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Bridge Beat

Mar 9, 2021

Benjamin Tal at the LandPro Conference 2021

Benjamin Tal, Senior Economist at CIBC, had some insights for the development business in Ontario last week at the LandPro Conference.  Here are some of the highlights:

  1. Interest Rates: BOC will not be raising them any time soon.BOC will be following the lead of the Fed in the U.S.The Fed will want to moderate long-term rates and will adjust money supply up or down to maintain the long-term bond rates at a low level. The Canadian dollar currently hovering near $0.80, Mr. Tal feels that it is way overvalued as there will be no interest rate hikes in Canada until the U.S. does so and that won’t happen soon.The BOC will only follow the U.S.The U.S. is also having a huge stimulus package that will stimulate the economy and boost the U.S. dollar over the Canadian one. Finally, Canada is way behind the U.S. on the vaccines.His prediction is the Canadian dollar will fall.
  2. Low-Rise: The (905) market has been exceptionally hot as everyone is aware. The move out of (416) to larger and cheaper homes has been significant. However, price increases have narrowed the gap significantly between (416) and (905).He feels that this is somewhat overblown. The office market will come back in (416) and there will be a move back into offices if not full time, then on a significant basis. People will realize that a 2 hour commute will still be there in part for their existing job or their future job. He expects the (905) demand to soften and prices to stabilize in the (905) low-rise areas.
  3. High Rise in Toronto: Resales have clearly softened because of the lack of demand and the exodus of young people from downtown. He expects this to change as well as noted earlier. In fact, February sales numbers confirm a rebound in (416) condos. In addition, there is significant immigration that is coming once the COVID-19 crisis ameliorates. There are over 400,000 returning Canadians from Hong King and many thousands in other countries that will be seeking accommodation. As well, the immigration numbers do not reflect the at least 60,000 foreign students whose Visas have expired but who are remaining here. Simply put, immigration will be somewhere between 350,000 and 400,000 people in Canada (and a third come to the GTA) and this will drive much of the demand in southern Ontario and the (416) condo market in particular. He, therefore, expects condo resale prices to increase and demand for new condos also to increase with commensurate pricing.
  4. Long-Term Effect of COVID-19: Benjamin considered whether the pandemic was an event or a condition. The financial issues in 2008/2009 he felt were a condition that permeated the market for a much longer period of time and did not go away once the initial financial impact of the financial crash was over. He views COVID-19 as an event which impacts strictly for the period of time it is in effect. In particular, it impacts on low earning jobs which have less of an impact on home buying and condominium buying. In fact, the home buying part of the market has been relatively unscathed in terms of the job losses and that is in part the reason for significant demand for low-rise housing.

He showed pictures of New York City in 1921, one year after the Spanish flu epidemic had subsided after killing over 50,000,000 worldwide.  The city was alive and back to normal.  He expects life here to return to a partial normality within the next year and a burst of jobs in the areas that have suffered.  i.e. hotel and hospitality and restaurants with a pent-up demand for those with all the jobs and income to spend.


There continues to be short-term pain in both the economy and (416) condominium markets (no longer based on February numbers).  In the mid-term to long-term, there will be a significant continued rebound in the (416) condominium market, but (905) will soften.


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