The Two Minute Market Update is intended to keep readers apprised of what’s going on in local real estate markets and in the global financial markets that affect real estate via inflation, interest rates, capital flows and public policy. It is best suited for those not able to keep up with all the news every day, but still wanting to be informed.
Two Minute Market Update, July 30th, 2024
The trend from the past month has continued with the pace of new listings far exceeding that of sold properties. Sales are occurring in primarily two categories: properties priced under $2 million but which are livable or require only modest improvements prior to occupancy. These properties are oftentimes selling slightly under their already reasonable list prices. Properties in the $2.5-3.2 million price range which are either new or in very good condition and come with some feature that is hard to replicate with other properties. Sellers that are “aspiring” to a sale price that may have been attainable in the past few years are simply not finding buyers.
The Bank of Canada did indeed cut rates a second time on July 24th, and bank prime rates and variable rates have followed them lower. As the economic data comes in on both sides of the border, odds of another cut in Canada and one in the US are also growing (albeit not likely at all for tomorrow’s Fed decision). This has been pushing the available best fixed rate mortgages below 4.5%. Rates under 4% could conceivably be available before the end of the year, which is considerably below the consensus forecast of just a few months ago. This may be sufficient to move the needle for buyers that are capitalized well enough to take advantage.
Both Canadian and US government bond yields are hitting new yearly lows. So far the decline in yields has not been resulting in a corresponding drop in the currencies of either, meaning that the sustainability of the movement is being weighed and not necessarily unwelcomed.
Sector rotation has continued with major indexes like the S&P 500 and Nasdaq down 5 and 8.5% from their recent all-time highs, yet the smaller cap indexes like the Russell 2000 and even the Canadian TSX sitting near their highs. This is, again, constructive especially during the summer months which are typically lower in liquidity. Unless the corrections become more dramatic and start to result in some “blood in the streets”, traders and investors are likely to be positioning themselves for a bullish fall during the election cycle (circus?)
Bitcoin has been grinding it’s way higher as well, yet suffering minor liquidations at times that are keeping it from hitting new all-time highs. Several high profile figures have been talking favourably about ensuring the US embraces the technology, which should continue in the coming months as policy and legislation is announced that could further ingrain bitcoin into the financial system. Oil has been lagging due to economic concerns and the precious metals continue to trade rangebound.
Matthew Stiles
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Disclaimer: The information provided in this column is for general informational purposes only and does not constitute financial, investment, or other professional advice. While I strive to provide accurate and up-to-date information, I make no warranties or representations as to its accuracy, completeness, or reliability. Any actions taken based on this information are at your own risk. Always consult with a qualified financial advisor before making any investment decisions.