Shit Show 2.0

Holy Shit!!!! My 2024 bingo card is getting wild. Normally, a fall budget going 54% OVER TARGET would be breaking news. Headline news. All the news cycle would talk about. But somehow it managed to barely rank 3rd on the top stories of the day. Just when you thought it couldn’t get worse, it always seems to these days.

Now, of course this is all politics, but now it is really getting bad. These stupid politicians are actually putting Canada at risk in the coming months. Canada is quickly losing world respect, and shit like yesterday only makes the slide worse. Below I am going to throw out some points, ideas, and thoughts, and then look at where we go from here.

1. I find it interesting that the Finance Minister released her resignation on X ( formerly Twitter ). Of course she did because it is the only Canadian social media site that doesn’t get censored under her parties rule.
2. Canada faces a lot of economic problems and housing challenges, and we don’t even have a Minister for either of those portfolios right now – how fucking embarrassing is that?
3. Apparently budgets don’t balance themselves, and budgets also don’t present themselves, and so we saw what will go down in history as the absolute worst fiscal update in the history of the world – and rest assured, the world was watching – including a certain President elect that is trying to cash in on everyone else’s misfortunes.
4. Almost all of the mortgage and housing related bills will die now that we won’t likely see the fall economic statement voted on. This will include the advancement of things like CRA income verification linkage, and the longer term mortgage options that were being explored.

The scariest part for me is that Canadian Parliament is now on break until January 27, 2025. Inauguration day is January 20, 2025. DJT made no secret of the fact that one of his first executive orders will be to levy tariffs on Canada and Mexico on day 1. So, just so we are all on the same page here……. Our government is so unserious, they didn’t even change the schedule to ensure the house will be sitting and able to respond. Nope. Trumps tariffs are the largest threat the Canadian economy has faced in years, and our lazy ass politicians can’t even come back to work early to try and save the country. And people wonder why we don’t get taken serious anymore? I really hope DJT was bluffing, because a 25% tariff across the board will absolutely decimate the Canadian economy. Housing will be the least of everyone’s worry at that point.

With all the crap going on, the Canadian dollar just keeps retreating. Today it was lower than anytime since 1998. 27 years ago. If Justin and the boys keep the shit of yesterday up, we will be looking at setting new lows on the currency in the coming months. Currency markets are now easily showing a further decline. No finance minister at the helm, and a power drunk leader don’t exactly make for a strong economy. I feel bad for anyone planning a trip outside Canada in the coming months – the exchange rate is gonna hurt. And, as I have always said, currency markets are great fortune tellers, so they are telling us the worst for the Canadian economy is yet to come. At least in 1994 we had a government that took the sign seriously, but in 2024 I don’t think we have that luxury.

Housing rules. Holy crap. Can we leave rules alone for at least 6 months? Yesterday ( you’d be forgiven for not knowing ) a press release was announced that basically no one in our business can understand. I was driving yesterday and I spent the better part of 8 hours on the phone with a lot of smart people, and no one can make heads or tails of what the fuck is going on with the stress test rules. Do we stress test conventional mortgages or don’t we? No one knows. It’s almost like the government in charge of the rules doesn’t have a clue. No one can tell me, or any of us with any certainty what the rules are. More importantly, will these rules even be in effect by the time we figure them out? Why do we need to flip flop every 6 weeks on big things like this? What is going on at OFSI, Department of Finance, etc? How the hell can something be a great idea one week, and a terrible idea the next? When you change the rules more than the weather you start to lose confidence in a market. Canadian housing has enough going against it, lets not add a regulatory headwind to it, shall we? I would tell this to the Finance Minister and the Housing Minister, but, well, you know……

Good ol’ inflation numbers were released today, and I cannot for the life of me figure out why everyone is doing the happy dance. Below was the headline in the news:

Canada’s inflation rate ticks down to 1.9% in November

Talk about click bait!!! Yes, the HEADLINE inflation number came down in November, but the BOC preferred measures of core inflation, CPI-median and CPI-trim, were unchanged, and the previous month’s data were revised up by a notch. So, the number everyone watches went down, but actual inflation stayed the same, and previous months numbers were revised up. Why is everyone so excited? CPI Median inflation was 2.60% in November, and CPI Trim was 2.70%. Inflation did not go down for the average person!!!!! The only good thing about todays inflation reading was that their was no Twitter post from a certain politician claiming her governments plan is working because inflation went down. Do your own research and do your homework here – inflation is not coming down like you might think. Now, I will be the first to tell you that the December to February reading will come down due to the GST holiday, so don’t be shocked when inflation readings are ( falsely ) low for the next 2 months.

Yields on Canadian bonds have bounced a little off of the floor around 2.79% and rallied up about 15 bps in the last week. As we see political turmoil pick up, don’t be shocked if we see the 5 year get back over the hump of the magical 3% mark. I wouldn’t look for major moves over the coming days as we wind down into the Christmas break, but any major news announcement always has the potential to make markets volatile for a short while. Look for lenders to potentially make some increases to their rates late this week and early next week. Nothing major, but 5 bps is 5 bps, right?

Take some time over the Christmas break to business plan for 2025. Have a plan, have a contingency plan, and have a contingency plan for your contingency plan. Rules will change, political winds will change, and with the ever present threat of DJT South of the border, we will have to be nimble and quick to respond to changes in the political, financial and housing landscape. I imagine 2025 will probably go down as the year of change for everything related to housing. We will see some major developer and builder bankruptcies – especially in GTA and GVA. 2025 will bring a lot of swings in interest rates, in housing prices, and politicians of all stripes will try and throw any and all rules against a wall to see what will stick. We will all be caught up in the cross fire of trying to buy votes in 2025, as housing is a hot topic. Try to stay level headed, keep emotion out of it, and simply go and do the best job you can for your clients. When we can’t even figure out the rules in our own industry, it is a sure thing our clients won’t know. Be the expert to your client, and help them navigate what will become the ever changing landscape.