Happy Friday! Some key headlines this week – email a bit delayed since I was out of town, but key updates below.
1) The Canadian housing agency (CMHC) decided to SCRAP the First-Time Home Buyer Incentive, which was introduced in 2019 to help first-time homebuyers with lower mortgage payments.
Deadline to apply: March 21, 2024 (more information)
Benefits: Allows up to 10% of purchase price help from the Government of Canada, who steps in with the down payment (equity), which upon sale (or after 25 years) will be subject to a fixed return paid back to the government.
However, this program was subject to eligibility requirements (household income and size of mortgage), which unfortunately only addresses to a very small population of Canadian residences – the juice wasn't worth the squeeze for the program.
By now, the Canadian government is slowly starting to realize the issue is supply (and demand); and no Band-Aid fix can help when it comes to fundamental issues.
2) In Calgary, housing starts are hitting a record level, despite the city's construction shortage – but demand continues to outpace supply.
• 61% increase in single family home starts compared to same period last year
• 48% increase in semi / rows / condos compared to same period last year
These results however, are trying to catch up with the last two years of record immigration to the city. On top of that, the supply takes 9-12 months for detached homes to be built, and quite a lot longer for larger multi-unit complexes.
3) Bank of Canada holds key rates at 5% as expected by economists
• There remains key risks to higher inflation, such as attacks on Red Sea shipping routes – the worry here is against the clock, and inflation entrenchment if it remains stagnant for too long
• Central bank expects inflation to remain close to ~3% during 1H24 (recall impact of rate adjustments are felt 18–24 months). However, based on the commentary from Macklem, the BoC remains more hawkish than expected...
