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Canada Holds Steady: Interest Rate Pause Signals Cautious Confidence

                      The Bank of Canada also held its policy rate at its last scheduled rate announcement in December. The Bank of Canada has opted to keep its key interest rate at 2.25% , a move that underscores a careful balancing act as the country approaches a pivotal moment in North American trade relations. With CUSMA (the Canada‑United States‑Mexico Agreement) negotiations on the horizon, policymakers appear intent on maintaining stability while assessing potential economic turbulence. The decision reflects a mix of optimism and prudence. Inflation has been easing gradually, giving the central bank some breathing room. At the same time, global economic uncertainty and the high stakes of upcoming trade talks mean officials are reluctant to introduce new variables into the financial system. By holding the rate steady, the Bank of Canada signals confidence in the economy’s underlying resilience while acknowledgin...
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Toronto’s Condo Crisis: A Dire Signal for Housing Affordability and Rental Market

 

The Greater Toronto Area (GTA) is facing a condo crisis that has significant implications for housing affordability and rental supply. According to a recent report by CIBC and Urbanation, the GTA’s condo market is “clearly in recessionary territory,” and the nationwide housing crisis is at a level not seen in over 30 years. Here are the key points:

  1. Condo Pre-Sales at a 20-Year Low: Toronto-area condo pre-sales are below 50%, marking a more than 20-year low. High costs, high interest rates, and poor investment prospects have left the market in a challenging situation.

  2. Investor Dilemma: Condo investors play a crucial role in rental supply and overall housing affordability. However, recent investors are mostly losing money, and prospective investors are avoiding new projects due to uncertainty.

  3. Developers Struggle: Developers face rising construction costs due to inflation, coupled with dwindling interest in future projects. This slowdown in future supply exacerbates the crisis.

  4. Limited Relief: Falling interest rates, projected population growth slowdown, and stabilized construction costs provide some relief. However, it’s not a magic solution, and a more comprehensive policy response is needed.

  5. Record-High Inventory: Unsold condo inventory in the second quarter of 2024 reached a record high of 25,893 units, more than 60% higher than the 10- and 20-year averages. Sales were the lowest in 20 years outside of the initial months of the COVID-19 pandemic.

In summary, Toronto’s condo market woes underscore the urgent need for housing policy reforms and creative solutions to address affordability and rental challenges.


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