Canada's population has surpassed 41 million, growing at a rate of approximately 4,000 people per day, equating to nearly 1.5 million per year according to StatCan's realtime tracker. This indicates a significant increase, with 480,000 people added in the past two months alone. If this growth rate persists, it will surpass the federal government’s 2024 target. Historically, a 1.2 million annual growth rate strained housing and infrastructure, and the current trend suggests even more rapid growth, potentially leading to further challenges.

In March, building permits issued fell by 4% monthovermonth, with a 7% decline in singlefamily homes. This trend undermines the federal goal of constructing 3.8 million homes over the next seven years. Although there is currently a strong pipeline of homes under construction, the decline in new permits suggests a potential future shortage, particularly in populous provinces like Ontario and British Columbia. New home completions are at a sevenyear high, but the number of dwellings under construction is declining, indicating fewer new homes will be available in the coming years.

Credit card balances have surged to $106 billion, a 40% increase since 2021, indicating economic stress. Domestic business lending by chartered banks declined for the third consecutive month in March, with the lowest annual loan growth rate in 25 years outside of a recession. While mortgage arrears at major banks remain low, smaller lenders are experiencing higher arrears, particularly among nonprime borrowers. This could foreshadow future challenges for prime borrowers. Housing affordability improved slightly last month, with the average monthly mortgage payment for a typical Canadian home now at $3,225, down $330 from its peak in September 2023. However, this is still double the cost from 2021. The Wall Street Journal reported that foreign investors withdrew $6.2 billion from Canada in Q1, marking the first such divergence in 14 years. In contrast, Canadian investment abroad totaled $30 billion. This trend highlights a decreasing interest from foreign entities in Canadian investments, which could negatively impact GDP and employment.

Canada’s total active housing inventory rose 6.5% in April, with notable increases in British Columbia (43%) and Ontario (58%). Total available listings now stand at 160,000, up from a low of 90,000 in 2022, but still below the peak of 250,000 in 2015. Alberta, however, saw a 20year low in inventory, contributing to recordhigh real estate prices. May's data will be crucial to determine if this inventory spike is an anomaly or the start of a new trend.

A recent comment by Prime Minister Justin Trudeau highlighted the government's inclination to protect housing prices rather than making homes more affordable. This stance is seen as a strategy to maintain voter support and economic stability. Measures such as allowing homeowners to defer mortgage payments during the COVID crisis and extending amortizations during rate hikes illustrate this approach. The housing market is unlikely to see significant price reductions regardless of political changes, as no politician would risk campaigning on lowering home values but rather making them more accessible or affordable to buy.

The next interest rate announcement on June 5th is highly anticipated. Markets expect a modest rate cut of 0.5% in 2024, starting in July, with a longterm outlook of rates decreasing to 3.5% by 2026 and 3% by 2028. A rate of 3% would stabilize the housing and investment landscape, avoiding extreme lows seen during the Global Financial Crisis and the COVID pandemic. The average and median home prices are currently at alltime highs, with the Home Price Index (HPI) at a twoyear high. Despite low sales numbers, the market remains robust with 2,700 sales, marking the fifthhighest total over the past 24 months.


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