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40 Million Canadians!

The estimated population of Canada has reached 40 million (link to Statistics Canada information). Although reaching that level is not particularly important, it highlights a shift that is somewhat surprising for those of us not paying close attention …

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The estimated population of Canada has reached 40 million (link to Statistics Canada information). Although reaching that level is not particularly important, it highlights a shift that is somewhat surprising for those of us not paying close attention to Canadian statistics. The figure above highlights the increase in Canadian immigration, particularly after the pandemic dip (which reflects the border closing). I have never needed to pay attention to Canadian demographic data before — since population growth was quite slow due to falling rate of births. Although immigration was a source of population growth, it was not too significant. However, population inflows are a factor that cannot be ignored, and they matter for the “Canadian Housing Crisis” debate.

One thing to keep in mind that I believe the series I plotted above includes net international student flows, which are large. The United States made it more difficult for foreign students to enter, and so there was a hefty reallocation into Canadian universities.

(Statistics Canada has an interactive dashboard of population statistics here, for people who want to take a look at the data presented in way better than I have time to do.)

Housing Bubble (or Not?)


This leads into the status of the Canadian Housing Bubble. Researchers at the Dallas Fed have created a database of international house prices, and I have seen people plot the same chart multiple times, comparing the house price to income ratio of Canada versus the United States. The chart looks crazy, but I believe that it is missing some context. All the versions that I have seen have dumped multiple countries into the same chart, I have instead just shown Canada. I have not had time to look at the data, but it seems consistent with other data that I have seen. (One of the problems with Canadian data is the limited availability of housing data.)

  • The top panel shows nominal house prices (according to whatever series they used) and nominal disposable incomes. I have rebased both series to 100 in the first quarter of 2000, for reasons to be explained. The immediate problem with these data is that they are indices, while the sensible initial comparison is nominal house prices to nominal incomes.
  • The bottom panel shows the ratio of the two indices (rebased to 100). Since this is a ratio of an index to an index, its level has no economic significance; all we can so is see whether it is rising or falling.
  • I chose 2000 as the rebase point because that is roughly when Canadian house prices took off, forming a hockey stick chart. (The house price data chosen by the Fed researchers puts the hockey stick somewhat later.) However, that level was not a “fair value”: house prices in Canada (outside of a few localities) was cheap. Winnipeg and Montreal (the two cities I have mainly lived in) essentially saw no nominal house price between 1980 and the mid 1990s (working from memory on the CREA house price series that I no longer have access to). We bought our first house (a 3 bedroom townhouse) in Montreal at the end of 1998 at a price that was about 150% of the median Canadian after-tax household income. I believe that a closet in London (England, not Ontario) would have cost about the same at that time at the prevailing exchange rates.
  • The cheapness is not obvious in the chart above, but one may see that the bottom panel ratio shows it is roughly the same in 2000 as in 1980 — and interest rates were considerable higher in 1980.
  • Real estate is local, and there were two large pockets of high house prices — Vancouver (and Victoria) and Toronto. Vancouver is easily understood — it is one of the few places in Canada where old people are not risking hip injuries stepping outside of their homes in January, and construction is confined to a handful of valleys amidst a mountain range. Vancouver house prices have been notoriously (relatively) expensive since the 1970s. Toronto has more open space around it, and what has happened there is that people have been forced to commute longer and longer distances to the city centre. It is not surprising that house prices close to Canada’s financial centre are high. Both Toronto and Vancouver had a condo bubble and bust in the early 1990s (coinciding with one in the United States).
  • The hockey stick after 1998 was the result of the progressive loosening of mortgage insurance standards. (All mortgages with loan-to-value above 80% must have mortgage insurance, which must conform to a minimum standard.) This loosening allowed the rest of the country to emulate the experience of the United States where subprime lending became a force in the early 1990s, and also put more fuel into the Toronto and Vancouver markets (which bumped into maximum mortgage sizes).

The above background is aimed at the chart that I have seen reproduced multiple times that allegedly indicated that Canadian house prices were more “overvalued” than American in the mid-1990s. Putting aside Toronto and Vancouver, that was not true until the American housing market broke in the Financial Crisis.

I have been bearish on Montreal house prices since the mid-1990s, and I was concerned after 2010 with what I saw as excessive construction and the collapse in lending standards for mortgage insurance. However, the lending standards were tightened, and the immigration wave blew my “excessive construction” fears completely out of the water.

Grab Bag of Comments

  • If one wants to dig into the state of the Canadian housing market, one needs to look into metrics of borrower vulnerability. That has been a topic on policymakers’ minds since the Financial Crisis, and there is now more data available. I have not had time to dig into these new data sources.
  • Housing bears need to learn to be patient. As long as the labour market is in decent shape, nothing interesting is going to happen. My concern has always been that there will be a nasty self-reinforcing feedback loop: the high level of employment in construction means that if the housing market tanks, it feeds into the labour market. However, that has not happened, and the immigration wave has been enough to absorb any excess supply.
  • There are pockets of silliness, possibly buoyed by dubious cash inflows from overseas. However, this is a story aimed at condo markets in some city centres, and we could just end up with a localised blow up (as in the early 1990s).
  • I find that analysts spend too much time worrying about house prices. Unless you are buying or selling a property, the important concerns for housing economics are debt service and construction activity. What I am seeing locally is that there is such a backlog of construction and renovation projects that there is limited sensitivity to house prices.
  • As for the drop in house prices at the end of the chart, I looked at the Teranet-National Bank House Price Index™️ and I see a roughly 10% round trip up then down from 2021 to 2022 to present. This is not incredibly surprising given the behaviour of interest rates over this period. Although the chart looks ominous, in the absence of another rate hike campaign, a “sideways correction” is an entirely plausible outcome. Conditions were unusual and 2022 and they unwound — which does not necessarily lead into “the bubble is popped and the housing market is taking the express elevator down!”
  • Rising interest rates creates a strain on household finances — particularly since the longest period interest rates can be locked in practice is 5 years. However, a spike has already happened, and the Bank of Canada is well aware of this vulnerability on a forward-looking basis.

Ever since the Financial Crisis, there has been periodic excitement raised by foreign analysts predicting the collapse of the Canadian housing market. Unless the business cycle is upended elsewhere, I would remain cautious.


Email subscription: Go to https://bondeconomics.substack.com/ 

(c) Brian Romanchuk 2023

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There will soon be one million seats on this popular Amtrak route

“More people are taking the train than ever before,” says Amtrak’s Executive Vice President.

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While the size of the United States makes it hard for it to compete with the inter-city train access available in places like Japan and many European countries, Amtrak trains are a very popular transportation option in certain pockets of the country — so much so that the country’s national railway company is expanding its Northeast Corridor by more than one million seats.

Related: This is what it's like to take a 19-hour train from New York to Chicago

Running from Boston all the way south to Washington, D.C., the route is one of the most popular as it passes through the most densely populated part of the country and serves as a commuter train for those who need to go between East Coast cities such as New York and Philadelphia for business.

Veronika Bondarenko captured this photo of New York’s Moynihan Train Hall. 

Veronika Bondarenko

Amtrak launches new routes, promises travelers ‘additional travel options’

Earlier this month, Amtrak announced that it was adding four additional Northeastern routes to its schedule — two more routes between New York’s Penn Station and Union Station in Washington, D.C. on the weekend, a new early-morning weekday route between New York and Philadelphia’s William H. Gray III 30th Street Station and a weekend route between Philadelphia and Boston’s South Station.

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According to Amtrak, these additions will increase Northeast Corridor’s service by 20% on the weekdays and 10% on the weekends for a total of one million additional seats when counted by how many will ride the corridor over the year.

“More people are taking the train than ever before and we’re proud to offer our customers additional travel options when they ride with us on the Northeast Regional,” Amtrak Executive Vice President and Chief Commercial Officer Eliot Hamlisch said in a statement on the new routes. “The Northeast Regional gets you where you want to go comfortably, conveniently and sustainably as you breeze past traffic on I-95 for a more enjoyable travel experience.”

Here are some of the other Amtrak changes you can expect to see

Amtrak also said that, in the 2023 financial year, the Northeast Corridor had nearly 9.2 million riders — 8% more than it had pre-pandemic and a 29% increase from 2022. The higher demand, particularly during both off-peak hours and the time when many business travelers use to get to work, is pushing Amtrak to invest into this corridor in particular.

To reach more customers, Amtrak has also made several changes to both its routes and pricing system. In the fall of 2023, it introduced a type of new “Night Owl Fare” — if traveling during very late or very early hours, one can go between cities like New York and Philadelphia or Philadelphia and Washington. D.C. for $5 to $15.

As travel on the same routes during peak hours can reach as much as $300, this was a deliberate move to reach those who have the flexibility of time and might have otherwise preferred more affordable methods of transportation such as the bus. After seeing strong uptake, Amtrak added this type of fare to more Boston routes.

The largest distances, such as the ones between Boston and New York or New York and Washington, are available at the lowest rate for $20.

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The next pandemic? It’s already here for Earth’s wildlife

Bird flu is decimating species already threatened by climate change and habitat loss.

I am a conservation biologist who studies emerging infectious diseases. When people ask me what I think the next pandemic will be I often say that we are in the midst of one – it’s just afflicting a great many species more than ours.

I am referring to the highly pathogenic strain of avian influenza H5N1 (HPAI H5N1), otherwise known as bird flu, which has killed millions of birds and unknown numbers of mammals, particularly during the past three years.

This is the strain that emerged in domestic geese in China in 1997 and quickly jumped to humans in south-east Asia with a mortality rate of around 40-50%. My research group encountered the virus when it killed a mammal, an endangered Owston’s palm civet, in a captive breeding programme in Cuc Phuong National Park Vietnam in 2005.

How these animals caught bird flu was never confirmed. Their diet is mainly earthworms, so they had not been infected by eating diseased poultry like many captive tigers in the region.

This discovery prompted us to collate all confirmed reports of fatal infection with bird flu to assess just how broad a threat to wildlife this virus might pose.

This is how a newly discovered virus in Chinese poultry came to threaten so much of the world’s biodiversity.

H5N1 originated on a Chinese poultry farm in 1997. ChameleonsEye/Shutterstock

The first signs

Until December 2005, most confirmed infections had been found in a few zoos and rescue centres in Thailand and Cambodia. Our analysis in 2006 showed that nearly half (48%) of all the different groups of birds (known to taxonomists as “orders”) contained a species in which a fatal infection of bird flu had been reported. These 13 orders comprised 84% of all bird species.

We reasoned 20 years ago that the strains of H5N1 circulating were probably highly pathogenic to all bird orders. We also showed that the list of confirmed infected species included those that were globally threatened and that important habitats, such as Vietnam’s Mekong delta, lay close to reported poultry outbreaks.

Mammals known to be susceptible to bird flu during the early 2000s included primates, rodents, pigs and rabbits. Large carnivores such as Bengal tigers and clouded leopards were reported to have been killed, as well as domestic cats.

Our 2006 paper showed the ease with which this virus crossed species barriers and suggested it might one day produce a pandemic-scale threat to global biodiversity.

Unfortunately, our warnings were correct.

A roving sickness

Two decades on, bird flu is killing species from the high Arctic to mainland Antarctica.

In the past couple of years, bird flu has spread rapidly across Europe and infiltrated North and South America, killing millions of poultry and a variety of bird and mammal species. A recent paper found that 26 countries have reported at least 48 mammal species that have died from the virus since 2020, when the latest increase in reported infections started.

Not even the ocean is safe. Since 2020, 13 species of aquatic mammal have succumbed, including American sea lions, porpoises and dolphins, often dying in their thousands in South America. A wide range of scavenging and predatory mammals that live on land are now also confirmed to be susceptible, including mountain lions, lynx, brown, black and polar bears.

The UK alone has lost over 75% of its great skuas and seen a 25% decline in northern gannets. Recent declines in sandwich terns (35%) and common terns (42%) were also largely driven by the virus.

Scientists haven’t managed to completely sequence the virus in all affected species. Research and continuous surveillance could tell us how adaptable it ultimately becomes, and whether it can jump to even more species. We know it can already infect humans – one or more genetic mutations may make it more infectious.

At the crossroads

Between January 1 2003 and December 21 2023, 882 cases of human infection with the H5N1 virus were reported from 23 countries, of which 461 (52%) were fatal.

Of these fatal cases, more than half were in Vietnam, China, Cambodia and Laos. Poultry-to-human infections were first recorded in Cambodia in December 2003. Intermittent cases were reported until 2014, followed by a gap until 2023, yielding 41 deaths from 64 cases. The subtype of H5N1 virus responsible has been detected in poultry in Cambodia since 2014. In the early 2000s, the H5N1 virus circulating had a high human mortality rate, so it is worrying that we are now starting to see people dying after contact with poultry again.

It’s not just H5 subtypes of bird flu that concern humans. The H10N1 virus was originally isolated from wild birds in South Korea, but has also been reported in samples from China and Mongolia.

Recent research found that these particular virus subtypes may be able to jump to humans after they were found to be pathogenic in laboratory mice and ferrets. The first person who was confirmed to be infected with H10N5 died in China on January 27 2024, but this patient was also suffering from seasonal flu (H3N2). They had been exposed to live poultry which also tested positive for H10N5.

Species already threatened with extinction are among those which have died due to bird flu in the past three years. The first deaths from the virus in mainland Antarctica have just been confirmed in skuas, highlighting a looming threat to penguin colonies whose eggs and chicks skuas prey on. Humboldt penguins have already been killed by the virus in Chile.

A colony of king penguins.
Remote penguin colonies are already threatened by climate change. AndreAnita/Shutterstock

How can we stem this tsunami of H5N1 and other avian influenzas? Completely overhaul poultry production on a global scale. Make farms self-sufficient in rearing eggs and chicks instead of exporting them internationally. The trend towards megafarms containing over a million birds must be stopped in its tracks.

To prevent the worst outcomes for this virus, we must revisit its primary source: the incubator of intensive poultry farms.

Diana Bell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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This is the biggest money mistake you’re making during travel

A retail expert talks of some common money mistakes travelers make on their trips.

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Travel is expensive. Despite the explosion of travel demand in the two years since the world opened up from the pandemic, survey after survey shows that financial reasons are the biggest factor keeping some from taking their desired trips.

Airfare, accommodation as well as food and entertainment during the trip have all outpaced inflation over the last four years.

Related: This is why we're still spending an insane amount of money on travel

But while there are multiple tricks and “travel hacks” for finding cheaper plane tickets and accommodation, the biggest financial mistake that leads to blown travel budgets is much smaller and more insidious.

A traveler watches a plane takeoff at an airport gate.

Jeshoots on Unsplash

This is what you should (and shouldn’t) spend your money on while abroad

“When it comes to traveling, it's hard to resist buying items so you can have a piece of that memory at home,” Kristen Gall, a retail expert who heads the financial planning section at points-back platform Rakuten, told Travel + Leisure in an interview. “However, it's important to remember that you don't need every souvenir that catches your eye.”

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According to Gall, souvenirs not only have a tendency to add up in price but also weight which can in turn require one to pay for extra weight or even another suitcase at the airport — over the last two months, airlines like Delta  (DAL) , American Airlines  (AAL)  and JetBlue Airways  (JBLU)  have all followed each other in increasing baggage prices to in some cases as much as $60 for a first bag and $100 for a second one.

While such extras may not seem like a lot compared to the thousands one might have spent on the hotel and ticket, they all have what is sometimes known as a “coffee” or “takeout effect” in which small expenses can lead one to overspend by a large amount.

‘Save up for one special thing rather than a bunch of trinkets…’

“When traveling abroad, I recommend only purchasing items that you can't get back at home, or that are small enough to not impact your luggage weight,” Gall said. “If you’re set on bringing home a souvenir, save up for one special thing, rather than wasting your money on a bunch of trinkets you may not think twice about once you return home.”

Along with the immediate costs, there is also the risk of purchasing things that go to waste when returning home from an international vacation. Alcohol is subject to airlines’ liquid rules while certain types of foods, particularly meat and other animal products, can be confiscated by customs. 

While one incident of losing an expensive bottle of liquor or cheese brought back from a country like France will often make travelers forever careful, those who travel internationally less frequently will often be unaware of specific rules and be forced to part with something they spent money on at the airport.

“It's important to keep in mind that you're going to have to travel back with everything you purchased,” Gall continued. “[…] Be careful when buying food or wine, as it may not make it through customs. Foods like chocolate are typically fine, but items like meat and produce are likely prohibited to come back into the country.

Related: Veteran fund manager picks favorite stocks for 2024

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