The Weekly 411:

Today we're covering

💸 Recent Inflation May Delay Expected Rate Cuts Until September

📉 Canada's Pension Funds Lose $170 Billion in Real Estate

😲 Toronto Luxury Condo 'The One' Plummets to 50% of Asking Price

📈 Calgary Homes in High Demand Among New Canadians

🍁 Canadian Population Growth Rate To Fall 75%

Read Time: 3 minutes

💸 Recent Surge in Inflation May Delay Expected Rate Cuts Until September

• May's consumer price index rose 2.9%, exceeding the median estimate of 2.6%. This is the first of two CPI reports before the July 24 rate decision

• Some analysts predict September will likely be the next Bank of Canada rate cut.

• The Bank of Canada's two core inflation measures averaged a 2.85% yearly pace, exceeding the expected 2.7%.

• Mortgage interest costs increased by 23.3% year over year, while rent increased by 8.9%. Grocery prices increased 1.5% year over year, marking the first acceleration since June 2023.

📉 Canada's Pension Funds Lose $170 Billion in Commercial Real Estate

• Canadian pension funds, managing US$1.24 trillion, are experiencing difficulties due to poor real estate investments.

• The Public Sector Pension Investment Board suffered a 16% loss, its worst fiscal year performance since the global financial crisis.

• Investments in office buildings and retail spaces are underperforming and are affected by remote work trends and retail shifts.

Why It Matters: Canadian pension funds are big players in real estate, so their actions affect property values and competition. Their investment choices can signal market trends, like the move away from office buildings. This allows real estate investors to adjust their strategies and potentially find deals when the funds sell off properties.

😲 Toronto Luxury Condo 'The One' Plummets to 50% of Asking Price

• The One, an unfinished 85-storey luxury condo tower in Toronto, is in receivership and up for sale.

• The current asking price is $1.2 billion, but appraisers estimate its market value at around $600 million.

• If no buyer emerges by October, the lending bank may take over the project.

• Over 300 condo buyers are uncertain whether their purchase agreements will be honored.

• If contracts are canceled, buyers would get deposits back but likely won't recover damages through lawsuits.

• The project has faced allegations of mismanagement, including budget failures and delays.

📈 Calgary Homes in High Demand Among New Canadians

• Newcomers to Canada are eager to buy their first home, with 65% planning to do so in the next two years

• Calgary has long been an attractive destination for newcomers due to its affordability compared to Toronto and Vancouver.

• Calgary remains more affordable than Canada's two largest cities, with detached houses in Edmonton available for $500,000 to $600,000.

• This enthusiasm is reflected in Calgary's real estate market, where some international buyers are purchasing homes sight unseen.

🍁 Canadian Population Growth Rate To Fall 75%

• Canada's population growth is set to drop by 75% over the next three years, from 3.1% in 2024 to 0.7% annually.

• The government is capping student and temporary visas to manage this slowdown.

• Recent rapid population growth has strained resources, reducing GDP per capita, productivity, and housing affordability.

• The slowdown will help build the necessary infrastructure and integrate the existing population better.

• The current population growth exceeds projections, reaching 2028 levels in 2024.

🤔 WTF of The Week

Did the developers' preference for more significant properties ultimately backfire? Would they have been more successful if they built smaller and more affordable homes?