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Economic Highlights: Property Market Challenges
1: Canada’s population grew by over 1 million in 2022. Meanwhile, housing completions remained at around 200,000. I imagine that most other infrastructure investment is falling behind on a per-capita basis too. With this kind of population growth, will Canada ever experience a painful housing market correction?
2: As office vacancy rates remain elevated, the commercial property market is next up to be a source of economic and financial stress. REIT share prices are already anticipating the onslaught of maturing commercial mortgages over the next several months. Resetting loans at higher rates while rental income is under pressure could cause defaults to rise. This will likely affect small and medium sized banks disproportionately.
3: The number of contractors reporting canceled kitchen and bath remodeling projects has risen significantly. This is (usually) the discretionary end of residential construction, and with higher borrowing costs homeowners are putting off the unnecessary. This is just one of many early indications that the economy is slowing.
The upside is it may be now easier to negotiate better prices with contractors.
4: Great interview with David Rosenberg if you have 53 minutes. Skip the first 15 minutes if you don’t want to hear about Rosie’s career and want to get straight to the economic commentary.