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BMO: Canadian Housing: Migration Matters
Canadas population surpassed 41 million for the first time on April 1, marking an increase of nearly a quarter-million people from the previous quarter. The yearly rise of 1.27 million set a new record, while the 3.2 per cent growth rate was the highest since 1958 and more than twice the historical average, says Sal Guatieri, BMO Senior Economist and Director of Economics in a recent report.
Net international migration of 1.24 million drove almost all the rise, with two-thirds (828,000) propelled by temporary immigration. If, as planned, the federal government slashes the number of temporary immigrants from 6.8% of the population to 5% within three years, then overall growth will slow to around 1%. A growing population propelled by permanent immigration targets of half a million per year will still support the housing market, but in a much more sustainable manner. Builders will have a decent chance of keeping up with household formation, reducing the risk of markets overheating and prices overshooting income growth.
Poor affordability, namely in B.C. and Ontario, is not (yet) having a serious effect on international migration. Ontarios population grew 3.5% in the past year and B.C.s rose 3.3%, both much faster than usual and still leading all provinces except for Alberta, whose population exploded 4.4%, the most since 1981. Ontario and Albertas population growth is about double the long-run norm. All provinces are attracting more international migrants than usual, even pricey Ontario (net 93,000) and B.C. (40,000), with Alberta (33,000) punching above its weight.
But regional affordability differences are influencing where migrants, including longtime residents, eventually end up.The biggest increases in population relative to historical norms are in Saskatchewan, Manitoba, Quebec, and three Atlantic Provinces. What do all six regions have in common? Still-decent affordability. The sole exception is Newfoundland Labrador with still subdued population growth of 1.0%, though thats twice the norm. A total 356,000 people moved between provinces in the past year, also more than usual. This is where differences in housing costs come to the fore. Ontario had a net outflow of 32,000 people, trending at the worst levels on record, while B.C. lost 10,000 folks to other provinces. The hands-down winner of the interprovincial migration sweepstakes is Alberta with a net gain of 53,000, tracking the most on record. And its no coincidence that the biggest contributor to this gain is people leaving B.C. and Ontario. More Canadians are also moving to Atlantic Canada. While NL did see a small net outflow, this followed a rare inflow in the prior two years. Quebec, Saskatchewan and Manitoba also lost residents to other provinces, but Quebecs net outflow was much smaller than usual.
Source: https://economics.bmo.com/en/publications/detail/0aa3f8dd-43d3-4167-ac05-682ddb7765be/
TD: Provincial Growth Looking Up As Interest Rates Come Down
TD Provincial Economic Forecast
Provincial economies are performing broadly as expected. Activity is likely to remain subpar across most of Canada, as regional economies continue to absorb the impact of elevated rates. We still see scope for growth outperformances in the Atlantic Region and Prairies, with somewhat weaker expansions likely in Ontario, B.C and Quebec.
The Bank of Canada has begun to normalize its policy rate. However, the process will be gradual, with more significant progress in 2025. By late this year, the U.S. central bank should also be trimming its policy rate, downwardly pressuring Canadian yields and setting the stage for meaningful rate relief. All provinces will benefit, particularly those with the most highly indebted households such as Ontario, B.C., and Alberta.
Falling borrowing costs will also deliver a shot in the arm to Canadian housing markets later in the year, changing the momentum from a spring market that has been subdued. Home sales growth should be particularly sturdy in B.C. and Ontario given pent-up demand, although affordability pressures will limit price gains. In contrast, markets in the Prairies should continue to outperform.
Population growth across the nation continued to balloon over the first quarter of 2024, notably in Alberta, Ontario, and PEI. This may be the last surge before we see population growth rates slowly taper as a result of recently announced policies by the federal government. For now, decent employment gains have not been able to keep pace with the quickly growing labour force, leading to higher unemployment rates across most jurisdictions. We see jobless rates generally peaking by the end of this year before gently pulling back in 2025.
https://economics.td.com/provincial-economic-forecast
Housing Market Monitor: Home sales edged down in May
Summary
Home sales edged down 0.6% between April and May, a fourth consecutive monthly decline.
On the supply side, new listings increased 0.5% from April to May, the fourth advance in five months.
Active listings rose by 4.2% in May, the second consecutive month of growth and the highest level since March 2020. Meanwhile, the number of months of inventory (active listings-to-sales) increased from 4.2 in April to 4.4 in May, a level now back in line with its pre-pandemic level.
Market conditions loosened during the month but remained tighter than their historical average in most provinces. They were balanced in Manitoba and B.C., and softer than average in Ontario.
Housing starts jumped 23.4K in May to 264.5K (seasonally adjusted and annualized), a result well above the median economist forecast calling for a 245.1K print. Urban starts increased by 24.7K (to 246.1K) withs gains in both the multi-family segment (+24.0K to 203.1K) and the single-family segment (+0.8K to 43.0K). Starts increased in Montreal (+14.4K to 28.3K), Toronto (+17.3K to 54.3K), and Calgary (+1.4K to 23.4K), while they decreased in Vancouver (-11.1K to 23.5K). At the provincial level, the most pronounced increases in total starts were registered in Qubec (+19.4K to 59.6K), Ontario (+12.4K to 86.3K), and New Brunswick (+3.5K to 7.0K). Meanwhile, notable decreases were seen in British Columbia (-8.4K to 46.5K) and Manitoba (-4.8K to 3.5K).
The Teranet-National Bank Composite National House Price Index rose by 0.5% from April to May, after seasonal adjustments. Seven of the 11 markets in the composite index were up during the month: Halifax (+1.5%), Hamilton (+1.1%), Calgary (+1.0%), Vancouver (+1.0%), Victoria (+0.8%), Toronto (+0.5%) and Quebec City (+0.5%). Conversely, prices fell in Edmonton (0.7%), Winnipeg (-0.6%) and Ottawa-Gatineau (-0.2%), while they remained stable in Montreal.
https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf