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Canadian Housing is Being Propped Up by Just One City [Chart]

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Canadian Housing is Being Propped Up by Just One City [Chart]

Canadian Housing is Being Propped Up by Just One City

Without Vancouver’s gains, the market would have dipped -1.1% in February 2016

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

“Markets can remain irrational longer than you can remain solvent.” – John Maynard Keynes

The last time we gave a good run down of Canada’s housing market was in May 2015, when we noted that The Economist gave it the dubious title of the most overvalued housing market in the world. Since then, in just 10 months, prices in Vancouver and Toronto have soared to marks that are 14.1% and 8.7% higher respectively.

Frothy prices, million-dollar shacks, and buying frenzies have prompted world-class short-sellers to come out of the woodwork. For a speculator such as Marc Cohodes, who advises hedge funds on Wall Street that want to bet against the Canadian housing market, this type of classic bubble behavior is music to his ears.

“The cross currents are beyond crazy in Vancouver — it’s a mix of money laundering, speculation, low interest rates,” says Cohodes, who was once profiled as Wall Street’s highest-profile short-seller by the New York Times. “A house is something you live in, but in Vancouver you guys are trading them like the penny stocks on Howe Street.”

Mr. Cohodes has recently said that Canadian real estate has reached “peak insanity”, and it’s part of the reason that investors around the world are trying to find a way to bet against the market.

Home Capital Group, one of Canada’s largest financial institutions, was one of the most-shorted stocks last year on Canadian exchanges. The same alternative mortgage lender recently also came under scrutiny for suspending 45 of its brokers for falsifying borrower income.

Dominos Falling

Just as falling oil prices helped to drag the Canadian dollar down, the “lower for longer” price environment for crude has had a similar effect on house prices in the Prairies. Homes in Fort McMurray, the epicenter of the Canadian oil sands, have crashed an average of $117,000 in just a year.

Meanwhile, price tags in the once-strong housing market of Calgary have declined from their peak in October 2014 by -5.4%. The city, which is a financial center for Canadian energy, is bracing for a particular tough year ahead as well. Houses are spending more time on the market, and sales volume and prices continue to fall.

But it’s not just Canada’s oilpatch that is starting to see the writing on the wall. Toronto, which has helped to buoy the rest of the country’s housing growth for years, has also started to cool down.

According to the Teranet – National Bank House Price Index, prices have risen just 0.3% since October in Canada’s largest real estate market. With the prospect of rising interest rates in the future, it’s not expected to heat back up, either. In fact, TD Bank expects that Toronto will have a “moderate” decline in 2017.

And Then There was One…

For investors bullish on near-term gains in Canada’s housing sector, there is one last hope that resides on the West Coast.

Vancouver’ housing market sailed again in February, shooting up a record 3.2% in just one month. This is the best month for the market since August 2006. It was so good, in fact, that it single-handedly propped up Canada’s national index for housing.

Canada’s market as a whole saw gains of 0.6% in the month, but it would have dropped to a lacklustre -1.1% without the inclusion of Vancouver in the 11-city index.

The only problem?

The city, which has been a primary beneficiary of rampant foreign buying, is continually cited as the market most ripe for a deep correction, as it continues to defy all common sense.

While Keynes is right in that markets can remain irrational for longer than one can stay solvent, it seems that Canadian housing has turned a corner: regional markets in other parts of the country have stumbled, and the last remaining pillar is Vancouver.

It may continue to buck the trend for now, but it is a wobbly pillar at best.

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Energy

All the World’s Coal Power Plants in One Map

Today’s interactive map shows all of the world’s coal power plants, plotted by capacity and carbon emissions from 2000 until 2018.

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All The World’s Coal Power Plants in One Map

The use of coal for fuel dates back thousands of years.

Demand for the energy source really started to soar during the Industrial Revolution, and it continues to power some of the world’s largest economies today. However, as the clean energy revolution heats up, will coal continue to be a viable option?

Today’s data visualization from Carbon Brief maps the changing number of global coal power plants operating between 2000 and 2018. The interactive timeline pulls from the Global Coal Plant Tracker’s latest data and features around 10,000 retired, operating, and planned coal units, totaling close to 3,000 gigawatts (GW) of capacity across 95 countries.

On the map, each circular icon’s size represents each plant’s coal capacity in megawatts (MW). The data also highlights the type of coal burned and the CO₂ emissions produced as a result.

A Precarious Power Source

Throughout its history, coal has been used for everything from domestic heating and steel manufacturing, to railways, gas works, and electricity. The fuel played a pivotal role in powering economic development, and had a promising future with a flurry of plant openings.

However, in 2016, coal output dropped by 231 million tons of oil equivalent (Mtoe). Combined with a rapid slowdown of new plants being built, total coal units operating around the world fell for the first time in 2018.

With the remaining fleet of plants operating fewer hours than ever, plant closures have been triggered in South Africa, India, and China—steadily eroding coal’s bottom line. Industry trends have also forced a wave of coal companies to recently declare bankruptcy, including giants such as Peabody Energy and Alpha Natural.

Can Coal Compete with Clean Energy?

Today, coal is experiencing fierce competition from low-priced natural gas and ever-cheaper renewable power—most notably from wind and solar. Further, solar power costs will continue to decline each year and be cut in half by 2020, relative to 2015 figures.

chart

Source: Lazard

Natural gas surpassed coal as America’s #1 power source in 2016, with the total share of power generated from coal tumbling from 45% in 2010 to 28% in 2018. By next year, the role of coal is expected to be further reduced to 24% of the mix.

On the interactive visualization, the decline of coal is especially evident in 2018 as plant closures sweep across the map. The chart shows how several countries, notably China and India, have been closing many hundreds of smaller, older, and less efficient units, but replacing them with larger and more efficient models.

As of today, China retains the largest fleet of coal plants, consuming a staggering 45% of the world’s coal.


Use the above slider to see the difference between China’s coal plants in 2000 with projected future capacity.

Towards a New Reality

Coal is the most carbon intensive fossil fuel, and for every tonne of coal burned there are approximately 2.5 tonnes of carbon emissions. The International Energy Agency states that all unabated coal must be phased out within a few decades if global warming is to be limited.

Despite these warnings, global coal demand is set to remain stable for the next five years, with declines in the U.S. and Europe offset by immediate growth in India and China. The latter are the main players in the global coal market, but will eventually see a gradual decline in demand as they move away from industrialization.

A total phaseout of unabated coal is planned by 14 of the world’s 78 coal-powered countries, with many of these countries working to convert coal capacity to natural gas.

As the price of premium solar generation drops steadily, and innovation in renewable energy technology becomes more prominent, the world is shifting its attention to a clean energy economy. A global revival of coal looks less and less likely—and the fossil fuel might very well one day become obsolete.

Editor’s Note: The map uses WebGL and will not work on some older browsers. The map may also fail to load if you are using an ad-blocking browser plugin.

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Cannabis

The Big Pharma Takeover of Medical Cannabis

The Big Pharma industry is entering the cannabis space, by swapping patients for patents. But what are the impacts of such a takeover?

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The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless companies.

Today’s infographic comes to us from CB2 Insights, and explores how and why the notorious Big Pharma are interested in the nascent cannabis industry.

Who are “Big Pharma”?

The term refers to some of the largest pharmaceutical companies in the world, considered especially influential as a group. To give a sense of their sheer size, the market cap of the top 10 Big Pharma companies is $1.7 trillion—Johnson & Johnson being the largest, with a market capitalization of $374 billion.

So far, Big Pharma has watched the cannabis industry from the sidelines, deterred by regulatory concerns. What we are seeing now is the sleeping giant’s takeover slowly intensifying as more patents, partnerships, and sponsored clinical trials come to fruition.

Could Cannabis be Sold Over the Counter?

The cannabis plant has been used in medicine for 6,000 years. However, there is still considerable debate around the role it plays in healthcare today. There are currently almost 400 active and completed clinical trials worldwide surrounding cannabidiol (CBD), a type of cannabinoid that makes up 40% of the cannabis plant’s extract.

Cannabis relies on CBD’s therapeutic properties, and recent studies suggest it may be useful in combating a variety of health conditions, such as:

  • Epilepsy
  • Schizophrenia
  • Multiple sclerosis
  • Migraines
  • Arthritis
  • Cancer side effects

As of 2019, 33 states and the District of Columbia have legalized cannabis for medical use. Its potential for pain management has led some experts to recommend it as an alternative to addictive painkillers, with one study of 13 states showing opiate-related deaths decreasing by over 33% in the six years since medical cannabis was legalized.

As the industry evolves, data is becoming increasingly important in understanding the potential of cannabis—both as a viable medical treatment, and as a recreational product. The shift away from anecdotal evidence towards big data will inform future policies, and give rise to a new era of consumer education.

Big Pharma’s Foray into Cannabis

Further legalization of cannabis will challenge Big Pharma’s bottom line, and poach more than $4 billion from pharma sales annually. In fact, medical cannabis sales are projected to reach $5.9 billion in 2019, from an estimated 24 million patients.

Seven of Canada’s top 10 cannabis patent holders are major multinational pharmaceutical companies, a trend that is not unique to Canada.

Company Rank🇨🇦 Canadian PatentsCompany Rank🇺🇸 U.S. Patents
1. Novartis211. Abbvie59
2. Pfizer142. Sanofie39
3. GW Pharmaceuticals133. Merck35
4. Ericsson134. Bristol-Myers Squibb34
5. Merck115. GW Pharmaceuticals28
6. Solvay Pharmaceuticals76. Pfizer25
7. Kao Corporation77. Hebrew University of Jerusalem19
8. Ogeda SA78. Roche17
9. Sanofi69. University of Connecticut16
10. University of Connecticut610. U.S. Health and Human Services13

It comes as no surprise that many pharmaceutical giants have already formed strong partnerships with cannabis companies, such as Novartis and Tilray, who will develop and distribute medical cannabis together in legal jurisdictions around the world.

Data is the Missing Link

While the body of knowledge about the many uses of cannabis continue to grow, clinical evidence is key for widespread adoption.

Products backed by data will be a defining criteria for major companies to come into the market en masse. And ultimately, Big Pharma’s entry could accelerate public understanding and confidence in cannabis as a viable option for a range of ailments, and mark the next major milestone for the industry.

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