A moment in time

So now there are bidding wars for rental houses. Reports are showing up documenting ten or a dozen families competing to lease a SFH, offering above-market rates or offering to prepay six months or a year. No wonder. Most people who do not own cannot afford to buy, given the pandemic bulge in prices. Nor should they, if doing so would gut their finances.

Meanwhile more scare stories coming out of the DT condo business. Last year prices slumped by about a fifth and rental rates crashed 20%. But that was then. This is now. Eighty per cent of the herd is vaxed these days and half are fully inoculated. Everything changed right around Canada Day.

So agents are telling renters they’d be wise to sign a lease immediately, to lock in a price still lower than in late 2019. Because, they warn, there’s only one direction in which costs will go – especially as cash-strapped cities raise property tax rates and throw around ’empty house’ levies.

Last week Toronto unveiled a big plan to repopulate the gleaming towers in the core. The province just announced the next phase of its reopening has been advanced. In a city of six million there were but two dozen Covid cases announced on Saturday. As I walked through the King Street entertainment district that night the mood could be described as euphoric. Unbridled. The cafes are sold out. Sidewalks jammed. Masks optional. Hugs and embraces. Glam everywhere.

The downtown streets here are metaphoric of urbanity everywhere. Covid is over. 2020 never happened. By Labour Day Toronto, Halifax, Calgary, Montreal, Vancouver and every other city will be lurching into full pre-pandemic normality. WFH will be under serious pressure. Commuting will be a thing again. The stores, clubs, salons, gyms, restaurants, airports and highways will look just as you remember them two years ago. As this blog has said for ages – right back to March of last year – (a) pandemics are temporary. They always pass. And, (b) it’s wasn’t different this time.

Stock markets – all of them, pretty much – closed at record highs Friday. Lots more to come. The dip in bond yields was a temporary aberration. The reopening trade continues. Central banks have not let up on the gas. Biden’s spending more money than God. Canada’s about to get a federal election called next month that will trigger an explosion in new promises. Household savings are massive and we haven’t had a personal rate this high since people were humming ‘Rhinestone Cowboy’ on the subway.

Those who think the virus is coming back, that we’re on the cusp of a recession or an imminent debt crisis have it wrong. GDP growth in the second half of this year will be the greatest in at least 12 years. There will be (as mentioned last week) more jobs available than people willing to fill them. That will hike overall wages, and guarantee an inflation rate we’ve not seen in a long time.

The implications:

• Yeah, sign the lease now. The city is about to fill up.
• If you’re in love with GICs, you’ll finally get some good news. Yeah, they’re still awful, illiquid investments but you will see 4%.
• CIBC figures the US central bank rate will go from its current in-the-ditch level (0-.25%) to 2.5% in a few years. That’s a big deal. Our CB will follow. So will mortgages.
• Lots of new condos coming online, but even that increased supply the trend for prices of DT living spaces will reverse.
• This pandemic is over, even as the virus rages among the unvaccinated. The economic damage will be recovered and we’re into a multi-year expansion. Corporate profits are estimated to be 40% higher (at least) in the next few quarters. No wonder stocks have leapt.
• The suburban, hick-city, rural real estate infatuation will end fast when recent buyers face the cost and toll of trekking back to work. Many of those high-salaried while-collar types who thought they could WFH forever from a cottage on a lake two hours away are in for a hefty surprise. The big choice is coming – career or canoe.

Of course, you’ll probably be made to mask up for flights for a year or two. Covid-19 booster shots will be an annual event. Politicians will eventually have to stop hiding behind states of emergency. And, inevitably, we will face a day of tax-and-austerity reckoning for the way we all handled the slimy little pathogen.

But until then, rock out.

About the picture: “Saturday morning, we put down our dear old dog Cepeda,” writes Lindsay. “She was the best member of our family for 15 years. She was unique, beautiful, loving, and loyal. I don’t really know what to do now, I find myself sharing pictures of her with you. Here she is, in her glory. Thanks for all you do Garth.”