Juggling Dynamite

First quarter new condo sales in the Toronto region dropped to their lowest level since the 2009 financial crisis, with investors balking at lofty purchase prices and higher borrowing costs. See New condo sales in the Greater Toronto Area hit 15-year low:

“It is dead. I would never use words like this, but I am because it is true,” said Simeon Papailias, managing partner with real estate brokerage REC Canada, whose firm sells new condos, also known as preconstruction condos because they have not been built yet.

Mr. Papailias said the industry used to handle an average of 300 preconstruction sales a day. So far this year, there has been an average of 500 preconstruction sales per month.

As sales have plunged, new listings have leapt (chart below with YTD in blue versus other years since 2018). The 229 added last week was the third +200 week in a row—the most since August 2020.

Despite spring market optimism, US Home sales in March posted their most significant decline in more than a year (-4.3% month-over-month–largest monthly decline since November 2022) as 30-year fixed mortgage rates moved back above 7% from just over 6% in early February. See Housing Market Slumps as Mortgage Rates Top 7%. Also, see, This could be the year the home improvement boom fizzles out.

In Canada, where fixed mortgage rates are back above 5%, March home sales and prices were mostly unchanged month-over-month (Canadian Real Estate Association data (CREA). Home sales activity recorded over Canadian MLS® Systems rose just 0.5% between February and March 2024, some 10% below the average of the last ten years (chart below since 2007). While the Bank of Canada is expected to lower its base rate in the second half of this year, Pandemic-era mortgages that were taken out at rock-bottom interest rates are still likely to face higher interest rates at renewal over the next three years.

Oxford Economics forecasts that mortgage payments will increase by another 6% to $156 billion by the end of 2024 and 18% to $173 billion by the end of 2027. This would take mortgage payment’s share of disposable income to a peak of 9.3% by mid-2025–the highest on records going back to 1990 (chart below).

The implications are less money for everything else and a rash of forced asset sales. See, the Pain of Canadians’ Mortgage Rate Shock is not over–not by a long shot:

The hardest hit will be low to medium-income households, which have little spare income, excess pandemic savings or ability to take on more debt.

According to Oxford, these households hold about 45 per cent of the mortgage debt in this country, with higher-income households accounting for 55 per cent.Higher income households, with more disposable income, are obviously better equipped to deal with rising mortgage payments. For less wealthy Canadians, however, these payments are expected to gobble up 10 per cent of disposable income by mid-2025, compared to 8.8 per cent for higher incomes.

Solar energy bombards the earth every day. And, every day, more and more people passively capture it to lower their power costs and move us away from fossil fuels.

Train tracks, roads, car parks, car roofs, cemeteries, building facades… the list of structures getting a solar makeover goes on and on. Humans can be so innovative when we try to be. Plug-and-play systems are affordable and portable when their owners move. See Solar balconies are booming in Germany:

More than 400,000 plug-in solar systems have been installed in Germany, most of them taking up a seamless spot on people’s balconies.

New data shows at least 50,000 of the PV devices were added in the first quarter of 2024 alone. A boom born from Germany’s “very strong solar culture”, in the words of one expert.

Solar balconies are a piece of the wider energy transition across Europe, explains Jan Osenberg, a policy advisor at the SolarPower Europe association.

“We see them as a subset of rooftop solar, but also as something different,” he tells Euronews Green. “We basically see it as a trend to use all possible artificial infrastructure for solar generation.”