🏠 Housing momentum

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Good morning! 🪙 Would you live in a “Bitcoin City”? El Salvador has announced a $1.6 billion investment to develop a crypto-centric metropolis designed to attract global investors. The project would transform the Acajutla and La Union ports into major economic hubs, boosting international trade and modernizing infrastructure.

⏰ Today’s read: 4 ½ minutes

MARKETS

*Stock data as of last market close; currency, oil and crypto data as of 7:00 PM ET August 20th, 2024.

Economy: Canada just saw the $2.15-billion sale of Toronto-based Osisko Mining Inc., which owns one of the world's largest undeveloped gold deposits, to South Africa’s Gold Fields Ltd. Industry experts lamented that the sale reflected a broader trend of foreign acquisitions eroding Canada’s once-dominant mining sector. This pattern, part of a larger wave of globalization, has led to many of Canada’s richest mines being managed by foreign-owned companies, with little growth in the domestic industry over the past decade.

THE BIG STORY

Lagging indicator: Starts paint incomplete picture

The latest housing starts data is out and it’s spectacular.

In July, Canada saw a significant 16% increase. The six-month trend also rose by 3.2%, reflecting ongoing growth in the housing market. But before we pop the champagne, let's look at other indicators, which paint a far less rosy picture.

Developer struggles: Insolvency rates in the real estate sector have surged, nearing levels seen during the global financial crisis, with Canada on track to experience 57% more real estate insolvencies this year compared to 2023. Over the last year alone, more than 200 real estate developments in Canada became insolvent.

Sluggish sales: Major urban areas are in a historic slump. A recent study by Urbanation Inc. revealed that condo sales in the Greater Toronto Hamilton Area (GTHA) hit a 27-year low in the first half of 2024, with just 1,688 units sold in Q2-2024, marking a 66% year-over-year drop and 70% below the 20-year average.

Disconnected: Why such a difference between starts and other data? Starts represent projects that have already gone through the years-long gauntlet of permitting, presales and other hurdles. Presales and insolvencies are indicative of what’s happening right now.

Tapped consumers: While construction costs like materials, fees, labour and more have skyrocketed, there is only so much buyers can afford and that limit is being hit in major urban markets. Developers can’t carry all those costs and must pass them on to buyers. This creates a perfect storm for projects to fail. While many will say the solution to Canada’s housing crisis is to simply build more, that doesn’t ring true when consumers can’t afford the housing being built and builders are unable to make it cheaper.

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NEED TO KNOW

The week's headlines

🧑‍⚕️The Government of Alberta has awarded Clark Builders a construction management contract for the redevelopment of the Red Deer Regional Hospital Centre. With a total investment of $1.806 billion, including $810 million allocated over the next three years, the project will involve constructing a new patient tower and expanding and renovating the existing hospital facilities. 

🚃 The cost of the Surrey-Langley SkyTrain extension has risen by 50% to $5.996 billion, as B.C. officials announced the awarding of all three contracts for the project. Major construction, set to begin this year, marks the first rapid-transit project south of the Fraser River in 30 years.

🚿 Montreal is recovering from a major water main break near the Jacques Cartier Bridge that flooded streets, disrupted traffic, and led to emergency evacuations just before the weekend. The pipe, identified as vulnerable due to corrosion during inspections in 2017 or 2018, burst before further inspections could be conducted. 

☀️ Alberta municipalities are expected to receive over $54 million in tax revenues from solar and wind projects in 2024, a 93% increase from two years ago, according to the Business Renewables Centre-Canada. However, experts remain concerned that the province’s recent pause on renewable development and regulatory uncertainty could jeopardize revenue growth.

PROJECT SPOTLIGHT

Open air

The Muscowpetung Powwow Arbour in Regina is an open-air structure designed to celebrate and preserve Indigenous culture. The Arbour will feature a round timber tripod base, supported by a combination of steel plates, pile caps, grade beams, and concrete piles. It will serve as a hub for strengthening traditions, celebrating culture, and passing knowledge to future generations.

PROJECT UPDATES

New long-term care beds coming to Chilliwack

Cost of Barron Building conversion doubles

$149M Toronto Railpath budget faces criticism

Officials announce Parkland Region highway construction projects

Construction of CO-OP Centre now 55% complete

WHAT WE’RE TALKING ABOUT

LIST: 🏆 VRCA announces Silver Award Winners

READ: How Kalesnikoff pivoted to mass timber

WATCH: 💎 The real problem with ‘Luxury Housing’

READ: 💰 Venture capital investment in Alberta surpasses B.C. 

PHOTOS: 🏗️ An iconic B.C. totem pole is being relocated

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Here’s to a great rest of the week!

Disclaimer: SiteNews is an independently-operated news website. Views expressed are that of the editorial team and are based on publicly available information unless otherwise noted through sponsored content.