Trump appointees have called for a revolutionary deconstruction of the regulatory environment that has for decades favoured a “measured” approach to new technologies
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, January 2nd, 2025
Happy New Year! Looking forward to a busy and prosperous year for all in 2025. The North Vancouver detached and townhouse segments experienced a slightly above-seasonal level of activity with prices not much changed over the past few months. With many listings expiring, the inventory level from which the year will begin is again at very low levels. January is typically a very slow month as well for sales, but if you are planning on selling in the spring, now is the time to begin making your preparations and strategizing how your property is brought to market. The West Vancouver market remains suppressed due to the lack of buyer interest and higher than average inventory levels. Condos in both North and West Vancouver remain under pressure, as new supply hits the market. The pace of new listings across all these segments will be watched closely for clues to the health of the spring market.
Central banks on both sides of the border are shifting to “data-dependent” mode. Any large movements in the mortgage markets are likely to be the result of inflation, unemployment or economic growth data either confirming that past rate cuts have been enough, or more are required to prevent recessions. Currently, markets are pricing in only one 25 point cut in Canada between now and mid-March, whereas in the US the next rate cut isn’t expected to come until May. The bulk of rate cuts have likely come already, and these future expected cuts are largely reflected in the fixed mortgage rates offered by lenders today. Variable rates will continue to decline as the policy rate declines.
Bond yields rise persistently in the US as we approach the Trump inauguration, and the multiple trade policy and foreign policy implications are weighed by traders. Also bearing consideration is the “techno-accelerationist” nature of the new administration on matters pertaining to things like Artificial Intelligence, autonomous vehicles, decentralized finance (DeFi) and the nuclear energy infrastructure needed to supply it all. Trump appointees have called for a revolutionary deconstruction of the regulatory environment that has for decades favoured a “measured” approach to new technologies. Flipping this on its head, of course, comes with a risk to public safety. But to confront China’s technological rise, safety might be the “cost of doing business” to maintain America’s position globally. This type of wartime mentality has the potential to unleash the economy in ways we haven’t seen in our lifetimes. Growth and inflation would be downstream effects of these policies, so rising rates may reflect a trend shift in growth prospects.
The last two weeks of December failed to produce the “Santa Claus Rally” many were expecting in stocks on either side of the border. Still, markets performed admirably in 2024 with total returns above 20%. Global markets did not fare nearly as well. European markets, most Asian markets, Latin American markets (except Argentina), and Australia all underperformed on account of weakening currencies, weakening growth prospects and unstable political situations. How this changes in the face of the above American growth scenario is hard to see. Eventually the valuation discrepancy between US and global stocks will make investing abroad too attractive to pass up. Governments might need to get out of their own way before that ever happens, however. Investing in a Brazilian or Turkish telecom company with a 15% dividend might sound good. But if the currency is being intentionally destroyed, your investment will be negative before long.
Bitcoin has been consolidating its past gains with a modest pullback, flushing out much of the exuberance in the crypto sector. A push to new highs or a “sell the news” reaction to the inauguration remain possible, keeping investments risky for those with short time horizons. Gold made it’s respective high in early October and hasn’t yet surpassed that level just short of $2800. What both gold and bitcoin are telling us is that some kind of monetary realignment may be at hand, and both assets aspire to be a part of it in various parts of the world. Wealth preservation during such volatile times can be difficult and the traditional ways of doing it: indexing, diversifying, rebalancing, etc might backfire on unsophisticated investors. Now is a good time to study and learn about things out of your comfort zone, so you can act with conviction if necessary. 2025 could be a decade that happens in a year.
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.