Comedy of Errors

Imagine a world where social media existed during the time of Mussolini and Hitler. Would we have seen selfies with the Colosseum as a backdrop or perhaps, a 'Fuhrer Filter' on Snapchat? While this is a humorous thought, it underscores the profound impact of technology on information dissemination, particularly in the commercial real estate sector.

In the age of viral posts and trending hashtags, the speed at which information (or misinformation) spreads is faster than a New York minute. Remember when Justin Bieber posted a picture of Gaza City destruction, thinking it was Israel, and it spread faster than a Canadian winter? The Biebs faced quite the backlash for this faux pas, and it serves as a stark reminder of the power and pitfalls of technology in spreading information. He quickly deleted the post and reshared the message with the same wording but no background, clarifying his stance on the issue. It was like watching a game of digital ping-pong!

In this newsletter, we'll navigate the labyrinth of real estate data, armed with a flashlight of reliable sources and a compass of critical thinking. But remember, even the best navigational tools can sometimes lead us astray. So, double-check your sources and don't believe everything you read, unless it's in this newsletter, of course!

Statistics, while seemingly innocent, can be as misleading as a chameleon in a bag of Skittles. Bias, whether in the data or the people analyzing it, can lead to misrepresentation, much like a funhouse mirror distorts your reflection. So, let's tread carefully as we delve into the world of numbers and charts.

Now, let's turn our attention to the rollercoaster ride that is the Greater Toronto Area (GTA) real estate market. In September, sales took a 7.1% nosedive, marking the slowest September since the Y2K scare. But, like a phoenix rising from the ashes, average selling prices increased 3.0% annually, reaching a whopping $1.119 million. Talk about a plot twist!

However, the September results showed a meaningful divergence between homeownership demand and supply. This imbalance is like a seesaw with an elephant on one side and a mouse on the other, and it's likely to cause some downward pressure on selling prices in the coming months if the latest trends hold.

High interest rates are starting to have an impact on supply, as homeowners that were previously holding off selling until prices improved are now accepting the new market reality. It's like a game of musical chairs where the music has stopped, and everyone is scrambling for a seat. At the same time, continued increases in interest rates have further reduced affordability for buyers, creating a softer market environment for prices.

Interestingly, condo prices have held up best among all housing types with an 11.6% decline since the market peak in February 2022. This can be attributed to a relatively smaller run-up in prices as interest rates dropped during COVID-19, much like a rollercoaster that didn't climb as high, so the fall wasn't as steep.

Now, let's talk about the Bank of Canada, which seems to be playing a game of 'will they, won't they' with interest rates. According to a Reuters poll of economists, the Bank is probably done raising interest rates and will hold them at 5.00% for at least six months. However, some economists believe that the Bank may still raise rates at least once more. It's like watching a suspenseful movie where you're not quite sure what the ending will be!

The Bank of Canada has hiked interest rates 10 times in 18 months to a 22-year high of 5%, but it still does not see inflation slowing to its 2% target until mid-2025. It is widely expected that the Bank of Canada will hold rates this week due to last week’s lower-than-expected inflation number. James Laird, co-CEO of Ratehub.ca and president of CanWise mortgage lender, believes that the Bank hopes to be finished with rate hikes and will be “unless they are surprised by future incoming data”

In conclusion, while technology can sometimes feel like a game of 'telephone' gone wrong, it also provides us with the tools to combat misinformation. So, let's embrace the comedy of errors, question our sources, and strive for accuracy in the information we consume and share and hope the bank does what is best for the economy.