DATE

Steve Saretsky -

https://www.youtube.com/watch?v=N91b1aEbuFo

Steve Saretsky -

Happy Monday Morning! National housing data dropped for the month of February, and there’s a lot to unpack here. Home sales plunged 40% year-over-year in February, coming off a blistering hot market this time last year. When you zoom out further it was the weakest February since 2009. However, there’s a caveat. New listings utterly collapsed, falling to their lowest levels since February 2003. Yes, that’s a 20 year low across the country. That’s not even adjusting for the massive growth in both population and housing stock over the past two decades. Quite simply, home sellers have gone missing. As we mentioned a few weeks ago, there are a few reasons for the lack of new listings: So you’ve got a ten year low in sales and a twenty year low in listings. In other words, zero turnover. A horrible market for Realtors and mortgage brokers, although no need to feel sad for them- the previous two years were fairly generous. The illusiveness of new listings are good for prices. They’re firming up in essentially every market. For the right product, which is basically anything entry level (the only thing people can afford) is moving quickly and often in multiple

Steve Saretsky -

https://www.youtube.com/watch?v=CysYLo4q_qs

Steve Saretsky -

Happy Monday Morning! Central banks finally broke something. After leaving rates hovering near zero for over a decade and engaging in trillions of dollars worth of QE (Quantitative Easing) you can’t simply raise interest rates by 400bps in less than a year without something going boom in the night. It was never a matter of IF, but WHEN. There are more qualified people than me to talk about the Silicon Valley Bank debacle so i’ll keep this brief. Banks are sitting on huge unrealized losses. The bonds they bought at ultra low interest rates were destroyed in price when the Fed jacked interest rates, and bonds are the collateral supporting the entire financial system. For example, a 1% shift higher on a 9 year duration bond is a 9% hit on the bond price. So the Fed’s ability to hike rates was ALWAYs limited to the extent to which banks invested cash wisely. Silicon Valley Bank is not alone. Lots of chatter that the Fed might be done with their rate hiking crusade. Any more bank failures and we’ll be talking about deflation, not inflation. The Bank of Canada has already moved to the sidelines as confirmed last week when

Steve Saretsky -

https://www.youtube.com/watch?v=-qDGWUZOZGc&t=957s

Steve Saretsky -

Happy Monday Morning! Canadian banks reported first quarter earnings this past week. Those earnings provided an important glimpse into what’s shaping the nations housing market. Deep in the footnotes, CIBC reported that $52-billion worth of mortgages – the equivalent of 20% of the bank’s $263-billion residential loan portfolio were in a position where the borrower’s monthly payment was not high enough to cover the interest portion of the loans. The bank has allowed these borrowers to stretch out the length of time it takes to pay off the loan, which is known as the amortization period. As well, borrowers are adding unpaid interest onto their original loan or principal. CIBC isn’t alone. Both TD and BMO also allow mortgages to negatively amortize. Assuming you took out a fixed payment variable rate mortgage at TD, you can allow outstanding interest to be tacked onto the balance of the loan, so long as your loan-to-value ratio does not exceed 80%. In other words, defer any pain resulting from higher interest rates. As a result, amortizations are growing. At TD bank, 25.2% of their residential mortgages now have an amortization of 35 years or greater. A year ago, that number was essentially zero. If you’re

Steve Saretsky -

https://www.youtube.com/watch?v=VZeTnBPqwMo

Steve Saretsky -

Happy Monday Morning! Some good news on the inflation front in Canada this past week. Headline inflation ticked in at 5.9% year-over-year, below market expectations of 6.1%. Inflation in services, which is one of the key figures policymakers are watching, eased to 5.3%, from 5.6% in December. The Bank of Canada’s preferred median and trim inflation measures continue to ease, now running at around 3.5% on a 3-month annualized basis. Progress. Meanwhile, mortgage interest costs in Canada surged 21.2% annually in January, the largest increase since the early 1990’s when the data set was first created. According to the always insightful Ben Rabidoux of North Cover Advisors, rising mortgage interest costs alone added 0.6 percentage points to the headline 5.9% print. In other words, in his pursuit of fighting inflation, Tiff Macklem is actually creating inflation too. Rather ironic, I know. Now for the bad news. While inflation is easing in Canada, it is proving to be more sticky in the US. Prices in the US, according to the Federal Reserve’s preferred metrics, rose 5.4% from a year earlier and the core gauge was up 4.7%, both hotter than forecast after slowing for several months. More importantly, Core PCE (Personal Consumption

Steve Saretsky -

https://www.youtube.com/watch?v=47xKHSG_SHA

Steve Saretsky -

Happy Monday Morning! National housing figures dropped this past week, and it wasn’t pretty. January home sales fell 37% year-over-year, a sharp decline from the blistering hot bull market of January 2022. When you zoom out further, this January was the slowest since 2009. However, balancing this out was a dearth of supply trickling to market. New listings for the month of January came in at their lowest levels since the year 2000. Yes, we just recorded a 23 year low of new listings coming to market. The nations housing market is currently starved of inventory, which is ultimately the largest driver behind the sudden resurgence of multiple offers popping up across the country. A housing market deprived of sales volume is ultimately a big drag on the economy. When houses don’t transact people don’t need lawyers, mortgage brokers, inspectors, contractors, and new furniture, just to name a few. It’s certainly true that the chronic shortage of new inventory coming to market is providing a floor for house prices, although plenty of damage has already been inflicted. National home prices, as measured by the Home Price Index, fell 12.6% year-over-year in January. Since peaking last year, the index is down

Steve Saretsky -

https://www.youtube.com/watch?v=I0-ikySZ4Pw

Steve Saretsky -

https://www.youtube.com/watch?v=BCKJji1E3hY

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The Canadian Economy

Steve Saretsky -

https://www.youtube.com/watch?v=N91b1aEbuFo

Steve Saretsky -

Happy Monday Morning! National housing data dropped for the month of February, and there’s a lot to unpack here. Home sales plunged 40% year-over-year in February, coming off a blistering hot market this time last year. When you zoom out further it was the weakest February since 2009. However, there’s...

Steve Saretsky -

https://www.youtube.com/watch?v=CysYLo4q_qs

Steve Saretsky -

Happy Monday Morning! Central banks finally broke something. After leaving rates hovering near zero for over a decade and engaging in trillions of dollars worth of QE (Quantitative Easing) you can’t simply raise interest rates by 400bps in less than a year without something going boom in the night. It...

Steve Saretsky -

https://www.youtube.com/watch?v=-qDGWUZOZGc&t=957s

Steve Saretsky -

Happy Monday Morning! Canadian banks reported first quarter earnings this past week. Those earnings provided an important glimpse into what’s shaping the nations housing market. Deep in the footnotes, CIBC reported that $52-billion worth of mortgages – the equivalent of 20% of the bank’s $263-billion residential loan portfolio were in a position...

Steve Saretsky -

https://www.youtube.com/watch?v=VZeTnBPqwMo

Steve Saretsky -

Happy Monday Morning! Some good news on the inflation front in Canada this past week. Headline inflation ticked in at 5.9% year-over-year, below market expectations of 6.1%. Inflation in services, which is one of the key figures policymakers are watching, eased to 5.3%, from 5.6% in December. The Bank of...

Steve Saretsky -

https://www.youtube.com/watch?v=47xKHSG_SHA

Steve Saretsky -

Happy Monday Morning! National housing figures dropped this past week, and it wasn’t pretty. January home sales fell 37% year-over-year, a sharp decline from the blistering hot bull market of January 2022. When you zoom out further, this January was the slowest since 2009. However, balancing this out was a...

Steve Saretsky -

https://www.youtube.com/watch?v=I0-ikySZ4Pw

Steve Saretsky -

https://www.youtube.com/watch?v=BCKJji1E3hY

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The Saretsky Report. December 2022