No Comments

Canadian Inflation and Retail Sales

Canadian Retail Sales & Inflation

Canadian retail sales increased 0.4 per cent on monthly in basis in February and were 3.5 per cent higher year-over-year. Sales were higher in only 4 of 11 sub-sectors representing less than half of total retail trade. With today’s data, and all other data available thus far for the first quarter, we are tracking Canadian economic growth at about 1.6 per cent for the first quarter of 2018. In BC, retail sales were up 0.4 per cent on a monthly basis and 5.9 per cent year-over-year. Retail sales in the province continue to moderate back to historical trend after growing close to 10 per cent in 2017.

Canadian inflation, as measured by the Consumer Price Index (CPI), increased again in March as prices rose 2.3 per cent year-over-year, up from 2.2 per cent in February. The Bank of Canada’s three measures of trend inflation were relatively unchanged at around 2 per cent. In BC, provincial consumer price inflation was 2.6 per cent in the 12 months to March. Rising inflation and an economy operating at capacity signals further Bank of Canada tightening, potentially as soon as the next interest rate decision on May 30.

No Comments

Bank of Canada Interest Rate Announcement – April 18, 2018

Bank of Canada Interest Rates Affecting Vancouver Real Estate

The Bank of Canada decided to leave the target for the overnight policy rate unchanged at 1.25 per cent this morning. In the statement accompanying the decision, the Bank noted that inflation is forecast to be slightly higher in 2018 than originally expected but will return to the Bank’s 2 per cent target once the impact of higher gas prices and minimum wage increases dissipate. While the mortgage stress test has been a contributor to weaker growth in the first quarter of 2018, the Bank expects the economy to be operating at above potential over the next three years, growing at an average rate of about 2 per cent.

Although the Bank held steady today, with inflation rising to the Bank’s two per cent target and many Canadian firms operating at or near capacity, interest rates are very likely headed higher this year. Headwinds from the trade sector have moderated, energy prices are higher and growth for the first quarter appears to be firming after a slow start. Given those trends, the Bank is likely to adjust its policy rate higher in coming months. That will translate to higher mortgage rates which, combined with the erosion of purchasing power from the mortgage stress test, will temper housing demand in 2018.

No Comments

Policy Induced Demand Slide Does Little to Impact Supply

Vancouver Housing Supply Problem

MLS Residential Sales - Q1 2018The British Columbia Real Estate Association (BCREA) reports that a total of 7,409 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in March, a 24.6 per cent decrease from the same month last year. The average MLS® residential price in BC was $726,930, up 5.3 per cent from the previous year. Total sales dollar volume was $5.39 billion, a 20.6 per cent decline from March 2017.

“More burdensome mortgage qualifications are having the predictable effect of swiftly curbing housing demand,” said Cameron Muir, BCREA Chief Economist. “You simply cannot pull as much as 20 per cent of the purchasing power away from conventional mortgage borrowers and not create a downturn in consumer demand.”

Despite the decline in consumer demand, the supply of homes for sale remains low in most BC regions. Total active listings on the market are essentially unchanged from March 2017, and are at or near a 12-year low across the province. As a result, home prices are expected to continue an upward trajectory.

Year-to-date, BC residential sales dollar volume was down 1.7 per cent to $13.9 billion, compared with the same period in 2017. Residential unit sales decreased 9.4 per cent to 18,927 units, while the average MLS® residential price was up 8.5 per cent to $732,243.

Source – BCREA

No Comments

Canadian Housing Starts – April 2018

Canadian Housing Starts - April 2018

 

Canadian housing starts fell 3 per cent on a monthly basis in march to 225,213 units at a seasonally adjusted annual rate (SAAR). The six-month trend in Canadian housing starts was steady at about 226,000 units SAAR.

In BC, total housing starts jumped 48 per cent on a monthly basis to 46,629 units SAAR with multiple unit starts rising over 60 per cent. On a year-over-year basis, total starts in the province were 4 per cent higher.

Looking at census metropolitan areas (CMA) in BC:

Total starts in the Vancouver CMA were up 60 per cent on a monthly basis after falling close to 40 per cent in February. Year-over-year, Vancouver starts were up 6 per cent. The 32,000 unit annual pace set in March was the result of an increase in both condo and rental units in core parts of the Metro area including the City of Vancouver, Richmond and North Vancouver.

In the Victoria CMA, housing starts were down 5 per cent on a monthly basis but were almost double the level of March 2017 due to a surge of new multi-unit starts. Apartment starts were 77 per cent higher than March last year while single detached starts were down 32 per cent.

In the Kelowna CMA, new home construction bounced back from a slow February with total housing starting rising by over 4 times the previous months activity. However, starts were down 68 per cent compared to what was a very busy March of 2017.
Housing starts in the Abbotsford-Mission CMA increased 71 per cent on a monthly basis but were down 20 per cent year-over-year, largely due to lower single detached starts. Multiple unit starts were essentially flat compared to last year.

Source – BCREA

No Comments

Vancouver Real Estate Statistics – March 2018

March 2018 - Vancouver Real Estate MLS Statistics

Fewer home sales and listings in the first quarter of 2018

Home buyers and sellers were less active in Metro Vancouver throughout the first quarter of 2018.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,517 in March 2018, a 29.7 per cent decrease from the 3,579 sales recorded in March 2017, and a 14 per cent increase compared to February 2018 when 2,207 homes sold.

Last month’s sales were 23 per cent below the 10-year March sales average.

There were 6,542 home sales on the Multiple Listing Service® (MLS®) in Metro Vancouver during the first quarter of 2018, a 13.1 per cent decrease from the 7,527 sales over the same period last year. This represents the region’s lowest first-quarter sales total since 2013.

“We saw less demand from buyers and fewer homes listed for sale in our region in the first quarter of the year,” Phil Moore, REBGV president said. “High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today.”

There were 4,450 detached, attached and apartment properties newly listed for sale in Metro Vancouver in March 2018. This represents a 6.6 per cent decrease compared to the 4,762 homes listed in March 2017 and a 5.4 per cent increase compared to February 2018 when 4,223 homes were listed.

There were 12,469 homes listed for sale in Metro Vancouver during the first quarter of 2018, a 0.8 per cent decrease from the 12,568 sales over the same period last year. This represents the region’s lowest first-quarter new listings total since 2013.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 8,380, a 10.5 per cent increase compared to March 2017 (7,586) and a 7.1 per cent increase compared to February 2018 (7,822).

“Even with lower demand, upward pressure on prices will continue as long as the supply of homes for sale remains low,” Moore said. “Last month was the quietest March for new home listings since 2009 and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms.”

For all property types, the sales-to-active listings ratio for March 2018 is 30 per cent. By property type, the ratio is 14.2 per cent for detached homes, 39.9 per cent for townhomes, and 61.6 per cent for condominiums.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,084,000. This represents a 16.1 per cent increase over March 2017 and a 1.1 per cent increase compared to February 2018.

Sales of detached properties in March 2018 reached 722, a decrease of 37 per cent from the 1,150 detached sales recorded in March 2017. The benchmark price for detached properties is $1,608,500. This represents a 7.4 per cent increase from March 2017 and a 0.4 per cent increase compared to February 2018.

Sales of apartment properties reached 1,349 in March 2018, a decrease of 26.7 per cent compared to the 1,841 sales in March 2017. The benchmark price of an apartment property is $693,500. This represents a 26.2 per cent increase from March 2017 and a 1.6 per cent increase compared to February 2018.

Attached property sales in March 2018 totalled 446, a decrease of 24.1 per cent compared to the 588 sales in March 2017. The benchmark price of an attached unit is $835,300. This represents a 17.7 per cent increase from March 2017 and a two per cent increase compared to February 2018.

No Comments

Canadian Retail Sales and Inflation

Canadian Retail Sales - March 2018

Canadian retail sales increased 0.3 per cent on monthly in basis in January and were 3.6 per cent higher compared to last January. Sales were higher in 7 of 11 sub-sectors representing 63 per cent of total retail trade.  With today’s data, and all other data available thus far for the first quarter, we are tracking Canadian economic growth at just 0.9 per cent for the first quarter of 2018.  In BC, after growing nearly 10 per cent in 2017,retail sales growth has slowed, falling 1 per cent on a monthly basis in January but rising 6.2 per cent compared to January 2017.

Canadian inflation, as measured by the Consumer Price Index (CPI), jumped higher in February, registering 2.2 per cent year-over-year, up from 1.7 per cent in January. The Bank of Canada’s three measures of trend inflation were all higher as well and now are either very close to or exceeding the Bank’s 2 per cent inflation target.   In BC, provincial consumer price inflation was 2.8 per cent in the 12 months to February.

Today’s data is somewhat mixed in its impact on monetary policy in Canada. On the one hand, the Canadian economy appears to be slowing considerably, while on the other, inflation continues to close in on the Bank’s target of 2 per cent.  We believe the Bank will continue to hold interest rates steady until summer or fall to get a better grasp on the direction of the economy before acting.

Source – BCREA

No Comments

New Mortgage Qualification Rules Temper Housing Demand

Mortgage Rules Vancouver Real Estate Demand

The British Columbia Real Estate Association (BCREA) reports that a total of 6,206 residential unit sales were recorded by the Multiple Listing Service® BCREA Mortgage Demand(MLS®) across the province in February, a 5.7 per cent decrease from the same period last year. The average MLS® residential price in BC was $748,327, up 8.8 per cent from the previous year. Total sales dollar volume was $4.64 billion, a 2.6 per cent increase from February 2017.

“More stringent mortgage qualification rules for conventional borrowers are dampening housing demand in the province,” said Cameron Muir, BCREA Chief Economist. “Since the new rules came into effect, BC home sales have fallen more than 26 per cent, on a seasonally adjusted basis.”

Previous mortgage policy tightening has negatively impacted housing demand for a period of four to seven months, with the largest impact occurring in the third month after implementation.

Year-to-date, BC residential sales dollar volume was up 15.9 per cent to $8.47 billion, compared with the same period in 2017. Residential unit sales increased 4.1 per cent to 11,516 units, while the average MLS® residential price was up 11.3 per cent to $735,755.

Source – BCREA

No Comments

BCREA 2018 First Quarter Housing Forecast Update

Real Estate Sales Forecast 2018

BC Housing Demand to Slow Through 2019

The British Columbia Real Estate Association (BCREA) released its 2017 Fourth Quarter Housing Forecast today.

MLS Sales Forecast 2018

Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 8.6 per cent to 94,855 units in 2018, after decreasing 7.5 per cent in 2017. A record 112,209 unit sales were recorded in 2016. The ten-year average for MLS® residential sales in BC is 84,800 units. Strong employment growth, consumer confidence and favourable demographics have been highly supportive of housing demand over the last four years. However, slower economic growth, tougher mortgage qualification rules, and a rising interest rate environment are expected to slow the pace of housing demand over the next two years.

“Housing demand in the province is expected to moderate this year and in 2019,” said Cameron Muir, BCREA Chief Economist. “More stringent mortgage qualifications and rising interest rates will further erode affordability and household purchasing power.”

The 5-year qualifying rate is forecast to rise 35 basis points to 5.49 per cent by Q4 2018, and another 21 basis points to 5.70 per cent by Q4 2019. “With home prices already at an elevated level, BC households are more vulnerable to rising interest rates.”

The supply of homes for sale continues to trend at or near decade lows in most BC regions. However, this condition hasn’t gone unnoticed by home builders. There are over 60,000 homes now under construction in the province, well above the previous peak of 45,000 units recorded in 2008. In Metro Vancouver, over 42,000 units are in the pipeline, 56 per cent more than recorded in 2008. Slowing consumer demand combined with a surge in new home completions over the next several quarters will create more balance in the housing market and produce less upward pressure on home prices. The average MLS® residential price in the province is forecast to increase 6.0 per cent to $752,000 this year, and a further 4.0 per cent to $781,800 in 2019.

Source – BCREA

No Comments

Canadian Housing Starts – February 2018

Vancouver Housing Starts - February 2018

Canadian housing starts increased 6.7 per cent on a monthly basis in February to 229,737 units at a seasonally adjusted annual rate (SAAR). The six-month trend in Canadian housing starts rose to 225,276 units SAAR.

In BC, total housing starts fell 26 per cent monthly basis to 30,622 units SAAR with both single and multiple unit starts posting monthly declines of over 20 per cent. On a year-over-year basis, total starts in the province were 9 per cent higher.

Looking at census metropolitan areas (CMA) in BC:

Total starts in the Vancouver CMA were down 37 per cent on a monthly basis at 20,000 units SAAR but were 12 per cent higher compared to February of last year. Construction activity is particularly strong in the condo markets of Burnaby, the North Shore and the city of Vancouver.

In the Victoria CMA, housing starts nearly tripled on a monthly basis to an annualized rate of almost 4,000 units due to a number of multiple unit projects breaking ground. Total starts in the Victoria CMA were up 48 per cent year-over-year. Construction activity is being driven by new apartment rentals and condos.

The Kelowna CMA saw housing starts decline over 60 per cent on a monthly basis in February with relatively little new construction occurring in the month. The CMHC counted just 22 single units and 15 multiple unit starts.
Housing starts in the Abbotsford-Mission CMA increased 200 per cent year-over-year as construction of more than 300 new multiple units got underway in February. However, the annualized pace of starts fell 6 per cent from January at just under 800 units SAAR.

Source – BCREA

No Comments

Bank of Canada Interest Rate Announcement

Bank of Canada Interest Rates Affecting Vancouver Real Estate

The Bank of Canada opted to maintain its target for the overnight interest rate this morning at 1.25 per cent.  In the statement accompanying the decision, the Bank noted that although growth in the Canadian economy slowed more than expected in the fourth quarter of 2017, the economy is expected to operate at capacity going forward. The bank cited recent trade policy developments, mainly the threat of a trade war with the United States, as a significant risk to its outlook for growth and inflation.

The Canadian economy is at or very close to full-employment, meaning there is little room for Canadian firms to expand output without putting undue pressure on inflation. There are signs core inflation is already firming up.

Two of the Bank’s three core inflation measures are closing in on the Bank’s 2 per cent target and all three measures have increased significantly in the past six months. Absent any unforeseen challenges to the Canadian economy, monetary policy will be biased in the direction of higher interest rates.

However, the Bank will likely hold off raising its overnight rate while it assesses the impact of tighter monetary policy over the past year, the impact of newly implemented B-20 guidelines on mortgage qualification rules, and heightened risk to Canadian exports from US trade policy.

Source – BCREA