Steve Flynn  RE/MAX Crest Realty- Burnaby 

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There were more treats than tricks in today's monthly GDP data. The Canadian economy expanded for a seventh consecutive month in August, growing at a 0.1 per cent monthly rate.  Growth was driven by the oil and gas and finance and insurance sectors.  The output of real estate agents and brokers jumped 2 per cent, the third straight monthly increase. However, output from Canadian real estate agents and brokers remained close to 17 per cent lower than the December 2017 level prior to the introduction of the B20 mortgage stress test.

With two months of third quarter GDP data now available, we are tracking overall third quarter growth at close to 2 per cent.  With the economy on solid footing, the Bank of Canada will continue to raise its policy rate over the next year. While we expect that the next move will be in January, a December rate hike can not be ruled out completely.



Copyright British Columbia Real Estate Association. Reprinted with permission.



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US real GDP growth remained strong in the third quarter at 3.5 per cent, albeit down from 4.2 per cent in the second quarter. Economic growth was led by a strong contribution from consumer spending, which grew at its fastest rate since 2014, while an accumulation of business inventories made its largest contribution to growth since 2015.  Government spending grew at its fastest rate in two years, but business investment slowed and net exports created their largest drag on growth in 33 years as US tariffs dampened trade.  Today's data gives the US Federal Reserve further reason to keep tightening monetary policy, which will put further upward pressure on medium term interest rates in the US and Canada.
 
The US economy has been riding high this year from debt-financed government stimulus, but that growth is expected to slow in 2019 as that stimulus fades and higher interest rates and a continued trade war act to slow the economy.



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The Bank of Canada raised its target for the overnight rate by 25 basis points to 1.75 per cent this morning. In the statement accompanying the decision, the Bank noted that the Canadian economy is expected to average growth of 2 per cent over the second half of 2018 before slowing to 1.9 per cent next year.  The renegotiation of NAFTA is expected to lower uncertainty and boost business investment and exports while households spending and the housing market are stabilizing after the implementation of the B20 mortgage stress test. Inflation is expected to remain close to 2 per cent over the Bank's two year projection horizon.
   
The resolution of NAFTA negotiations earlier in the fall paved the way for the Bank of Canada to resume its rate tightening this morning.  While inflation data came in slightly soft in September, the Canadian economy is still operating above its long-run trend which should keep inflation near the Bank's 2 per cent target. The Bank will meet one final time in 2018 at its December meeting, at which we expect policymakers will maintain the target rate at is current level before raising the target rate to 2 per cent in January 2019.  As the target rate continues on its path higher, Canadian mortgage rates will continue to rise, ultimately resulting in a 6 per cent qualifying rate by the end of 2019.



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Canadian retail sales declined 0.1 per cent on a monthly basis in August, but were 3.6 per cent higher on a year-over-year basis. Retail sales were lower in 7 of 11 sub-sectors representing 52 per cent of total retail trade. After a spending binge in 2017 which saw retail sales grow nearly ten per cent,  BC consumers have closed their wallets this year. BC retail sales declined 0.1 per cent on a monthly basis in August and were just 1.3 per cent higher year-over-year.  

Canadian inflation, as measured by the Consumer Price Index (CPI), registered 2.2 per cent in the 12 months to September, down from the nearly 3 per cent rate recorded in July and August. The Bank of Canada's three measures of trend inflation softened slightly in September, but still remain at or near the Bank's two per cent target.  In BC, provincial consumer price inflation was 2.5 per cent in the 12 months to September.  Although inflation numbers have softened slightly, it is still widely expected that the Bank of Canada will raise its overnight rate at its next meeting on October 24.



Copyright British Columbia Real Estate Association. Reprinted with permission.


 


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Vancouver, BC - October 12, 2018.


The British Columbia Real Estate Association (BCREA) reports that a total of 5,573 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in September, a 33.2 per cent decrease from the same month last year. The average MLS® residential price in BC was $685,749, down 1.1 per cent from September 2017. Total sales dollar volume was $3.8 billion, a 34 per cent decline from September 2017.


BC home sales continue at a slower pace compared to last year, said Cameron Muir, BCREA Chief Economist. The impact on affordability and purchasing power caused by the mortgage stress test and moderately higher interest rates are negating the effect of the extraordinarily strong performance of BC's economy over the last five years.


Year-to-date, BC residential sales dollar volume was down 21.3 per cent to $45 billion, compared with the same period in 2017. Residential unit sales decreased 22.5 per cent to 63,251 units, while the average MLS® residential price was up 1.5 per cent to $716,096.



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The total value of Canadian building permits rose 0.4 on a monthly basis in August to $8.1 billion on broad strength in the non-residential sector. Residential building permits declined for a third consecutive month.
 
In BC, the total value of permits reached a record high of $1.8 billion, smashing the previous record set earlier this year by nearly 13 per cent. Residential permits increased 17 per cent from July and were up 31 per cent year-over-year. Non-residential permits were up 77 per cent on a monthly basis and passed the $600 million threshold for the first time as the result of large office building projects in Vancouver.

Construction intentions August were mixed in BC's four census metropolitan areas (CMA):

  • Permits in the Abbotsford-Mission CMA increased 11 per cent on a monthly basis to $31.3 million. Year-over-year, permit values were down 9 per cent.
  • In the Victoria CMA, total construction intentions were down 9 per cent to $71.1 million, a 40 per cent decline over this time last year.
  • In the Kelowna CMA, permits values decreased by 14.5 per cent on a monthly basis to $96.6 million, but were up 4 per cent year-over-year.
  • In the Vancouver CMA, the value of permits rose 66.4 per cent on a monthly basis and accounted for three quarters of all permit values in BC.  Most of the increase came from the City of Vancouver, though the City of Burnaby issued over $250 million worth of apartment building permits in August.



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Canadian housing starts declined 5 per cent on a monthly basis in September to 188,683 units at a seasonally adjusted annual rate (SAAR).  The trend in Canadian housing starts continued to moderate lower, averaging 208,000 units SAAR over the past six months.

It was a volatile month for new home construction in BC. Total housing starts fell 43 per cent on a monthly basis to 25,611 units SAAR and were down 31 per cent year-over-year. On a monthly basis, starts of multiple units were down more than half from August to just 16,980 units SAAR while single detached fell 3 per cent to 8,631 units SAAR. Compared to September 2017, multiple units starts were down 37 per cent while single detached starts were 20 per cent lower.
 
Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA were down 42 per cent on a monthly basis to 14,390 units SAAR as multiple units starts dropped 50 per cent from August. Compared to this time last year, total starts in Vancouver were 21 per cent lower. September new home construction in Metro Vancouver was concentrated in Surrey which accounted for a quarter of all starts.
  • In the Victoria CMA, housing starts fell 56 per cent after a surge of new starts in August. Total housing starts were still on a 3,000 annual pace in September. That is well below the torrid pace of new home construction seen in Victoria over the past year, but still relatively strong.
  • In the Kelowna CMA, new home construction slowed substantially in September, falling to just 750 units SAAR from August's near 4,000 unit annual pace. On a year-over-year basis, total starts were down 84 per cent to just 67 total units.  Housing starts in Kelowna have fallen off of the record pace of 2017, but remain above the 10-year average for the city.

Housing starts in the Abbotsford-Mission CMA rose 23 per cent on a monthly basis, driven by a 44 per cent increase in multiple unit projects and strong single-detached starts. However, total housing starts were down 80 per cent compared to last September, which saw very strong multiple unit starts.



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Total Canadian employment increased by 62,000 jobs in September, reversing the similar sized decline from August. Part-time employment accounted for most of the gain, rising by 80,000 while full-time work declined.   The national unemployment rate declined 0.1 points to 5.9 per cent and total hours worked across the economy rose 0.6 per cent.  Total employment was up 1.2 per cent over this time last year.
 
In BC, employment rose for a third consecutive month as the economy added an astonishing 33,000 jobs in September (near the all-time record of 34,700 set in May 2015), including 26,000 full-time jobs. Employment in the third quarter was up 54,000 jobs after declining in the first half of the year.  On a year-over-year basis, employment was up 1.7 per cent and the provincial unemployment rate fell 1.1 points to 4.2 per cent, the lowest rate of unemployment in the province since June 2008.



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Highlights from REBGV September MLS Sales Report:


  • Highest number of listings in 4 years
  • Decreasing sales activity
  • More days on market to sell
  • Benchmark Sale prices continue downward 3-month trend 
  • Sales-to-Listing ratios continue to drop


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The supply of homes for sale continued to increase across the Metro Vancouver* housing market in September while home buyer demand remained below typical levels for this time of year:


The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 1,595 in September 2018, a 43.5 per cent decrease from the 2,821 sales recorded in September 2017, and a 17.3 per cent decrease compared to August 2018 when 1,929 homes sold. Last month’s sales were 36.1 per cent below the 10-year September sales average.


“Fewer home sales are allowing listings to accumulate and prices to ease across the Metro Vancouver housing market,” Ashley Smith, REBGV president-elect said. “There’s more selection for home buyers to choose from today. Since spring, home listing totals have risen to levels we haven’t seen in our market in four years.”


There were 5,279 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2018. This represents a 1.8 per cent decrease compared to the 5,375 homes listed in September 2017 and a 36 per cent increase compared to August 2018 when 3,881 homes were listed.


The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 13,084, a 38.2 per cent increase compared to September 2017 (9,466) and a 10.7 per cent increase compared to August 2018 (11,824).


For all property types, the sales-to-active listings ratio for September 2018 is 12.2 per cent. By property type, the ratio is 7.8 per cent for detached homes, 14 per cent for townhomes, and 17.6 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.


“Metro Vancouver’s housing market has changed pace compared to the last few years. Our townhome and apartment markets are sitting in balanced market territory and our detached home market remains in a clear buyers’ market,” Smith said. “It’s important for both home buyers and sellers to work with their Realtor to understand what these trends means to them.”


The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,070,600. This represents a 2.2 per cent increase over September 2017 and a 3.1 per cent decrease over the last three months.


Sales of detached properties in September 2018 reached 508, a 40.4 per cent decrease from the 852 detached sales recorded in September 2017. The benchmark price for detached properties is $1,540,900. This represents a 4.5 per cent decrease from September 2017 and a 3.4 per cent decrease over the last three months.


Sales of apartment properties reached 812 in September 2018, a 44 per cent decrease compared to the 1,451 sales in September 2017. The benchmark price of an apartment property is $687,300. This represents a 7.4 per cent increase from September 2017 and a 3.1 per cent decrease over the last three months.


Attached property sales in September 2018 totalled 275, a 46.9 per cent decrease compared to the 518 sales in September 2017. The benchmark price of an attached unit is $837,600. This represents a 6.4 per cent increase from September 2017 and a two per cent decrease over the last three months.



Areas covered by the Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, Pitt Meadows, Maple Ridge, and South Delta.




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The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.