Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Greater Fool (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

‘The door is open’

% of readers think this story is Fact. Add your two cents.


As a certain pathetic, dodgy and often-questionable blog predicted, rates are going down two weeks from tomorrow. Circle the date, kids. June 5th. The easing cycle begins, after 10 hikes, a 23-year rate high, a 1,900% increase in the Bank of Canada policy marker and months on hold while the economy was milked by the elevated cost of money.

In case you missed it, headline inflation has withered to 2.7%. That’s three months now within the CB’s target range of 1-3%, and down mightily from 8.1% two years ago. It’s a win for Tiff – the guy whose head the leader of her Majesty’s Loyal Opposition wanted on a stick. Good thing that went nowhere. It’s a lesson in imprudence.

Anyway, here is (a) the latest and (b) some graphic evidence why it had to happen.

All measures of core inflation have plopped. They’re back at levels unseen since everybody looked fetching in face masks in mid-2021. At that point the cost of money was in the ditch, real estate was going ballistic and nobody was even talking about a rate increase, let alone ten of them. Ah, we were so cute and innocent with our optimism Covid would soon end, the office towers would fill and mortgages forever stay sub-2%.

The big economists are all lining up quickly today behind our rate-chop June prediction.

“A persistently softer economic backdrop in Canada (declining per-capita GDP and rising unemployment rate) increases the odds that price growth will continue to slow,” says RBC. The case for interest rate cuts from the Bank of Canada continues to build, with today’s report in line with our own base case for a first cut in June.”

And here’s BeeMo’s Doug Porter: “Chalk another one up for the doves, with four consecutive tame readings to start 2024. There is really no debate that monetary policy is tight in Canada, and that it is now consistently weighing on underlying inflation… We believe that the door is open for a BoC rate cut, and we have been leaning to June move for the past six months.”

Meanwhile the boys at CIBC capital markets are going even further – multiple cuts by Christmas. “There doesn’t appear to be a good reason not to cut interest rates at the next meeting in June. We continue to forecast a first reduction at that meeting, with a total of four 25bp cuts before the end of the year.”

Well, a quarter-point drop in two weeks seems baked in. The bank prime will fall below 7% for the first time this year. Mortgages are on their way into 4% territory. And at least one bank says the CB rate will plunge a full 1% within six months. That’s big, chunky news. Will it ignite the real estate market again? Or are prices so nosebleed-crazy that chopping home loan rates by even 1% won’t bring buyers flooding back?

We’ll see. Humans are weird.

Meanwhile, we do know this: current rates are kicking the crap out of every political promise that’s been made in the past year about building a slew more houses in the dubious, unproven theory this will make them cheaper. The tighter-money monetary policy of the central bank has done exactly the job it was designed for. Price escalation has dropped, taking with it buyer confidence. The resale real estate sector is hurting. The new-home business is dying.

The news this week is grim, with construction levels in Ontario and beyond literally collapsing as builders and buyers alike struggle with financing charges. Housing starts last month plopped 37% across the country’s largest province, says CMHC. In the sprawling GTA (where the bulk of immigrants land) new-builds are down 38%. Ottawa saw 58% less construction activity. And poor Hamilton/Burlington had an unprecedented 91% decline.

CMHC – the very agency telling politicians we need 3.5 million new homes within the next six years (never happening) now says starts will “continue to trend down.” Not up. In fact last month across all of Ontario only 5,500 new housing units were being put up, the least in six years. Sales of new condos are at a 15-year low. Over sixty new developments in the GTA alone, containing twenty thousand more condos, have been cancelled. There are 22,000 new, unsold, unloved, unoccupied units available.

The boss of the Residential Construction Council of Ontario is quoted in today’s media as saying this: “Sales have fallen dramatically, starts are falling, housing supply is going to fall and it’s going to get worse. Sometimes you’ve got to hit bottom before you can start building back up again, and we haven’t hit the bottom yet.”

So, there will be about a fifth fewer homes built this year than in 2023. Since then governments have spent more than $8 billion trying to prime the construction pump, doled out money to municipalities to ‘fast-track’ building, blown up local neighbourhood zoning protections, hiked taxes on non-resident buyers, brought in anti-flip levies, launched a crazy first-home savings vehicle and assured everyone – repeatedly, in dozens of events – that crops of new homes would sprout like shrooms making middle-class ownership a reality.

But here we are. It failed. Houses are not only going begging, but unbuilt. And it’s all because of the conflict between monetary and fiscal policies. The CB wanted to slow things down to kill inflation. Politicians wanted to stay in power, telling people to wait, promising unicorns. Tiff won.

Now what?

Rates in Canada will start to decline in two weeks, the Bay Streeters say. This will be in advance of Fed cuts in the States. Our dollar will fall a bit (but not disastrously). Bond yields will go down (already happening) and prices up. Mortgages will slowly descend. That should spur resale housing sales (and average values), but it will take much more, and much longer, to rekindle construction.

In short, is the ‘housing crisis’ worse?

Good job, government.

About the picture: “Hi Garth,” writes Franky. “This is Fred (Duck) and Jed (Dog).  They are an unlikely pair of friends who live with my nephew and his partner. Thanks for your daily blog.  Feel free to use this photo for your blog.”

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


Source: https://www.greaterfool.ca/2024/05/21/the-door-is-open/


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Humic & Fulvic Liquid Trace Mineral Complex

HerbAnomic’s Humic and Fulvic Liquid Trace Mineral Complex is a revolutionary New Humic and Fulvic Acid Complex designed to support your body at the cellular level. Our product has been thoroughly tested by an ISO/IEC Certified Lab for toxins and Heavy metals as well as for trace mineral content. We KNOW we have NO lead, arsenic, mercury, aluminum etc. in our Formula. This Humic & Fulvic Liquid Trace Mineral complex has high trace levels of naturally occurring Humic and Fulvic Acids as well as high trace levels of Zinc, Iron, Magnesium, Molybdenum, Potassium and more. There is a wide range of up to 70 trace minerals which occur naturally in our Complex at varying levels. We Choose to list the 8 substances which occur in higher trace levels on our supplement panel. We don’t claim a high number of minerals as other Humic and Fulvic Supplements do and leave you to guess which elements you’ll be getting. Order Your Humic Fulvic for Your Family by Clicking on this Link , or the Banner Below.



Our Formula is an exceptional value compared to other Humic Fulvic Minerals because...


It’s OXYGENATED

It Always Tests at 9.5+ pH

Preservative and Chemical Free

Allergen Free

Comes From a Pure, Unpolluted, Organic Source

Is an Excellent Source for Trace Minerals

Is From Whole, Prehisoric Plant Based Origin Material With Ionic Minerals and Constituents

Highly Conductive/Full of Extra Electrons

Is a Full Spectrum Complex


Our Humic and Fulvic Liquid Trace Mineral Complex has Minerals, Amino Acids, Poly Electrolytes, Phytochemicals, Polyphenols, Bioflavonoids and Trace Vitamins included with the Humic and Fulvic Acid. Our Source material is high in these constituents, where other manufacturers use inferior materials.


Try Our Humic and Fulvic Liquid Trace Mineral Complex today. Order Yours Today by Following This Link.

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.