Latest news with #NerdWalletCanada
Global News
15-07-2025
- Business
- Global News
Canadian home prices hold steady. How Trump's tariffs could affect recovery
Home prices in Canada held steady for the month of June, while national home sales rose 2.8 per cent, building on a 3.5 per cent rise in May, the Canadian Real Estate Association (CREA) said in newly released data on Tuesday. However, experts say the long-anticipated recovery of Canada's real estate market may be marred by U.S. President Donald Trump's threat of new tariffs. The signs of recovery in the housing market may only be 'psychological,' Clay Jarvis, mortgage expert at NerdWallet Canada, said. 'Since home prices, the cost of living and mortgage rates all remain elevated, the change we've seen in the market has to be psychological. Canadians are exhausted with tariffs, with Trump and with the turmoil they've been subjected to since January,' he said. 'The risks involved with buying a home in the current climate are still there, but buyers seem more willing to move forward rather than spend their days looking over their shoulder,' Jarvis added. Story continues below advertisement While home sales in the Greater Toronto Area rebounded 17.3 per cent since April, nationally the picture is virtually a 'carbon copy' of the sales figures from May, CREA's senior economist Shaun Cathcart said. Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy 'It's another month of data suggesting the anticipated rebound in Canadian housing markets may have only been delayed by a few months, following a chaotic start to the year,' Cathcart said. CREA expects the delayed housing activity to start back up later in the summer or even in the fall as homebuyers who have been waiting on the sidelines look to jump back in. 'If the spring market was mostly held back by economic uncertainty, barring any further big shocks, that delayed activity could very likely surface this summer and into the fall,' CREA chair Valérie Paquin said. In a letter to Prime Minister Mark Carney posted to Truth Social on Friday, Trump threatened a 35 per cent tariff on 'Canadian products sent into the United States, separate from all Sectoral Tariffs.' The new tariff would take effect on Aug. 1. Jarvis said the newest threat could further spook homebuyers. 'The cloud hanging over the economy has gotten a little darker. Sales could maintain their momentum through July, but if there's no progress on a trade deal with the U.S. in the coming weeks, the heightened uncertainty might have home buyers second-guessing themselves in August,' he said. Story continues below advertisement The price of the average home in Canada was $691,643 in June. While this was down 1.3 per cent compared to June last year, it was up compared to May of this year. There were 4.7 months of housing stock on the market, which means that all conditions remaining equal, it would take that long for all homes on the market to sell.
Global News
26-05-2025
- Business
- Global News
The bond market is spooked. This is why you should care
Global economies are on edge as the trade war continues, and there's another sign in financial markets that things may be about to get worse. Demand for bonds worldwide is cooling down quickly as investors appear put off by the outlook for some major governments to be able to maintain their finances, including the United States. 'There's general unease around the U.S. government's fiscal policies, this tariff war, there's a new spending tax bill that people have some serious questions about, and what it's going to do to long-term government finances,' says financial expert Clay Jarvis at NerdWallet Canada. 'So I think those doubts are what's really shaking the bond market.' 0:57 'Weak productivity' making life less affordable for Canadians: Carney What is going on? The U.S. government currently has a debt of just over $32 trillion, and pays a substantial amount of its revenue, mainly from taxes, on interest payments servicing that debt. Story continues below advertisement That debt level is expected to increase after U.S. President Donald Trump's budget bill narrowly approved by the House of Representatives, and set to go to the Senate for a vote next. Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy That bill is poised to offer tax cuts, among other spending plans, which may actually be making the U.S. government's bonds appear less attractive for buyers. If buyers believe the government will be unable to pay down debt, they might feel less inclined to purchase bonds — especially those with longer terms. It's a similar scenario to when a bank denies someone a loan if they have a poor credit score. Recently, billions of dollars' worth of longer term 20-year U.S. government bonds were put to auction to generate more revenue, but they didn't sell as quickly as expected. As a result, the interest rate on those bonds had to be increased to more than five per cent to attract enough buyers, and led credit rating firm Moody's to downgrade those bonds. 'When the bond rating goes down, the interest rate that investors require goes up, and becomes harder for the government to finance itself,' says finance professor Andreas Park at the University of Toronto. 'You either finance the government by raising taxes or by taking on more debt, and if you take on more debt, that just spirals up and up.' Story continues below advertisement In his spending bill, Trump included tax cuts that may actually lead to more government debt. If the deficit continues to sink, then taxes will actually need to increase to pay off the debt or find another source of revenue. The analyst downgrade was one of the main contributing factors which lead to a big sell-off on stock markets last week. 'There has been a lot of concern over the U.S. government's financial position, and maybe it was highlighted by the fact that one of the credit ratings agencies, Moody's, actually took away the AAA rating of the U.S. government,' says chief economist Doug Porter at the Bank of Montreal. 'That's actually the third ratings agency that's decided the U.S. is no longer a AAA-rated entity, and what that's done is put a little bit more upward pressure on long-term interest. In other words, the U.S. government has to pay even more to borrow money.' What does that uncertainty actually mean for economies? That U.S. uncertainty is also part of a bigger international economic picture. Story continues below advertisement Other developed nations are also experiencing rising government debt, meaning government bonds are generally becoming less attractive as safe investment options overall. 'Investors around the world are basically scrambling to decide where to lend their money,' says Porter. 'I think in general, there is concern about government finances, and we've seen not just in the U.S., but in Europe, in Japan, and yes, even Canada, we have seen those long-term interest rates go up.' When government debt rises and more effort goes into paying it down, that can lead to less money being available to spend on services to citizens or on programs that are not viewed as priorities. That can signal more potential pain for consumers, who may decide to pull back on spending plans, said Jarvis. 'It would be maybe a warning sign that a government is engaging in some fiscal decisions that could impact its ability to pay for services or lead it to cut spending on social programs,' he said. Investors can shop around for the best deals if they want to buy bonds and by comparison to the United States, Canada's bond market may be considered a safer option for many. 'Foreign investors are actually still fairly confident in Canada,' says Porter. Story continues below advertisement 'We've got somewhat lower inflation, a weaker economy, but better government finances overall. So all those keep Canadian yields a little bit lower than they are in the U.S.' For Canadians, that uncertainty comes just ahead of the Bank of Canada's next interest rate decision next week, which will impact everything from the cost of mortgages to borrowing costs for bonds. The most recent report from Statistics Canada showed that Canada's inflation outlook may be leaning towards another pause on the rate cycle on June 4.
