GTA residents (500 in the ‘416’ area code and 700 in the ‘905’ area code) between May 18 and May 22, 2018, found:

  • 77% support reducing the provincial land transfer tax and 68% support repealing the provincial land transfer tax
  • 76% support reducing the Toronto municipal land transfer tax and 69% support repealing the Toronto municipal land transfer tax

“We look forward to working with the provincial and Greater Toronto Area municipal governments on effective ways to address housing affordability, namely increasing housing supply, especially ‘missing middle’ housing options (home types that bridge the gap between detached houses and condominium apartments), and reducing tax burdens like land transfer taxes,” added Mr. Bhaura.

The Stabilization of Home Prices Confirmed In May

In May the Teranetā€“National Bank National Composite House Price IndexTMĀ Ā was up 1.0% from the previous month. This confirms the index stabilization following the downward trend that prevailed over the second half of 2017. The last monthly gain is one tick less than the May average of 1.1% over the 20 years of index history. The monthly advance was led by the metropolitan markets of Victoria (1.8%), Ottawa-Gatineau (1.7%), Toronto (1.3%), Winnipeg (1.3%) and Vancouver (1.0%). The rise of the Toronto index matched its historical average for May. The rise of the Ottawa-Gatineau index was not enough to make up its cumulative decline over the previous four months. There were smaller monthly advances in the indexes for Edmonton (0.7%), Quebec City (0.6%), Hamilton (0.4%), Calgary (0.4%) and Montreal (0.3%). The index for Halifax was flat.

In Toronto the condo resale market remains tight.[1]Ā In May the condo subindex was up 11.1% annualized from the beginning of the year compared to only 0.8% annualized for all other housing types. The recent advance of the Vancouver index is also due primarily to its condo segment, whose subindex in May was up 17.5% annualized from last September compared to 4.9% for other housing types. Of the 11 markets in the composite index, Vancouver, Victoria and Montreal were the only ones whose indexes rose to a new high in May. In the Montreal market, existing-home sales in the first five months of the year were the best in eight years for those months. In May the countrywide composite index was 0.6% below its peak of last August. The metropolitan area furthest from its previous peak was Toronto, down 5.9% from its reading of last July.

Because of a rapid advance from May to August last year, the composite index was nevertheless up 4.5% from a year earlier. It was the smallest 12-month rise since June 2015 and an 11th consecutive deceleration from last Juneā€™s record 12-month gain of 14.2%. The increase was led by Vancouver (15.4%) and Victoria (10.3%), the only two markets whose gains exceeded the countrywide average. The 12-month rise was 3.9% in Ottawa-Gatineau, 3.9% in Halifax, 3.6% in Montreal, 2.1% in Winnipeg, 1.9% in Quebec City, 1.8%

[1]Ā Note on methodology:Ā The current-month data used to calculate the index are those of closed sales registered in the provincial land registry. The published indexes of the 11 metropolitan markets entering into the Teranetā€“National Bank Composite House Price Indexā„¢ are moving averages of the last three months of raw indexes, a procedure that smooths out month-to-month fluctuations. More granular monthly data are available upon request, possibly subject to subscription fees. For our full methodology, please visitĀ www.housepriceindex.ca

Report By:

Marc Pinsonneault
Senior Economist
Economics and Strategy Group
National Bank of Canada

 

The Teranet-National Bank House Price Indexā„¢ thanks the author for his special collaboration on this repo

GTA REALTORSĀ® Release Monthly Resale Housing Figures For May 2018

TORONTO, June 4, 2018 — Greater Toronto Area REALTORSĀ® reported 7,834 sales through TREB’s MLSĀ® System in May 2018. This result was down by 22.2 per cent compared to May 2017. While the number of sales was down year-over-year, the annual rate of decline was less than reported in February, March and April, when sales were down by more than 30 per cent. On a month-over-month basis, seasonally adjusted May sales were basically flat compared to April.1

Supply of homes available for sale continued to be an issue. New listings were down by 26.2 per cent. The fact that new listings were down by more than sales in comparison to last year means that competition increased between buyers. Recent polling conducted by Ipsos for TREB suggests that listing intentions are down markedly since the fall.

“Home ownership remains a sound long-term investment. Unfortunately, many home buyers are still finding it difficult find a home that meets their needs. In a recent Canadian Centre for Economic Analysis study undertaken for the Toronto Real Estate Board, it was found that many people are over-housed in Ontario, with over five million extra bedrooms. These people don’t list their homes for sale, because they feel there are no alternative housing types for them to move into. Policy makers need to focus more on the ‘missing middle’ ā€“ home types that bridge the gap between detached houses and condominium apartments,” said Tim Syrianos, TREB President.

The MLSĀ® Home Price Index (HPI) Composite Benchmark was down by 5.4 per cent year-over-year. The average selling price for all home types combined was down by 6.6 per cent to $805,320. On a seasonally adjusted basis, the average selling price was up by 1.1 per cent compared to April 2018.1

“Market conditions are becoming tighter in the Greater Toronto Area and this will provide support for home prices as we move through the second half of 2018 and into 2019. There are emerging indicators pointing toward increased competition between buyers, which generally leads to stronger price growth. In the City of Toronto, for example, average selling prices were at or above average listing prices for all major home types in May,” said Jason Mercer, TREB’s Director of Market Analysis.

Housing Issues Important to Voters

TREB is releasing the results, today, of a poll conducted by Ipsos Public Affairs regarding issues relevant to the upcoming provincial election.

“Housing and real estate issues are top of mind for many Ontario and GTA voters, and they often turn to their REALTORĀ® for opinions on these matters. That’s why we think it’s important to help shine the spotlight on these issues during the provincial election campaign,” said Tim Syrianos, TREB President.

The poll, conducted by on-line survey of 1200 GTA residents (500 in 416 and 700 in 905) between May 18 and May 22, 2018, found that,

Among 9 listed issues (health care, government spending/balancing budget, taxes, housing affordability, energy costs, economy, transportation/traffic, environment/climate change, enhancing social programs), 25% of GTA residents rank housing affordability in their top two most-important issues for the Ontario election campaign;
69% agree (35% strongly/34% somewhat) that a party’s platform on housing affordability will influence who they vote for on election day;
Nearly six in ten (56%) of GTA residents believe that government policies should focus equally on increasing the supply of housing and reducing the demand of housing; few believe that they should only be focused on reducing demand;
77% of GTA residents support reducing the provincial land transfer tax and 68% support repealing this tax completely.

 

GTA REALTORSĀ® Release Monthly Resale Housing Figures For April 2018

TORONTO, May 3, 2018Ā — Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 7,792 sales through TREB’s MLSĀ® System in April 2018.Ā  The average selling price was $804,584.Ā  On a year-over-year basis, sales were down by 32.1 per cent and the average selling price was down by 12.4 per cent.

The year-over-year change in the overall average selling price has been impacted by both changes in market conditions as well as changes in the type and price point of homes being purchased.Ā  This is especially clear at the higher end of the market.Ā  Detached home sales for $2 million or more accounted for 5.5 per cent of total detached sales in April 2018, versus 10 per cent in April 2017.Ā  The MLSĀ® Home Price Index strips out the impact of changes in the mix of home sales from one year to the next.Ā  This is why the MLSĀ® HPI Composite Benchmark was down by only 5.2 per cent year-over-year versus 12.4 per cent for the average price.

“While average selling prices have not climbed back to last year’s record peak, April’s price level represents a substantial gain over the past decade. Recent polling conducted for TREB by Ipsos tells us that the great majority of buyers are purchasing a home within which to live. This means these buyers are treating home ownership as a long-term investment. A strong and diverse labour market and continued population growth based on immigration should continue to underpin long-term home price appreciation,” said Mr. Syrianos.

After preliminary seasonal adjustment1, the month-over-month change (i.e. March 2018 to April 2018) in sales and the average selling price was minimal, with sales decreasing 1.6 per cent and the average selling price decreasing by 0.2 per cent.Ā  The month-over-month sales trend has flattened out over the past two months following a steeper drop-off in January and February.

“The comparison of this year’s sales and price figures to last year’s record peak masks the fact that market conditions should support moderate increases in home prices as we move through the second half of the year, particularly for condominium apartments and higher density low-rise home types.Ā  Once we are past the current policy-based volatility, home owners should expect to see the resumption of a moderate and sustained pace of price growth in line with a strong local economy and steady population growth,” said Jason Mercer, TREB’s Director of Market Analysis.

Provincial Election Candidates Should Make Housing Issues a Top Priority

With a provincial election campaign about to begin, GTA REALTORSĀ® hope that all of the provincial parties will make housing issues a priority. Home ownership is a worthwhile investment that benefits our economy, individual finances and quality of life,” said Mr. Syrianos

“In recent months and years, there has been significant intervention in housing markets by all levels of government, through regulatory changes and taxation. We believe the next step should be tax relief, especially from Land Transfer Taxes, both provincial and the Toronto Land Transfer Tax, and efforts to facilitate an increase in the supply of missing middle housing that fills the gap between single family homes and high rises. Furthermore, we believe that any attempt to increase the Toronto Land Transfer Tax should require approval from the provincial government, given the significance of Toronto’s economy to the Province and the connections between the Toronto real estate market and that of the broader GTA,” added Syrianos.

Notes:

1 Preliminary seasonal adjustment undertaken by the Canadian Real Estate Association (CREA).Ā  Removing normal seasonal variations allows for more meaningful analysis of monthly changes and underlying trends.

GTA REALTORSĀ® Release Monthly Resale Housing Figures For March 2018

TORONTO, April 4, 2018Ā — Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 7,228 residential transactions through TREBā€™s MLSĀ® System in March 2018. This result was down by 39.5 per cent compared to a record 11,954 sales reported in March 2017 and down 17.6 per cent relative to average March sales for the previous 10 years.

The number of new listings entered into TREBā€™s MLSĀ® System totaled 14,866 ā€“ a 12.4 per cent decrease compared to March 2017 and a three per cent decrease compared to the average for the previous 10 years.

ā€œTREB stated in its recent Market Outlook report that Q1 sales would be down from the record pace set in Q1 2017,ā€ said Mr. Syrianos. ā€œThe effects of the Fair Housing Plan, the new OSFI-mandated stress test and generally higher borrowing costs have prompted some buyers to put their purchasing decision on hold. Home sales are expected to be up relative to 2017 in the second half of this year.ā€

The MLS Home Price Index Composite Benchmark was down by 1.5 percent on a year-over-year basis for the TREB market area as a whole. The overall average selling price was down by 14.3 per cent compared to March 2017.

While the change in market conditions certainly played a role, the dip in the average selling price was also compositional in nature. Detached home sales, which generally represent the highest price points in a given area, declined much more than other home types.Ā  In addition, the share of high-end detached homes selling for over $2 million in March 2018 was half of what was reported in March 2017, further impacting the average selling price.

ā€œRight now, when we are comparing home prices, we are comparing two starkly different periods of time: last year, when we had less than a month of inventory versus this year with inventory levels ranging between two and three months.Ā  It makes sense that we havenā€™t seen prices climb back to last yearā€™s peak.Ā  However, in the second half of the year, expect to see the annual rate of price growth improve compared to Q1, as sales increase relative to the below-average level of listings,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

TREB continues to stress that housing and housing affordability need to be at the forefront of the policy debates leading into this yearā€™s provincial and municipal elections.

ā€œA well-functioning housing market is not only important to ensure that people have a place to live; it is also important because it supports hundreds of thousands of jobs, billions of dollars in spin-off expenditures and billions of dollars in government revenues.Ā  Issues such as the below-average level of housing supply and often inadvisable policy ideas and negative measures such as land transfer taxes, vacancy taxes, speculation taxes and second home taxes should also be thoroughly debated by all candidates,ā€ said Mr. Syrianos.

Source: The Toronto Real Estate Board

GTA REALTORSĀ® Release Monthly Resale Housing Figures For February 2018

TORONTO, March 6, 2018Ā — Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 5,175 residential transactions through TREBā€™s MLSĀ® System in February 2018. This result was down 34.9 percent compared to the record 7,955 sales reported in February 2017.

The number of new listings entered into TREBā€™s MLSĀ® System totaled 10,520, a 7.3 per cent increase compared to the 9,801 new listings entered in February 2017. However, the level of new listings remained below the average for the month of February for the previous 10 years.

ā€œWhen TREB released its Outlook for 2018, the forecast anticipated a slow start to the year compared to the historically high sales count reported in the winter and early spring of 2017. Prospective home buyers are still coming to terms with the psychological impact of the Fair Housing Plan, and some have also had to reevaluate their plans due to the new OFSI-mandated mortgage stress test guidelines and generally higher borrowing costs,ā€ said Mr. Syrianos.

The MLSĀ® Home Price Index Composite Benchmark was up by 3.2 per cent on a year-over-year basis for the TREB market area as a whole. This growth was driven by the apartment and townhouse market segments, with annual benchmark price increases of 18.8 per cent and 7.5 per cent respectively. Single-family detached and attached benchmark prices were down slightly compared to February 2017.Ā  The overall average selling price for February sales was down 12.4% year-over-year to $767,818. However, putting aside the price spike reported in the first quarter of 2017, it is important to note that Februaryā€™s average price remained 12 per cent higher than the average reported for February 2016, which represents an annualized increase well above the rate of inflation for the past two years.

ā€œAs we move further into the spring and summer months, growth in sales and selling prices is expected to pick up relative to last year.Ā  Expect stronger price growth to continue in the comparatively more affordable townhouse and condominium apartment segments.Ā  This being said, listings supply will likely remain below average in many neighbourhoods in the GTA, which, over the long-term, could further hamper affordability,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

In recent submissions to the City of Toronto and other levels of government, TREB has argued that housing affordability must continue to be a priority.

ā€œIt is encouraging that the City did not include demand-oriented tax policies in its Budget,ā€ said Mr. Syrianos.Ā  ā€œTREB believes that all levels of government need to collaboratively develop solutions to increase the supply of housing, especially the ā€˜missing middleā€™.Ā  This was noted in our 2018 Market Year in Review and Outlook Report, which calls for more ā€˜gentle densityā€™, including housing types like semi-detached houses, townhouses, multiplexes and apartments.ā€

Source: Toronto Real Estate Board

GTA REALTORSĀ® Release Monthly Resale Housing Figures For January 2018

TORONTO, February 6, 2018Ā — Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 4,019 residential transactions through TREBā€™s MLSĀ® System in January 2018.Ā  This result was down by 22 per cent compared to a record 5,155 sales reported in January 2017.

The number of new listings entered into TREBā€™s MLSĀ® System amounted to 8,585 ā€“ a 17.4 per cent increase compared to 7,314 new listings entered in January 2017.Ā  However, it is important to note that the level of new listings was the second lowest for the month of January in the past 10 years.

ā€œTREB released its outlook for 2018 on January 30th.Ā  The outlook pointed to a slower start to 2018, especially compared to the record-setting pace experienced a year ago.Ā  As we move through the year, expect the pace of home sales to pick up, as the psychological impact of the Fair Housing Plan starts to wane and home buyers find their footing relative to the new OSFI-mandated stress test for mortgage approvals through federally regulated lenders,ā€ said Mr. Syrianos.

The MLSĀ® Home Price Index Composite Benchmark was up by 5.2 per cent year-over-year.Ā  This annual rate of growth was driven by the condominium apartment market segment, with double-digit annual growth versus the single-family segment, with prices essentially flat compared to last year.Ā  The overall average selling price was down by 4.1 per cent year-over-year to $736,783.Ā  This decline was weighted toward the detached segment of the market.Ā  In the City of Toronto, the average selling price was up for all home types except for detached houses.

ā€œIt is not surprising that home prices in some market segments were flat to down in January compared to last year.Ā  At this time last year, we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace.Ā  It is likely that market conditions will support a return to positive price growth for many home types in the second half of 2018.Ā  The condominium apartment segment will be the driver of this price growth,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

ā€œWith the City of Torontoā€™s Executive Committee meeting today to make recommendations on the Cityā€™s 2018 Budget, City Councillors would be wise to note the vast difference between last Januaryā€™s real estate market and this Januaryā€™s, given the Cityā€™s inadvisable reliance on the Municipal Land Transfer Tax. Ā  The amount of revenue that the City generates from this tax goes up and down with the real estate market. Ā The last year should be a wake-up call for City Council. Ā They should heed the City Managerā€™s ongoing warnings ofĀ  over-relianceĀ on this tax. The Land Transfer Tax is not a good way to fund municipal services,ā€ said Syrianos.

The revenue generated by the Municipal Land Transfer Tax is based on the number of real estate transactions and the value of those transactions. When the MLTT was first implemented in 2008, it made up less than 2% of the Cityā€™s operating budget. Ā Today, it makes up 7%, a 250% increase.

Source: The Toronto Real Estate Board

December 2017 GTA REALTORSĀ® Release Monthly Resale Housing Figures

TORONTO, January 4, 2018Ā — Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 92,394 sales through TREBā€™s MLSĀ® System in 2017.Ā  This total was down 18.3 per cent compared to the record set in 2016.

Record sales in Q1 were followed by a decline in Q2 and Q3 after the Ontario Fair Housing Plan (FHP) was announced.Ā  The pace of sales picked up in Q4, as the impact of the FHP started to wane, and some buyers arguably brought forward their home purchase in response to the new OSFI stress test guidelines effective January 1, 2018.

ā€œMuch of the sales volatility in 2017 was brought about by government policy decisions.Ā  Research from TREB, the provincial government and Statistics Canada showed that foreign home buying was not a major driver of sales in the GTA. However, the Ontario Fair Housing Plan, which included a foreign buyer tax, had a marked psychological impact on the marketplace.Ā  Looking forward, government policy could continue to influence consumer behavior in 2018, as changes to federal mortgage lending guidelines come into effect,ā€ said Mr. Syrianos.

The average selling price for 2017 as a whole was $822,681 ā€“ up 12.7 per cent compared to 2016.Ā  This annual growth was driven more so by extremely tight market conditions during the first four months of the year.Ā  In the latter two-thirds of 2017, fewer sales combined with increased listings resulted in slower price growth.Ā  In December, the MLSĀ® Home Price Index (HPI) Composite Benchmark was up by 7.2 per cent year over year, and the overall average selling price was up by 0.7 per cent year over year.

ā€œIt is interesting to note that home price growth in the second half of 2017 differed substantially depending on market segment.Ā  The detached market segment ā€“ the most expensive on average ā€“ experienced the slowest pace of growth as many buyers looked to less expensive options.Ā  Conversely, the condominium apartment segment experienced double-digit growth, as condos accounted for a growing share of transactions,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

ā€œTREB will have much more to say about the year to come on January 30 when we will release our third annual Market Year in Review and Outlook Report.Ā  The report will feature an outlook for home sales and prices; new Ipsos consumer survey results covering buying intentions, including insights on new federal mortgage lending guidelines; new research on housing supply options surrounding the ā€˜missing middle,ā€™ and important new reports on the movement of people and goods throughout the GTA,ā€ added Mr. Syrianos.

Source: Toronto Real Estate Board

November 2017 GTA REALTORSĀ® Release Monthly Resale Housing Figures

TORONTO, December 5, 2017Ā — Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 7,374 transactions through TREBā€™s MLSĀ® System in November 2017. This result was up compared to October 2017, bucking the regular seasonal trend.Ā  On a year-over-year basis, sales were down by 13.3 per cent compared to November 2016.

New listings entered into TREBā€™s MLSĀ® System in November 2017 amounted to 14,349 ā€“ up by 37.2 per cent compared to November 2016, when the supply of listings was very low from a historic perspective.

ā€œWe have seen an uptick in demand for ownership housing in the GTA this fall, over and above the regular seasonal trend.Ā  Similar to the Greater Vancouver experience, the impact of the Ontario Fair Housing Plan and particularly the foreign buyer tax may be starting to wane.Ā  On top of this, it is also possible that the upcoming changes to mortgage lending guidelines, which come into effect in January, have prompted some households to speed up their home buying decision,ā€ said Mr. Syrianos.

The MLSĀ® Home Price Index (HPI) composite benchmark price was up by 8.4 per cent on a year-over-year basis in November 2017.Ā  The average selling price for all home types combined was down by two per cent compared to November 2016, due in large part to a smaller share of detached home sales versus last year.Ā  On a year-to-date basis, the average selling price was up by 13.4 per cent compared to the same period last year.Ā  High density home types continued to lead the way in terms of price growth, with the average condominium apartment price up by double-digits compared to November 2016.

ā€œChanges in market conditions have not been uniform across market segments.Ā  In line with insights from consumer polling undertaken by Ipsos in the spring, we are still seeing sellerā€™s market conditions for townhouses and condominium apartments in many neighbourhoods versus more balanced market conditions for detached and semi-detached houses.Ā  We will have more insights to share about consumer intentions for 2018 at the end of January when TREB releases its third annual Market Year in Review and Outlook report,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

Source: Toronto Real Estate Board

October 2017 GTA REALTORSĀ® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Tim Syrianos reported 7,118 residential sales through TREBā€™s MLSĀ® System in October 2017. This result represented an above-average increase between September and October of almost 12 per cent, pointing to stronger fall market conditions.

On a year-over-year basis, October sales were down compared to 9,715 transactions in September 2016. Total sales reported through the first 10 months of 2017 amounted to 80,198 ā€“ down from 99,233 for the same time period in 2016.

ā€œEvery year we generally see a jump in sales between September and October. However, this year that increase was more pronounced than usual compared to the previous ten years. So, while the number of transactions was still down relative to last yearā€™s record pace, it certainly does appear that sales momentum is picking up,ā€ said Mr. Syrianos. The MLSĀ® Home Price Index Composite benchmark price was up by 9.7 per cent on a year-over-year basis in October. Annual rates of price growth were strongest for townhouses and condominium apartments. The average selling price for October transactions was $780,104 ā€“ up by 2.3 per cent compared to the average of $762,691 in October 2016.

ā€œThe housing market in the GTA has been impacted by a number of policy changes at the provincial and federal levels. Similar to the track followed in the Greater Vancouver Area, it appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

ā€œTREB will be undertaking its annual consumer polling process over the last two months of 2017. This polling will include research into the impact of recent and proposed government policy changes on consumer intentions to buy and sell homes in the GTA, including the impacts of the new OSFI guideline and a potential vacancy tax in the City of Toronto. In addition, TREB continues to work with different levels of government on solutions to the long-term housing supply issues in the region,ā€ added Mr. Syrianos.

Source: Toronto Real Estate Board

September 2017 GTA REALTORSĀ® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 6,379 sales through TREBā€™s MLSĀ® System in September 2017.Ā  This result was down by 35 per cent compared to September 2016.

The number of new listings entered into TREBā€™s MLSĀ® System amounted to 16,469 in September ā€“ up by 9.4 per cent year-over-year.

ā€œThe improvement in listings in September compared to a year earlier suggests that home owners are anticipating an uptick in sales activity as we move through the fall.Ā  Consumer polling undertaken for TREB in the spring suggested that buying intentions over the next year remain strong.Ā  As we move through the fourth quarter we could see some buyers moving off the sidelines, taking advantage of a better-supplied marketplace,ā€ said Mr. Syrianos.

The average selling price in September 2017 was $775,546 ā€“ up 2.6 per cent compared to September 2016.Ā  The MLSĀ® Home Price Index (HPI) composite benchmark was up by 12.2 per cent on a year-over-year basis.Ā  A key reason for the difference in annual growth rates between the average price and the MLSĀ® HPI composite is the fact that detached homes ā€“ the most expensive market segment on average ā€“ accounted for a smaller share of overall transactions this year compared to last.

ā€œWith more balanced market conditions, the pace of year-over-year price growth was more moderate in September compared to a year ago.Ā  However, the exception was the condominium apartment market segment, where average and benchmark sales prices were up by more than 20 per cent compared to last year.Ā  Tighter market conditions for condominium apartments follows consumer polling results from the spring that pointed toward a shift to condos in terms of buyer intentions,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

Source: The Toronto Real Estate Board

August 2017 GTA REALTORSĀ® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 6,357 home sales through TREBā€™s MLSĀ® System in August 2017.Ā  This result was down by 34.8 per cent compared to August 2016.

The number of new listings entered into TREBā€™s MLSĀ® System, at 11,523, was down by 6.7 per cent year-over-year and was at the lowest level for August since 2010.

ā€œRecent reports suggest that economic conditions remain strong in the GTA.Ā  Positive economic news coupled with the slower pace of price growth we are now experiencing could prompt an improvement in the demand for ownership housing, over and above the regular seasonal bump, as we move through the fall,ā€ continued Mr. Syrianos.

The average selling price for all home types combined was $732,292 ā€“ up by three per cent compared to August 2016.Ā  This growth was driven by the semi-detached, townhouse and condominium apartment market segments that continued to experience high single-digit or double digit year-over-year average price increases.

The MLSĀ® Home Price Index composite benchmark, which accounts for typical home types throughout TREBā€™s market area, was up by 14.3 per cent year-over-year in August.Ā  The fact that MLSĀ® HPI growth outstripped average price growth, points to fewer high-end home sales this year compared to last.

ā€œThe relationship between sales and listings in the marketplace today suggests a balanced market.Ā  If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation.Ā  However, if some buyers move from the sidelines back into the marketplace, as TREB consumer research suggests may happen, an acceleration in price growth could result if listings remain at current levels,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

Ā Source: The Toronto Real Estate Board

August 2017 GTA REALTORSĀ® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORSĀ® reported 2,706 sales through TREBā€™s MLSĀ® System during the first 14 days of August 2017. This result was down by 35.6 per cent compared to the first 14 days of August 2016.

Over the same period of time, the number of new listings entered into TREBā€™s MLSĀ® System was down by 10 per cent on a year over year basis. New listings were down in the City of Toronto and the surrounding regions making up the GTA.

The average selling price during the first two weeks of August, at $731,614, was up three per cent compared to the same period in 2016. Overall average price growth was driven by the condominium apartment and semi-Ā­ā€detached market segments, which experienced double-Ā­ā€digit average annual rates of price growth.

Source: The Toronto Real Estate Board

July 2017 GTA REALTORSĀ® Release Monthly Resale Housing Figures

Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORSĀ® reported 5,921 residential transactions through TREBā€™s MLSĀ® System in July 2017. This result was down by 40.4 per cent on a year-over-year basis, led by the detached market segment ā€“ both in the City of Toronto and surrounding regions.

While sales were down, the number of new listings reported were only slightly (+5.1 per cent) above last yearā€™s level.

ā€œA recent release from the Ontario government confirmed TREBā€™s own research which found that foreign buyers represented a small proportion of overall home buying activity in the GTA. Clearly, the year-over-year decline we experienced in July had more to do with psychology, with would-be home buyers on the sidelines waiting to see how market conditions evolve,ā€ said Mr. Syrianos.

ā€œSummer market statistics are often not the best indicators of housing market conditions. We generally see an uptick in sales following Labour Day, as a greater cross-section of would-be buyers and sellers start to consider listing and/or purchasing a home. As we move through the fall, we should start to get a better sense of the impacts of the Fair Housing Plan and higher borrowing costs,ā€ said TREB CEO John DiMichele.

The MLSĀ® Home Price Index (HPI) Composite Benchmark price was up by 18 per cent on a year-over-year basis. However, the Composite Benchmark was down by 4.6 per cent relative to June. Monthly MLSĀ® HPI declines were driven more so by single-family home types. The average selling price for all home types combined was up by five per cent year-over-year to $746,218.

ā€œHome buyers benefitted from more choice in the market this July compared to the same time last year. This was reflected in home prices and home price growth. Looking forward, if we do see some would-be home buyers move off the sidelines and back into the market without a similar increase in new listings, we could see some of this newfound choice erode. The recent changes in the sales and price trends have masked the fact that housing supply remains an issue in the GTA,ā€ said Jason Mercer, TREBā€™s Director of Market Analysis.

Source: The Toronto Real Estate Board

July 2017 GTA REALTORSĀ® Release Mid-Month Resale Housing Figures

Greater Toronto Area REALTORSĀ® reported 2,670 residential transactions through TREBā€™s MLSĀ® System during the first 14 days of July 2017. This result was down 39.3 per cent compared to the same period in 2016. The greatest year-over-year decline in sales was noted for the detached market segment. The lowest annual rate of decline was noted for the condominium apartment market segment.

The number of new listings entered into the system was up by 6.5 per cent year-over-year. While still up compared to last year, the annual rate of growth for new listings has declined markedly, from over 40 per cent in mid-May, and over 20 per cent in mid-June, to less than seven per cent in mid-July.

With sales down and new listings up year-over-year, the market was better supplied compared to last year. This translated into a more moderate 6.5 per cent annual growth rate for the average selling price, which was $760,356 for all home types combined.

When breaking down average price growth by geography, an interesting dichotomy has developed between the City of Toronto and the surrounding ā€˜905ā€™ area code regions for some market segments. The annual growth rate for the average detached price in the ā€˜416ā€™ area code was 12.1 per cent, compared to 2.7 per cent for the ā€˜905ā€™ regions. The annual growth rate for the average condominium apartment price was 30.5 per cent in the ā€˜416ā€™ area code versus 12.4 per cent in the surrounding ā€˜905ā€™ regions.

Source: The Toronto Real Estate Board

Top 10 Reasons Canada Can Take Bank of Canada Hikes

In lieu of a Bank of Canada rate hike here is a quick cheat sheet of answers to commonly raise obstacles to hiking once, twice, three times and more. Call it an economistā€™s attempt at late night comedy, minus the part about being funny of course because this is about monetary policy.

  1. This is no longer an emergency of recession but we still have emergency rates. This is 2017. Not 2009 or even 2014.
  2. Housing can take it and a cooler market for affordability is welcome to a point. Toronto housing will continue to cool near term. Rule changes make it so borrowers have to qualify at a 4.6% average 5 year posted rate more than 200 points above the effective best offer 5 year rate. There is a built-in rate shock buffer in mortgage rules. Plus itā€™s not like the Fed raising 425bps over 2004-06. Itā€™s also seriously misinformed to view parallels between the US housing finance system back then and Canadaā€™s today.
  3. Consumers can take it. Disposable income growth is about 4% y/y now, 3%+ next year. 50-75bps+ on debt service is swamped by this effect. Donā€™t just adjust rates, consider income growth and increased international purchasing power.
  4. Exports can take it. USDCAD and the real effective exchange rate are where they have averaged for the past two years, which is what matters to lagging trade effects. Income effects from an improving global economy can offset price effects from the exchange rate.
  5. Investment can take it. Overall financing conditions are and should remain very stimulative aided by CAD strength given high reliance on imported capital goods. Capacity pressures will require expansion supported by gains in worker productivity. Resource maintenance cap-ex can no longer be postponed.
  6. Slack is being rapidly eroded with growth more than double the non-inflationary speed limit on average for the past 4 quarters. Spare capacity disappears by both output gap measures this year and then Canada begins slipping into excess aggregate demand.
  7. Core inflation will be bottoming into the Fall. Ending 2018 at 1.9% as excess aggregate demand arrives and followed by further progress into 2019. Thatā€™s not emergency conditions.Ā Monetary policy needs to lean in front of that occurring instead of pointing to the last inflation report in order to mitigate the rise given monetary policy lags. The costs to being wrong about inflation upsides are less than the costs to maintaining emergency insurance against forecast risks.The Fed can afford to pause being 100bps ahead but Canada hasnā€™t started. A 10% sustained two year average appreciation (ie: not from a transitory peak) in CAD versus the USD knocks 0.1-0.2% off core inflation two years out. Other forces are likely to dominate currency effects that the BoC views as transitory anyway.
  8. Wage growth is also bottoming. Rapidly tightening job markets, a maturing commodity shock on incomes and minimum wage hikes in Ontario and Albert should lift wage growth into 2018.
  9. Business surveys ā€“ like the Bank of Canadaā€™s BOS ā€“ are saying growth is durable with plans to keep on investing and hiring.
  10. Downbeat risks are generally not being realized. NAFTA has not been torn up, there are no border taxes, an imported bond shock hasnā€™t arrived and some geopolitical risks have improved (European elections) while others remain.

Source:Ā Scotiabank Global Economics Special Report July 2017