1) Canada's economy will continue to under perform the U.S. as growth slows to 1-3/4% in 2019 compared to just over 2% in 2018. For the U.S., this year’s growth will hit about 2.4%.
2) Canada's population growth will lead the G7 by a wide margin. In 2018, Canada’s population was 1.4%, which doubles the 0.7% rate for the U.S. Despite this, however, spending did not rise Per capita GDP growth in Canada this year will under perform most of the G7. Strong (net) immigration accounted for almost half (45%) of Canada’s population increase last year.
3) Canadian consumers are tapped out as debt levels remain high, interest rates edging upward and credit is less readily available. Foreign buying has slowed owing to foreign purchaser taxes and speculation taxes.
4) Most likely, both the Fed and the Bank of Canada will raise their benchmark overnight rate twice this year. With this increases in 2019, consumers will be impacted significantly because they are so heavily exposed to debt. Economists at the Royal Bank estimate that the average household faces a $1,000 hit from rate hikes.
5) Rising interest rates will squeeze government spending with significant debt loads.
6) In contrast to last year, housing in 2019 will not fuel Canada's national economy.
Bottom Line: Sales to new listings will continue to decline. In consequence, the number of completed and unabsorbed units continues to increase.