'Surprising' home sales increase challenging BoC's efforts to bring inflation down: economist
, BNN Bloomberg
One economist says that accelerating momentum in Canada’s housing market ahead of potential interest rate cuts could have spillover effects for the broader economy.
Scotiabank Senior Economist Farah Omran said in an interview with BNN Bloomberg on Friday that rising home sales in December were a “surprising jump for everybody” and the trend continued into January. She noted that rises in home sales have taken place ahead of any moves by the Bank of Canada to lower interest rates.
“House prices have not started increasing with the increase in sales that we've seen, but that is typical. Typically prices lag, the increase in sales, or the decline in sales,” Omran said adding that price increases could occur in the next few months.
The Canadian Real Estate Association said in January that December was characterized by “surprise” gains in home sales, rising 3.7 per cent compared with the same month a year earlier.
In the Greater Toronto Area, home sales rose 11.5 per cent in December compared to the previous year, according to the Toronto Regional Real Estate Board. Home sales rose to a lesser degree in Vancouver during December, with annual gains coming in at 3.2 per cent, according to the Real Estate Board of Greater Vancouver.
Omran also highlighted that the increase in buying activity could cause unintended inflationary pressures, and complicate efforts by the central bank to bring inflation back to its two per cent target.
“The other part of how housing impacts the Bank of Canada’s mission is that it increases economic activity. Once sales increase, there are spillover effects on other sectors in the economy that are related to housing, like furniture and renovation,” she said.
“Therefore, when home sales pick up, economic activity also picks up. And we are in an environment where the Bank of Canada is actively trying to slow down economic activity to create an excess supply and bring inflation back to target.”
, BNN Bloomberg
One economist says that accelerating momentum in Canada’s housing market ahead of potential interest rate cuts could have spillover effects for the broader economy.
Scotiabank Senior Economist Farah Omran said in an interview with BNN Bloomberg on Friday that rising home sales in December were a “surprising jump for everybody” and the trend continued into January. She noted that rises in home sales have taken place ahead of any moves by the Bank of Canada to lower interest rates.
“House prices have not started increasing with the increase in sales that we've seen, but that is typical. Typically prices lag, the increase in sales, or the decline in sales,” Omran said adding that price increases could occur in the next few months.
The Canadian Real Estate Association said in January that December was characterized by “surprise” gains in home sales, rising 3.7 per cent compared with the same month a year earlier.
In the Greater Toronto Area, home sales rose 11.5 per cent in December compared to the previous year, according to the Toronto Regional Real Estate Board. Home sales rose to a lesser degree in Vancouver during December, with annual gains coming in at 3.2 per cent, according to the Real Estate Board of Greater Vancouver.
Omran also highlighted that the increase in buying activity could cause unintended inflationary pressures, and complicate efforts by the central bank to bring inflation back to its two per cent target.
“The other part of how housing impacts the Bank of Canada’s mission is that it increases economic activity. Once sales increase, there are spillover effects on other sectors in the economy that are related to housing, like furniture and renovation,” she said.
“Therefore, when home sales pick up, economic activity also picks up. And we are in an environment where the Bank of Canada is actively trying to slow down economic activity to create an excess supply and bring inflation back to target.”
Trudeau announces funding for affordable housing construction in Cape Breton
, The Canadian Press
Prime Minister Justin Trudeau travelled to Nova Scotia on Thursday to announce $13.3 million in funding to fast-track construction of 367 housing units over the next three years.
Trudeau made the announcement from a snow-covered housing development inside the Membertou First Nation, a mostly urban community south of Sydney, the largest city in Cape Breton.
"People right across the country are facing tremendous pressures on housing, on rents on mortgages — on a range of things that are really top of mind," Trudeau told a news conference that featured massive snowdrifts in the background, the result of a historic nor'easter earlier this month that dumped up to 150 centimetres of snow on parts of the region.
"As a government, we've stepped … back into the housing business after previous Conservative governments in Ottawa stepped away from housing."
The prime minister said a $1.9-million agreement reached with Membertou and an $11-million agreement with the surrounding Cape Breton Regional Municipality could help spur the construction of more than 3,200 homes over the next 10 years.
The money is coming from the federal government's $4-billion Housing Accelerator Fund, which was announced in March 2023. It's aimed at encouraging municipalities to make changes to bylaws and regulations that will increase housing construction.
"We needed a way to change the speed housing was built in this country," Trudeau said. "We're looking at the tools that municipalities … have to unlock even more housing faster in their communities."
The program encourages municipalities to adopt denser zoning rules, speed up approvals for building permits and increase the use of public and underutilized lands. It also provides incentives for non-profit and private homebuilders to develop affordable housing projects.
The agreement with the regional municipality, for example, involves pre-approved building plans to fast-track construction and streamline the permitting process. As well, the municipality plans to cut construction time by providing financial incentives to developers for affordable housing.
Under the Membertou agreement, the First Nation will recruit housing administration staff and construction managers to hasten the building process. The funds will also be used to improve access to bridges, water and sewer services.
"It's going to put a big dent in our housing needs," said Terry Paul, chief of the Membertou First Nation. "It's going to provide what we call 'forever homes' for a lot of people here in Membertou."
As of Thursday, the federal government has signed 52 similar agreements since the launch of the fund.
"Housing is a challenge right now, right across the country," the prime minister said. "But it's a challenge we've been able to solve before as a country. And we're going to solve it again."
His announcement in Cape Breton followed housing pledges he made earlier in the week in Alberta and British Columbia.
On Wednesday, Trudeau announced $175 million in housing accelerator funding for the construction of 5,200 housing units in Edmonton over the next three years. And on Tuesday, he was at the University of British Columbia in Vancouver where he said Ottawa would add $2 billion to the province’s new BC Builds initiative aimed at fast-tracking the construction of middle-income rental housing. Earlier this week, six Alberta communities signed deals with Ottawa that provide nearly $14 million to help build 400 new homes over the next three years.
Trudeau's most recent trip to Atlantic Canada was on Jan. 18, when he travelled to Saint John, N.B., to announce $9.1 million in accelerator funding for 285 housing units over the next three years.
Before his announcement Thursday in Membertou, Trudeau visited a long-term care home under construction in the Eskasoni First Nation, about 40 kilometres southwest of Membertou. Norm Sylliboy, chief of the Mi’kmaq Grand Council, greeted the prime minister in the foyer, where large trees run up and through the concrete ceiling, evoking the structure of a traditional wigwam. Ottawa contributed $19.7 million to the project.
“A lot of work has been done, and there’s still more to be done," Sylliboy said.
The prime minister was then shown one of the 48 individual bedrooms, slated to be occupied in April 2024.
Leroy Denny, chief of Eskasoni First Nation, said his mother, who has dementia, will be one of the first residents.
“This place is special to me,” the chief said. "It's happy for me that she’ll have a home here."
This report by The Canadian Press was first published Feb. 22, 2024.
With files from Michael MacDonald in Halifax.
, The Canadian Press
Prime Minister Justin Trudeau travelled to Nova Scotia on Thursday to announce $13.3 million in funding to fast-track construction of 367 housing units over the next three years.
Trudeau made the announcement from a snow-covered housing development inside the Membertou First Nation, a mostly urban community south of Sydney, the largest city in Cape Breton.
"People right across the country are facing tremendous pressures on housing, on rents on mortgages — on a range of things that are really top of mind," Trudeau told a news conference that featured massive snowdrifts in the background, the result of a historic nor'easter earlier this month that dumped up to 150 centimetres of snow on parts of the region.
"As a government, we've stepped … back into the housing business after previous Conservative governments in Ottawa stepped away from housing."
The prime minister said a $1.9-million agreement reached with Membertou and an $11-million agreement with the surrounding Cape Breton Regional Municipality could help spur the construction of more than 3,200 homes over the next 10 years.
The money is coming from the federal government's $4-billion Housing Accelerator Fund, which was announced in March 2023. It's aimed at encouraging municipalities to make changes to bylaws and regulations that will increase housing construction.
"We needed a way to change the speed housing was built in this country," Trudeau said. "We're looking at the tools that municipalities … have to unlock even more housing faster in their communities."
The program encourages municipalities to adopt denser zoning rules, speed up approvals for building permits and increase the use of public and underutilized lands. It also provides incentives for non-profit and private homebuilders to develop affordable housing projects.
The agreement with the regional municipality, for example, involves pre-approved building plans to fast-track construction and streamline the permitting process. As well, the municipality plans to cut construction time by providing financial incentives to developers for affordable housing.
Under the Membertou agreement, the First Nation will recruit housing administration staff and construction managers to hasten the building process. The funds will also be used to improve access to bridges, water and sewer services.
"It's going to put a big dent in our housing needs," said Terry Paul, chief of the Membertou First Nation. "It's going to provide what we call 'forever homes' for a lot of people here in Membertou."
As of Thursday, the federal government has signed 52 similar agreements since the launch of the fund.
"Housing is a challenge right now, right across the country," the prime minister said. "But it's a challenge we've been able to solve before as a country. And we're going to solve it again."
His announcement in Cape Breton followed housing pledges he made earlier in the week in Alberta and British Columbia.
On Wednesday, Trudeau announced $175 million in housing accelerator funding for the construction of 5,200 housing units in Edmonton over the next three years. And on Tuesday, he was at the University of British Columbia in Vancouver where he said Ottawa would add $2 billion to the province’s new BC Builds initiative aimed at fast-tracking the construction of middle-income rental housing. Earlier this week, six Alberta communities signed deals with Ottawa that provide nearly $14 million to help build 400 new homes over the next three years.
Trudeau's most recent trip to Atlantic Canada was on Jan. 18, when he travelled to Saint John, N.B., to announce $9.1 million in accelerator funding for 285 housing units over the next three years.
Before his announcement Thursday in Membertou, Trudeau visited a long-term care home under construction in the Eskasoni First Nation, about 40 kilometres southwest of Membertou. Norm Sylliboy, chief of the Mi’kmaq Grand Council, greeted the prime minister in the foyer, where large trees run up and through the concrete ceiling, evoking the structure of a traditional wigwam. Ottawa contributed $19.7 million to the project.
“A lot of work has been done, and there’s still more to be done," Sylliboy said.
The prime minister was then shown one of the 48 individual bedrooms, slated to be occupied in April 2024.
Leroy Denny, chief of Eskasoni First Nation, said his mother, who has dementia, will be one of the first residents.
“This place is special to me,” the chief said. "It's happy for me that she’ll have a home here."
This report by The Canadian Press was first published Feb. 22, 2024.
With files from Michael MacDonald in Halifax.
Trudeau announces $175 million for Edmonton to help build affordable housing
, The Canadian Pres
Prime Minister Justin Trudeau announced Wednesday $175 million in funding to fast-track more than 5,200 new housing units in Edmonton over the next three years.
"We're changing the way housing gets built in this country," Trudeau said at an apartment complex construction site in southwest Edmonton.
The money is to flow through the federal Housing Accelerator program and be used to eliminate barriers to getting the homes built.
Trudeau said the funds would create more housing options in the city, including more rentals, affordable apartments, and housing near university and college campuses.
"One of the challenges we're facing right now with this housing crisis is over the past decades the federal governments of different stripes stepped back from the business of ensuring that housing was properly built right across the country in affordable ways, meeting the supply needs, meeting the growth of the country," Trudeau said.
Before announcing the agreement, Trudeau toured a project in the city's southwest corner that is to provide 334 housing units by the summer — with 60 per cent of them classified as affordable.
Walking through half-built hallways hanging with conduit, heavy with drywall dust and the smell of industrial adhesives, a hard-hatted Trudeau spoke with a number of tradespeople.
"Work's been picking up," said James Cameron, a plumber working on the apartment project. About 80 workers were on the site Wednesday.
"I think I speak for all of us when I say how it's good to make changes," Cameron's co-worker Joey Boelhouwer told the prime minister.
Trudeau listened as David Mitton, president of builder Leston Holdings, described Edmonton-created wood framing technology that is speeding construction of the units. Cellphone apps and other technological tools also help workers communicate faster and more efficiently, he said.
"We keep trying to find ways to build homes quicker," Trudeau responded.
Trudeau appeared at the news conference with Edmonton member of Parliament and cabinet minister Randy Boissonnault and Edmonton Mayor Amarjeet Sohi.
The city passed a motion last month declaring a homelessness and housing emergency.
"This city council has been committed to ensuring that everyone living in this city has a decent place to call home," Sohi said Wednesday. "We're very appreciative of how federal investments have been able to build more supportive housing.
"Our city has been leading the charge in removing barriers to housing by overhauling the zoning regulations, making it easier for people to build."
Trudeau spoke about the need for different levels of government to work together on the issue. But unlike a housing announcement Trudeau made Tuesday in British Columbia, no representatives from the Alberta government were on hand.
In a social media post, Alberta Seniors, Community and Social Services Minister Jason Nixon demanded Trudeau provide per capita housing funding and "end his attacks on the men and women in our oil and gas sector."
"The prime minister must stop hiding from Alberta’s government and come to the table to talk about these important issues," Nixon posted.
Trudeau said he's happy to meet with provinces "whenever they ask me to meet."
He said the federal-provincial program announced earlier in B.C. sees Ottawa match financing with that province to build affordable rental units. Trudeau and Premier David Eby appeared together to announce $2 billion in federal funding to expand the BC Builds program.
"I would love to be here with the province in the coming months announcing an Alberta Builds program," Trudeau said. "We would like to see the province sit down with us in trilateral meetings on countering homelessness."
Using provincial and federal money, the B.C. program is to use government, non-profit, community-owned, and underused land and fast-track development approval to build an estimated 8,000 to 10,000 new homes.
Also Tuesday, six smaller Alberta communities signed deals with Ottawa that provide nearly $14 million to help build 400 new homes over the next three years in Banff, Sylvan Lake, Bow Island, Westlock, Smoky Lake and Duchess.
This report by The Canadian Press was first published Feb. 21, 2024.
Canadians eager for homeownership, but down payments present another hurdle: report
, BNN Bloomberg
A new survey suggests economic challenges have not dampened Canadians' enthusiasm for the housing market.
NerdWallet Canada’s 2024 Canadian Home Buyer Report, released Wednesday, found 49 per cent of Canadians plan on buying a home within the next five years, though most appear willing to wait out the high interest rates, as only 11 per cent plan on buying in the next 12 months.
“Though it’s not entirely realistic, the strong desire to buy speaks to how much Canadians value owning their own home,” Clay Jarvis, NerdWallet’s mortgage and real estate expert in Canada, wrote in the report.
Though high real estate prices and interest rates present significant barriers to homeownership, the survey shows down payments may also be an issue.
The report found that just 16 per cent of Canadians planning to buy a home with a down payment have begun saving for it.
“Saving any money in the current economic climate is a cause for celebration, but many home buyers will need to greatly increase their down payment savings if they hope to get approved for a mortgage,” the report states. “This is especially true for Canadians aged 18-34 who plan to buy a home in the next five years, with 21 per cent of this cohort saying they have not started saving.”
Under Canadian guidelines, home purchases require a five per cent down payment at minimum, while homes sold for more than $500,000 require a minimum payment of five per cent for the first $500,000, and 10 per cent for the remainder.
Under these guidelines, Canadian Real Estate Association’s average home price for December -- $657,145 – would require a down payment of $40,715.
Canadians also looking to sell
While nearly half of Canadians are looking to buy, it appears Canadian homeowners are equally eager to sell.
The survey found 42 per cent of Canadian homeowners plan to sell within the next five years, which would still shut millions of expected home buyers out of the market, excluding new builds and immigration.
For those considering selling their home, the current economy is less of a concern, as 31 per cent said they plan to downsize, while 24 per cent are looking for a change of scenery and 20 per cent are looking to upsize.
Methodology
This survey was conducted online within Canada by The Harris Poll on behalf of NerdWallet from Jan. 17 – 19, 2024 among 1,015 adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 3.8 percentage points using a 95 per cent confidence level.
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