Posthaste: Hey Torontonians, your house made almost as much as you did last year
The Bank of Canada makes its decision on interest rates next week and economists say Canada’s resurging housing market is one reason the Bank will remain on hold not only this month, but for the year to come.
Recent data reveal that the nation’s housing market has moved from being a drag on the economy to a “source of strength,” said BMO chief economist Douglas Porter in a recent note.
Existing home sales in December were up 22.7% from a year ago, the fastest gain in almost a decade with 21 of Canada’s biggest 26 cities showing double-digit growth. At the same time new listings dropped 3.2% year over year, pushing the sale-to-new-listing ratio to 66.9%, the highest in 15 years, BMO says.
As the market tightens, prices are also rising. The MLS Home Price Index rose 3.3 year over year, its fastest pace in two years. While the gains come from 2018’s 10-year lows, Porter said the “current tightness of the market looks real.”
BMO expects housing prices to continue to rise and with it household debt. “The broad-based rebound in home sales, prices and borrowing is a key reason the Bank of Canada has remained planted on the sidelines, and why we expect them to stay here in 2020,” he said.
To put those housing prices in perspective, a study by online real estate broker Zoocasa found that gains in some areas of the Greater Toronto Area over 2019 were nearly equivalent to a entire year of after-tax income. In the City of Toronto median home prices rose by 8% or $55,000 to $720,000. The increase of $55,000 represents almost 94% of the median Toronto household after-tax income of $58,264.
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Milestone for Alphabet yesterday. The stock rallied in the last half hour of trading to hit US$1,450.16, making Google’s parent the newest member of the elite trillion-dollar club. Apple (US$1.38 trillion) and Microsoft (US$1.27 trillion) are the only other two U.S. companies on that list. Amazon flirted with the level last year, Bloomberg reports, but the online retail giant would have to rise more than 7% to return above US$1 trillion.
These four companies yield a lot of clout in U.S. markets. Together, they represent more than 15% of the weight of the S&P 500, according to Bloomberg.
The fifth largest stock is Facebook at US$632.9 billion, followed by Warren Buffett’s Berkshire Hathaway at about US$559 billion, the biggest company outside the tech sector.
Here’s what you need to know this morning:
Prime Minister Justin Trudeau will provide an update to Canadians about the Flight PS752 tragedy
A case management hearing is scheduled in Vancouver for Chinese telecom giant Huawei executive Meng Wanzhou, who is facing extradition to the United States
B.C. Forests Minister Doug Donaldson addresses the Truck Loggers Association convention in Vancouver and holds a Q and A to discuss major forest policy initiatives
B.C. Premier John Horgan holds a short Q and A session following his tour of the LNG Canada site in Kitimat, B.C.
The Alberta government’s Fair Deal Panel holds a town hall meeting in Medicine Hat, Alberta
Notable Earnings: Schlumberger Today’s Data: Canadian international securities transactions, U.S. housing starts and building permits, U.S. industrial production and capacity utilization, University of Michigan consumer sentiment index
It’s so cold in Alberta right now it’s freezing oilsands solid — no joke. The -36 C temperatures this week are certainly no laughing matter for the oil industry. To transport the freezing bitumen producers have to blend in more of the lighter crude condensate, cutting the volume that can be shipped by pipeline and raising transportation costs, reports Bloomberg. Trains as well are moving slower in the colder weather and natural gas supplies, which create steam to loosen the bitumen so it can be extracted, have been disrupted by the “extreme cold weather.” Western Canadian Select’s discount to WTI hit its widest in more than a year this week, as the weather added to the oilpatch’s existing headwinds.