Inventory Up, Rents Down, Rate Cuts & 25k To Leave Canada ?
In today’s episode Daniel Foch and Nick Hill covers several important topics such as inventory, rental market trends, potential rate cuts, and government initiatives to prevent Canadian residents from leaving the country.
Key Takeaways:
There are significant decrease in condo rents in the Greater Toronto and Hamilton Area (GTHA), attributing it to a record high completion of condo projects. Vancouver is facing a similar trend as well.
Investors play a role in the real estate market, providing rental stock but also influencing pricing dynamics. In addition, investors taking losses on rental properties can benefit renters.
There will be a continuous rise in rental prices with an increase in resale supply, particularly in Vancouver and Toronto, due to a shortage of construction activity, which may lead to long-term issues.
Significant increase in inventory could lead to a downturn in prices, especially if historical trends are considered.
There are potential for interest rate cuts by the Bank of Canada and how they might diverge from US monetary policy. The objective of monetary policy is to preserve the value of money by keeping inflation low, stable, and predictable, which encourages spending, investment, job creation, and productivity.
There's concern about the state of the Canadian economy, with references to recession-like conditions and stagnant GDP per capita growth since 2016. Factors contributing to economic challenges include inflation, foreign investment outflows, and the impact of currency devaluation on purchasing power.
James Orlando, the Director of Economics at TD Bank, pointed out that a gap between Canadian and US interest rates weakens the exchange rate between the Canadian dollar and the US dollar. This can lead investors to gravitate towards the US for higher rates and better investment opportunities.
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