The Bank of Canada announced this morning that it is maintaining its overnight rate at 0.5 per cent. In the press release accompanying the decision, the Bank noted that inflation is evolving as expected with total CPI continuing to test the bottom of the Bank's 1-3 per cent target range due to low energy prices. However, the Bank expects that inflation will rise over the next year, reaching its 2 per cent target by mid-2017.  On the economy, the Bank sees economic growth firming after a slowdown in the fourth quarter of last year. The Bank projects that the Canadian economy will grow a modest 1.5 per cent this year before strengthening to 2.5 per cent in 2017. 
 
In not moving on interest rates this morning, the Bank is recognizing that there is little that monetary policy can do to offset a significant supply-side shock such as the dramatic decline in oil prices. Indeed, given Canada's floating exchange rate, the loonie has already adjusted to help partially absorb the negative impact of falling commodity prices on exports.   Keeping in mind that the Canadian economy is still projected to grow at a rate very close to its somewhat diminished potential for 2016 and that inflation will be spurred by a dramatically lower Canadian dollar, we anticipate that the Bank will reassess the need for monetary stimulus once the worst of the oil-shock had passed. That means, barring a significant deterioration in the economy, the Bank will more than likely remain sidelined for 2016. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

 If you'd like to view a YouTube video from the REBGV highlighting the sales for December 2015 you can find it here:

http://www.rebgv.org/podcasts/december-2015-market-summary

Employment in Canada increased by 23,000 jobs in December, a 0.9 per cent increase over December 2014. The national unemployment rate was unchanged at 7.1 per cent. For all of 2015, employment posted average growth of just under 1 per cent or about 13,000 jobs per month. 

In BC, employment fell for a second consecutive month, dropping by 7,900 jobs in December. Those job losses, combined with an increase in job searchers migrating from other provinces helped to push the unemployment rate 0.5 points higher to 6.7 per cent. For the year 2015, employment in BC increased 1.3 per cent but grew at a 2 per cent rate over the second half of the year. 

In the US, payrolls jumped by 292,000 jobs and revisions to past months estimates added a further 50,000 to payrolls. The US unemployment rate was unchanged at 5 per cent.  Over the past three months, the US economy is averaging a robust rate of new job creation at close to 300,000 jobs per month. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Soaring sales in Metro Vancouver’s single-family home market are also driving higher assessments in a few, select pockets of condominiums.  In recent years, condo prices have been described as flat as a board, and while 2016 assessed values released earlier this week for the most part showed much more modest gains compared to the hot numbers in the single-family home market, there were a few outliers.

In Vancouver, condos in the MLS-defined neighbourhood of Coal Harbour, for example, posted an average assessment of $1.45 million, for a 12-per-cent increase over the past year. In West Vancouver, condos at Cypress Park Estates also reached $1.45 million, for an eight-per-cent gain.

Other neighbourhoods with higher average assessments for condos include Hawthorne in Delta, with a nine-per-cent increase to $300,000, as well as Canyon Springs in Coquitlam, with a 10-per-cent increase to $260,000. Compared to single-family homes, there is a far greater supply of new condos and townhouses. They are more affordable for a larger proportion of buyers so, naturally, their prices are not spiking in the same way, says Michael Ferreira, managing principal at Urban Analytics.

Some 95 per cent of all new housing in Metro Vancouver is strata-owned condos or townhouses at a time when affordable single-family homes close to the city seem a dying breed.  Despite this, says Ferreira, “In certain areas, we’ve seen fairly significant increases in assessed value (for condos).”  What these places all have in common, says Ferreira and others, are new developments catering to single-family home sellers flush with cash from frenzied activity in that market. They want to downsize but remain in their neighbourhoods.  “Cashing out of these (homes) is leaving buyers with more money to afford larger, newer condos,” says Ferreira. “In a lot of (areas), there hasn’t been a lot of (condo) development in a while.”

In North Vancouver’s Roche Point, where average assessments for condos rose 10 per cent, buyers have been after a new development, says realtor Charlie Mackenzie. “Older stuff has declined in value, but it’s the new condos that have impacted higher prices.”  That location is also very close to Polygon’s new Cates Landing, a set of townhomes and apartment residences along Deep Cove designed for “downsizers who want to stay local.”

Ferreira goes through the list of other areas where there were higher average assessments for condos: “In Coal Harbour, it’s unique because there are both local empty nesters as well as international second-home owners. “The Cambie Corridor is also driven by empty nesters downsizing out of homes. Mount Pleasant, South East False Creek. Downtown. Then, you have the West End. I was just talking to an appraiser yesterday and I said, ‘I think we’ve seen our last new condo tower going for under $1,000 a square foot. It has matured. It’s an established neighbourhood. There is a repurposing of old sites into new and fancy condos.”

The Vancouver Sun

The average value of detached homes has broken through $1 million in more than 50 additional Metro Vancouver neighbourhoods, 2016 assessment figures show.

“It’s a little, depressed area,” Realtor Jason Weinman said of the Multiple Listing Service-defined zone of Lynnmour on the North Shore. There’s not much to this zone between the end of the Ironworkers Memorial Bridge and Capilano University, long known as one of the most affordable in North Vancouver, he says. “But with prices going the way they are in the city, it doesn’t shock me,” Weinman said upon hearing the average assessment for a detached home in Lynnmour crossed from $844,531 in 2015 into what used to be defined as luxury territory at $1.02 million.

Property information firm Landcor Data Corp. crunched numbers released by B.C. Assessment Monday and found 53 Multiple Listing Service-defined neighbourhoods are newcomers to the $1 million-plus list, including parts of Burnaby, Coquitlam, Delta, Langley, New Westminster, North Vancouver, Port Moody, Richmond, Surrey and Vancouver. It’s a significant jump from last year when the list included 124 neighbourhoods.

“Everything up here has been selling for over $1 million in the last 12 months,” says realtor Monet Taylor, who specializes in the Port Moody neighbourhood of Heritage Woods, which crossed the $1 million line with average assessments for homes hitting $1.09 million.  “At the beginning of last year, a smaller, 3,000-square-foot home that I sold (in Heritage Woods) for $965,000, would now be $1.1 million,” says Taylor. “Young families are moving from North Vancouver and Burnaby. They are looking to upgrade from older, smaller homes or from a townhome.” She suggests homes in nearby Heritage Mountain might still be under $1 million, but the average assessment for 2016 in that area clocked in at $1.1 million, too.

The $1 million mark used to be reserved for describing luxury properties. In more recent years, with more $1 million single-family homes making old definitions meaningless here, Sotheby’s International Realty Canada, which targets the most expensive properties, added to its reports the term “top tier” to distinguish its listings from mere “luxury” ones.

Some economists still hold fast to the idea that rising prices are confined to a few, west side neighbourhoods, but “I think (this idea) is crazy,” says Andrey Pavlov, professor of real estate finance at Simon Fraser University’s Beedie School of Business. “There’s no reason why areas such as Coquitlam and Port Moody, where there is lots of land and supply of homes, would be rising” to be assessed at over $1 million if there wasn’t this trickle-down effect with buyers either seeking alternative destinations when they are priced out of others areas or taking earnings made from sales in these more expensive areas to spend in others.

At Vancouver City Hall, Mayor Gregor Robertson responded Tuesday to this week’s B.C. Assessment numbers by calling for “bold action from the provincial and federal governments to make housing more affordable.”  The “latest numbers from B.C. Assessment once again demonstrate the stark and alarming ways that our region’s housing market is divorced from local incomes,” said Robertson in a statement. “A speculation tax would help slow the practice of flipping houses, which treats housing as a commodity and intensifies the price escalation. A luxury housing tax would ensure that the very wealthiest buyers or investors pay an added price. Both of these taxes would raise new funds to make housing more affordable for those low and modest incomes.”

For a sense of where such action might take aim, there is, on a very small scale, signs of a new almost-$1 million club to join. Recently, a home at 3302 West 5th Ave. was sold for $802,000 over the asking price 0f $2.49 million and one at 1322 Maple St. for $940,000 over the asking price of $2.93 million.

The Vancouver Sun

One of Canada's biggest lenders will be raising rates on several of its mortgages starting Friday. Royal Bank of Canada says its special offer five-year fixed mortgage goes up one-tenth of a point to 3.04 per cent.  It noted that the changes don't apply to its posted mortgage rates, which are typically higher than special offer rates.

Several other special offer mortgage rates from RBC will also rise by 0.10 per cent on Friday but the amount of annual interest charged will depend on whether the term is two, three or four years.  Royal (TSX:RY) is also raising the rate for a variable five-year mortgage by 0.15 per cent, starting Jan. 8.

The Canadian Press

Metro Vancouver home sales set an all-time record in 2015!