The anniversary

Interest rates won’t change this week, but it hardly matters. It looks like robins, hormones and cocky realtors have already arrived.

First, the CB. The next rate reset is Wednesday morning and nobody expects a change. More pause. More waiting for the first cut to be announced, now that the economy has iced over the way the Bank of Canada wished. Real economic growth is barely showing a pulse at 1%. Growth-per-capita has been negative for the last six quarters. And, by the way, this week marks an anniversary. Two full years since Tiff started tightening the screws. The central bank rate exploded from one quarter of one per cent all the way to 5%.

It worked. Inflation has fallen from 8.1% to 2.9%. Unemployment stayed south of 6%. Average wage gains are now 5%. No recession. It doesn’t get a lot better than this for monetary policy. That’s not to say a lot of indebted households aren’t suffering. They are. And 2.2 million families will see mortgage renewals at higher rates this year and next. But all this is part of the master plan to slow the growth of credit, make people trim spending and pay down debt, reduce economic activity plus ultimately see lower consumer prices.

In short, stop moaning. Tiff won. He pursued the correct course of action and the leader of the official opposition was wrong to ever suggest the guy be fired in the middle of the process. The cost of cantaloupes will ultimately fall. But not bungalows.

The latest real estate stats show the combination of spring, increased listings and choice, pent-up demand after a dry 2023 for sales as well as the certainty of rate cuts later this year (maybe sooner than we expect) will augment sales.

We told you this a few months ago. More offers, more deals, more closings in early 2024. Price growth, we said, is less certain. But so far it seems houses are about to become more costly and unaffordable. At the same time, a myriad of new government actions and taxes will be proven useless.

Tomorrow the mighty GTA market stats will drop. In the meantime, look to the West to see how things are shaping up. And it’s a tad steamy.

In Vancouver, listings, sales and prices are all swelling. New properties hitting the market have jumped by almost a third, leading to a hike in sales – up 13.5% year/year. Normally a pop in listings would hold prices down, but not this time. The benchmark may be a little less than the peak of ’22, but not by much at $1.183 million. That’s 4.5% ahead of last year and a huge jump of almost 2% in the space of one month.

The average detached is closing in on the two-mill mark again at $1.97 million, up a hefty 7% from February of last year. Condo sales are ahead 18% and prices have rocketed 2.5% in the last thirty days. The benchmark is $$770,700, now equalling that of Toronto apartments.

Over on the snooty Island, more house lust. The Victoria cartel reports a whopping 38% surge in February sales compared with the month before. “We saw glimmers of a start to the spring market over the course of February,” said the head wizard. “In addition to the increase in sales, more than five hundred new listings came to market when compared to last year’s inventory numbers. This much needed inventory gives buyers more selection and more time to make their purchasing decisions. We’ve also seen prices continue to remain stable, which is excellent for buyers and sellers because it makes the transaction much more predictable.”

So the property benchmark price for a SFH is $1.247 million, up a few grand from January and about equal to a year-ago. In short, a wave of new listings and 12 months of elevated mortgage rates have done zip to make a house in that area more accessible.

As for Calgary, yahoo. The stampede continues.

Sales are up year/year by 23%. The volume of sales during February in dollar terms surged over 40% as Calgarians spent $1.25 billion buying houses from each other. The city is still a relative bargain, of course, with the benchmark price for all properties coming in at $585,000. That was a 10% gain in a year and a 2% pop in one month. Detached sales advanced 20% and prices leapt 13%, to more than $721,000.

So, how can all this activity – these sales increases and price advances – be so at odds with the whiny defeatism published daily on this blog and even more disreputable sites? All we hear about on social media is the pillage of the young, the scourge of homelessness, how evil Galen Weston must be and more evidence Boomers have screwed up everything, forever.

Meanwhile, enough people are buying real estate to move the market. Prices and sales are higher, even before interest rates are lower. It’s clear the bottom (as we told you) was a year ago. And it’s irrefutable the price of money will be lower – and the sale price of a house higher – six months from now.

There’s no joy in reporting this. But it’s better than lying to you. There is no real estate crash coming. If a 1,900% increase in the Bank of Canada rate couldn’t do it, then the feeble and ineffectual bleatings of politicians sure won’t. Higher taxes are not making houses cost less. The opposite. Given one or two rate cuts this coming summer, we could see prices in most urban areas touch new highs.

Tomorrow we’ll have more data. But likely, the same.

By the way, NB is lovely this time of year. The averge detached price is a titch under $300,000. Bring extra socks.

About the picture: “Hi Garth, this is Coco, a senior Border Collie,”  writes Steven. “Her many endeavours include running a successful real estate business here in the Gold Coast of Australia.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.