The Canadian economy expanded at a 2 per cent rate in the third quarter, led by strong export volumes. On the downside, household spending slowed, residential investment fell 1.5 per cent and business investment also declined following six consecutive quarterly increases.

Although economic growth was relatively strong in the third quarter, the underlying trends in household spending and in residential and business investment are not encouraging. Those trends, along with a struggling Alberta oil sector, the prolonged impacts of the mortgage stress test, and the recent GM plant closure in Ontario should mean a pause in the Bank of Canada's rate tightening cycle. We anticipate the Bank will hold off on further rate increases until its April 2019 meeting, though inflation at target and the economy growing above trend does mean that the Bank's bias toward a higher policy rate remains in place. 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian retail sales rose 0.2 per cent on a monthly basis in September, led by sales in food and beverage stores. Retail sales were higher in 6 of 11 sub-sectors representing 75 per cent of total retail trade. In BC, retail sales were unchanged on a monthly basis in September and were only 0.7 per cent higher year-over-year. Provincial retail sales were dragged lower by a nearly 3 per cent year-over-year decline in retail spending in the Metro Vancouver area.

Canadian inflation, as measured by the Consumer Price Index (CPI), accelerated in October to 2.4 per cent after recording 2.2 per cent in September. The Bank of Canada's three measures of trend inflation ticked slightly higher as well with two of the three measures at or above the Bank's 2 per cent target.  In BC, provincial consumer price inflation was 3 per cent in the 12 months to October.  Given an uptick in inflation, there is a higher probability of a rate increase by the Bank of Canada at its next meeting in December, though we still expect the Bank to hold off until early in the new year.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Click on the image to watch a very informative analysis of our current Metro Vancouver market:

Canadian housing starts increased 9 per cent on a monthly basis in October to 205,925 units at a seasonally adjusted annual rate (SAAR).  The trend in Canadian housing starts continued to moderate lower, averaging 206,000 units SAAR over the past six months.

In BC, total housing starts rebounded slightly in October after a sharp September decline. Total starts were up 17 per cent to 29,861 units SAAR and but were still down 45 per cent year-over-year. On a monthly basis, starts of multiple units were up 30 per cent to 25,464 units SAAR while single detached fell 8 per cent to 7,784 units SAAR. Compared to October 2017, multiple units starts were down 51 per cent while single detached starts were 22 per cent lower.
 
Looking at census metropolitan areas (CMA) in BC: 

• Total starts in the Vancouver CMA bounced back somewhat in October, rising 26 per cent on a monthly basis to 14,238 units SAAR as multiple units starts rose 41 per cent from September. However, starts have been trending lower for the past few months and were down 49 per cent compared to October 2017. Most new construction activity in October was concentrated in the City of Vancouver, which accounted for over half of all starts in the Metro Vancouver area.

• In the Victoria CMA, housing starts fell 12 per cent in October to 2,728 units SAAR but were 71 per cent down year-over-year. However, on a year-to-date basis, housing starts in Victoria are just 6 per cent below the record level set in 2017.

• In the Kelowna CMA, new home construction remained slow in October, falling 7 per cent to just 629 units SAAR. On a year-over-year basis, total starts were down 64 per cent to just 62 total units.  While housing starts in Kelowna have fallen off of the record pace of 2017, they remain on pace to finish above the 10-year average for the city.

• Housing starts in the Abbotsford-Mission CMA nearly tripled from September to 1,734 units SAAR due to 120 new multiple unit starts in October. On a year-over-year basis, starts were 22 per cent higher.

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The total value of Canadian building permits rose 0.4 on a monthly basis in September to $8.1 billion, driven primarily by record high construction intentions in Quebec.
 
In BC, the total value of permits fell 20 per cent in September from a record high of $1.8 billion in August. Residential permits fell 17 per cent on a monthly basis and were 5.6 per cent lower year-over-year. Non-residential permits were down close to 25 per cent on a monthly basis but were up nearly 20 per cent year-over-year.  Total permits in BC were up 8 per cent for the third quarter, though residential permits were off 5.3 per cent due to lower construction intentions for single-family dwellings.

Construction intentions in September were mostly lower in BC's four census metropolitan areas (CMA):

• Permits in the Abbotsford-Mission CMA declined 20 per cent on a monthly basis to $25.1 million. Year-over-year, permit values were down 31.7 per cent.

• In the Victoria CMA, total construction intentions nearly doubled on a monthly basis to $134.5 million, a 24 per cent increase year-over-year.

• In the Kelowna CMA, permits values decreased by 11.1 per cent from August to $84.7 million, but were nearly 50 per cent higher compared to September 2017.

• In the Vancouver CMA, the value of permits fell 38 per cent after a spike in permit values in August. On a year-over-year basis, the value of permits was 8 per cent lower.

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Home sale activity across Metro Vancouver* remained below long-term historical averages in October.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,966 in October 2018, a 34.9 per cent decrease from the 3,022 sales recorded in October 2017, and a 23.3 per cent increase compared to September 2018 when 1,595 homes sold.

Last month’s sales were 26.8 per cent below the 10-year October sales average. “The supply of homes for sale today is beginning to return to levels that we haven’t seen in our market in about four years,” Phil Moore, REBGV president said. “For home buyers, this means you have more selection to choose from. For sellers, it means your home may face more competition, from other listings, in the marketplace.”

There were 4,873 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in October 2018. This represents a 7.4 per cent increase compared to the 4,539 homes listed in October 2017 and a 7.7 per cent decrease compared to September 2018 when 5,279 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,984, a 42.1 per cent increase compared to October 2017 (9,137) and a 0.8 per cent decrease compared to September 2018 (13,084).

For all property types, the sales-to-active listings ratio for October 2018 is 15.1 per cent. By property type, the ratio is 10.3 per cent for detached homes, 17.3 per cent for townhomes, and 20.6 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.

“Home prices have edged down between three and five per cent, depending on housing type, in our region since June,” said Moore. “This is providing a little relief for those looking to buy compared to the all-time highs we’ve experienced over the last year.”

The MLS® Home Price Index composite benchmark price for all residential homes in Metro Vancouver is currently $1,062,100. This represents a one per cent increase over October 2017 and a 3.3 per cent decrease over the last three months.

Sales of detached homes in October 2018 reached 637, a 32.2 per cent decrease from the 940 detached sales recorded in October 2017. The benchmark price for detached properties is $1,524,000. This represents a 5.1 per cent decrease from October 2017 and a 3.9 per cent decrease over the last three months.

Sales of apartments reached 985 in October 2018, a 35.7 per cent decrease compared to the 1,532 sales in October 2017. The benchmark price of an apartment property is $683,500. This represents a 5.8 per cent increase from October 2017 and a 3.1 per cent decrease over the last three months.

Attached homes sales in October 2018 totalled 344, a 37.5 per cent decrease compared to the 550 sales in October 2017. The benchmark price of an attached home is $829,200. This represents a 4.4 per cent increase from October 2017 and a 2.8 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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Total Canadian employment was up by 11,200 jobs in October after jumping by 62,000 jobs in September. Part-time employment declined by 23,000 jobs while full-time work was up 34,000 jobs. The national unemployment rate ticked 0.1 points lower to 5.8 per cent. Total employment was up 1.1 per cent, or 206,000 jobs compared to this time last year.
 
In BC, employment fell by 1,100 jobs in October after adding 33,000 jobs in September.  On a year-over-year basis, employment was up 2 per cent and the provincial unemployment rate fell 0.1 points to 4.1 per cent, the lowest rate of unemployment in the province since December 2007.

Copyright British Columbia Real Estate Association. Reprinted with permission.