Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s housing minister has only been in office for a few days, but he’s already stumbled. The minister promised what we’re calling “quantum affordability”—home prices will both fall and stay at the same level. We break down his suggestions, which might create affordable housing—just not in the current quantum realm you occupy.
Canada’s unemployment rate is just off the record low, and suddenly there are multi-block lines to apply for entry level jobs. How does a shift from an incredibly low rate produce this environment? Well, the rate was likely never as low as it appeared to be. Experts warned that post-recession, seasonal adjustments tend to over adjust a period that doesn’t follow typical seasonal patterns. The result is overstating strength, resulting in a surprisingly fast erosion of the perceived strength.
Canadian real estate affordability is improving, but the vast majority of households can’t buy a home at today’s prices. The National Bank of Canada released its Q2 2023 Housing Affordability Monitor (HAM) which showed improvements in most markets, but it’s a long way from correcting 8 years of sharp erosion. The income required to qualify for a mortgage on a typical home is significantly higher than the median incomes in virtually all of Canada’s major cities.
Canada’s unemployment rate reached a multi-year high in July. The seasonally adjusted rate rose 0.1 points to 5.5%, hitting the highest level since 2020. Only 6,000 jobs were lost, a minor amount in an economy with 21 million workers. However, the country’s population is rising significantly faster than its labor market can absorb them. The rapid population growth is boosting aggregate demand, but producing more liabilities at this point.