Juggling Dynamite

Nationally, the average Canadian home sale price in February 2024 was $719,400, -11.9% from the cycle peak of $816,720 in February 2022.
Year-to-date, sixty percent of homes in the Greater Toronto Area sold below their asking price, 71% in Vancouver, and 48% in Calgary (the trend over the past three years is shown below). The average number of days a property spends on the market in the GTA rose 13.6% over the past year (TREB).
Bidding wars are less common than when interest rates were lower, and conditions like property inspections and financing approvals are once again typical. Still, most markets are considered balanced in terms of sellers and buyers so far, with properties priced to sell seeing offers.  See: Home sellers forced to confront new market realities this spring.

With sales edging down and new listings up 1.6% month over month in February, the national sales-to-new listings ratio was 55.6%. A sales-to-new listings ratio between 45% and 65% is generally considered a market where supply and demand are balanced, with readings above 65% favouring sellers and below 45% favouring buyers.

“If you price your property at what you want and it makes sense in the marketplace, you’re selling within seven days,” he said. “And the main reason for that is there’s such a low inventory out there that buyers don’t want to waste their time with sellers who are playing games. Buyers appreciate sellers who are pricing homes at what makes sense on paper, and are going through with the sale if everything checks out.”

The world produces an average of 430 million metric tons of plastic each year. The United States alone produces tens of millions of tons of plastic waste annually. Yet on average, only about 5 to 6 percent of plastic in the U.S. is recycled. NPR correspondent Michael Copley joins Ali Rogin to discuss a new report on the plastic industry’s tactics to push recycling and avoid regulation. Here is a direct video link.

US commercial real estate prices have declined an average of 33% since early 2020, with a 60% decline in the office sector. Similar trends are unfolding in Canada.

US office loan delinquencies of 30 to 60 days (dark blue below, courtesy of Bespoke) and over 90 days (light blue) have spiked in the past year to levels last seen in 2009.

Delinquencies take some time (and legal process) to translate into motivated sales by owners and lenders. But as price discovery unfolds, other owners and lenders are forced to mark holdings to reflect lowered market values as well.

The segment below discusses the typical contagion impacts of weakness in real estate–the world’s most widely held and leveraged asset class.

Drew McKnight, Fortress Investment Group co-CEO & managing partner, joins ‘Fast Money’ to talk the real estate and banking spaces and why he believes commercial real estate is still a big problem for banks. Here is a direct video link.