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Briefing highlights

  • Home price forecast
  • Stocks, loonie, oil at a glance
  • OECD trims outlook
  • Huawei slams U.S. for ‘bullying’
  • Home Depot misses estimates
  • Required Reading

Home price forecast

Some economists say Canada's housing market may now have hit bottom after the slowdown engineered by policy makers.

And by many accounts, those policies appear to have done the trick, with a soft landing rather than a crash.

"After more than two years of decline, sales in the resale market appear to have reached bottom," said Andres Carbacho-Burgos, lead housing economist at Moody's Analytics.

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Royal Bank of Canada senior economist Robert Hogue agreed, commenting on the latest Canadian Real Estate Association report, which showed sales on the upswing in April for a second consecutive month.

"The 3.6-per-cent month-over-month advance isn’t an ‘all-clear’ signal for the market but strongly suggests that the cyclical bottom has been reached," Mr. Hogue said.

“Activity climbed above year-ago levels for the first time since December, 2017.”

This comes after provincial measures in British Columbia and Ontario, aimed at cooling the Vancouver and Toronto area markets, and new mortgage-qualification stress tests brought in by the federal bank regulator in early 2018 to head off a debt bomb.

What many homeowners and potential buyers want to know now, of course, is where things could go from here if we've hit bottom.

Here's the view from Moody's Analytics, sister company of the credit rating agency:

"With the direct and indirect effects of monetary tightening, house price appreciation will slow down in 2020, turn briefly negative in 2021, and only recover in the following years," Mr. Carbacho-Burgos said in his report.

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"Over the coming year, only Montreal will have moderate house price appreciation compared with the other large metro areas, but in subsequent years there will be a partial recovery, with Toronto doing somewhat better," he added.

"Vancouver house prices will dip over the next year, and the metro area will be lucky to maintain level prices through 2024 given how overvalued house and apartment prices are currently."

Here's how Moody's sees home prices playing out across Canada over the next several years, basing its findings on RPS Real Property Solutions data:

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Markets at a glance

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OECD trims forecasts

The Organization for Economic Co-operation and Development now sees Canada’s economy expanding by just 1.3 per cent this year, with global growth at 3.2 per cent.

The new forecasts released today are revised down from its earlier projections in March.

The OECD also projects Canada’s economic growth to perk up next year to 2 per cent, with world growth at 3.4 per cent.

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“The outlook identifies continuing trade tensions as the principal factor weighing on the world economy,” the OECD said, projecting global trade will expand by just over 2 per cent this year, or the slowest pace in 10 years.

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Ticker

Huawei slams U.S.

From Reuters: Chinese telecoms equipment maker Huawei called itself the victim of U.S. “bullying” and said it was working with Google to counter trade restrictions imposed by Washington last week.

Home Depot misses estimates

From Reuters: Home Depot Inc. reported its slowest growth in quarterly same-store sales in at least three years and missed Wall Street estimates, as the home improvement chain was hurt by poor weather in February and a steep fall in lumber prices.

CPPIB invests in Premium Brands

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From The Canadian Press: The Canada Pension Plan Investment Board is investing about $200-million in specialty food company Premium Brands Holdings Corp.

Required Reading

Banks to report

Canadian bank stocks are lagging the S&P/TSX Composite Index this year amid concerns about slumping home sales, rising loan losses and a deteriorating outlook for the Canadian economy. That, writes investment reporter David Berman, adds to the importance of the banks’ second quarter financial results, which kick off this week.

Weight Watchers opening Toronto operation

Weight Watchers International Inc. is opening a technology operation in downtown Toronto, drawn to the city’s flourishing innovation sector as it attempts to make itself over into a digitally driven lifestyle and wellness company. Technology writer Sean Silcoff reports.

Meet this analyst

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Investment reporter Tim Shufelt introduces readers to the Canadian analyst who thinks Warren Buffett has lost his touch (and who Berkshire refuses to invite to its annual meeting).

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