Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Real Estate Flippers Are Still Near Record Levels
The death of the Canadian real estate flippers has been greatly exaggerated. Bank of Canada (BoC) data shows 2.5% of homes sold in Q2 2024 were purchased within the past 12 months—only seeing a minor reduction after anti-speculative measures. Even more surprising is the share flipped within a six month span is just off the record high set earlier this year. We also run down why this number is likely an underestimate due to the limitation of the BoC’s methodology, which excludes routine investor purchase methods.
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Canadian Real Estate Investors Capture A New Record Market Share
Canadian real estate may have cooled but investors have only made a minor pullback. Investors represented 30.4% of home purchases in Q1 2024, according to household credit data. The share is much higher than the volume seen in 2019, implying the minor correction wasn’t enough to knock the speculation out of the market. Similar to the Bank of Canada flipper data, it’s likely a big underestimate due to the methodology used.
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Canadian GDP Has Never Contracted Like This Outside Of A Recession
The Canadian economy is falling further behind population growth, even as the population slows. Real GDP grew 0.2% in July beating expectations but failing to match population growth. National Bank of Canada warns per-capita GDP has seen a cumulative decline of 3.9% since 2022. That makes this the sharpest non-recession erosion of economic output. To be blunt, that means it’s the first time households have seen stagnating real incomes and wealth outside of a recession.
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Canadian Temporary Resident Growth Falls 48%, Long “Overdue”: BMO
One key area of Canada’s breakneck population growth is starting to fade—temporary residents. The net flow, balance of those arriving and leaving, saw the country add 118k more temporary residents in Q2 2024. By itself, that may seem like a robust addition in a quarter, but it was 48% lower than the same one last year. The slowdown comes as a part of the Government of Canada’s attempt to slow population growth to more sustainable levels. A previous attempt to grow this segment saw the temporary resident population double over just a few quarters.
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What Cliff? Canadian Mortgage Changes May Fuel Credit Growth: BMO
Canadian mortgage credit is growing at an unusually slow rate but that may change soon. Annual growth of outstanding mortgage debt climbed 3.5% in June. Growth that would be robust anywhere in the world—except in Canada, where accumulating mortgage debt is almost a national sport. Don’t get too comfortable with the slow growth, with BMO seeing recent mortgage changes helping to boost the amount households will carry. As of right now, they don’t see this reviving the real estate market but simply allowing existing borrowers to accumulate more debt.
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