economy
DE-CONSTRUCTING THE HOUSING INVESTMENT NARRATIVE Much ado is being made about the extent to which Canada’s housing market—is there actually such a singular thing?—has heated up over the past year. With average sold prices having risen by 15% in Greater Toronto, 16% in Metro Vancouver, and by 26% in the Ottawa area, this view that markets are running hot is fair. This despite immigration to Canada having halved in 2020 and employment having suffered its worst losses in almost 100 years in the spring of last year. Hot, perhaps, but there are a few good reasons for it. As this report notes more than once,
by upwards of $200 billion over the final nine months of 2020—by far the greatest expansion of our collective rainy day fund in our nation’s history. As part of this, incomes were boosted above what they had been for many households prior to the pandemic and interest rates fell for everyone. Additionally, stock market volatility in the early days of the pandemic has likely enhanced the attractiveness of real estate as, at the very least, a wealth-maintaining asset class. Notably, this heat hasn’t manifested in residential construction. In Metro Vancouver, the average monthly value of residential construction investment (of $990 million) in 2020 was down 12% versus 2019 and 8% versus 2018. While this is up by 18% versus the past-decade average, it seems clear for now that our eggs aren’t all in the real estate basket as we climb our way back to our pre-pandemic economy.
unprecedented relief measures implemented by the federal government and provincial governments were complemented by the most aggressively-dovish monetary policy the Bank of Canada has ever embarked on, resulting in household savings that ballooned
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