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Canadian inflation, as measured by the Consumer Price Index (CPI), registered only 1.4 per cent in the twelve months to January. That was a significant drop from 2 per cent in December due to a 7 per cent decline in energy costs.  Excluding the impact of falling gasoline prices, consumer prices were up 2.1 per cent. The Bank of Canada's three measures of trend inflation were unchanged for a third straight month, averaging 1.9 per cent.   In BC, provincial consumer price inflation was 2.4 per cent in the 12 months to January. 

Given stable inflation and what looks to be weak first quarter economic growth in Canada, the Bank of Canada is unlikely to change course any time soon.  Those expectations are being reflected in the steep drop in 5-year government bond yields, but not yet in mortgage rates offered by most lenders, which have only come down modestly.  A further fall in 5-year mortgage rates may be on the horizon as lenders compete for market share in the upcoming spring market, which would provide some degree of relief from the overly stringent stress test.



Copyright British Columbia Real Estate Association. Reprinted with permission.


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Housing Market Adjusts to Mortgage Stress Test

Vancouver, BC – February 25, 2019.


The British Columbia Real Estate Association (BCREA) released its 2019 First Quarter Housing Forecast Update today.


Multiple Listing Service® (MLS®) residential sales in the province are forecast to increase 2 per cent to 80,000 units this year, after recording 78,345 residential sales in 2018. MLS® residential sales are forecast to increase a further 6.9 per cent to 85,500 units in 2020. The 10-year average for MLS® residential sales in the province is 85,800 units.


“The negative shock to affordability and purchasing power created by the B20 stress test on mortgage borrowers is expected to continue constraining housing demand in the province this year,” said Cameron Muir, BCREA Chief Economist. “Favourable demographics along with continuing strong performance of the BC economy is expected to underpin housing demand over the next two years.”


The policy-induced demand shock has contributed to an increase of the inventory of homes for sale in most regions of the province. As a result, market conditions are expected to provide little upward pressure on home prices this year, with the average annual residential price forecast to remain essentially unchanged, albeit up 0.5 per cent to $716,100. Modest improvement in consumer demand is expected to unfold over the next two years as households further adjust to the mortgage stress test.



Copyright British Columbia Real Estate Association. Reprinted with permission.


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Canadian retail sales declined 0.1 per cent on a monthly basis in December as lower sales at gas stations offset otherwise strong spending.  Excluding sales at gas stations,  retail sales were up 0.4 per cent.  For all of 2018, Canadian retail sales rose 2.7 per cent.

In BC, retail sales fell 0.2 per cent on a monthly basis and were up just 0.6 per cent year-over-year. For all of 2018, BC retail sales rose just 2.1 per cent, a steep decline from the over 9 per cent growth in retail spending in 2017. A pick-up in job growth and pressure on wages from BC's low unemployment rate should translate to a recovery in retail spending in 2019.



Copyright British Columbia Real Estate Association. Reprinted with permission.


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Policy-Induced BC Housing Slowdown Continues into 2019

Vancouver, BC,  February 15, 2019.


The British Columbia Real Estate Association (BCREA) reports that a total of 3,546 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in January, a decline of 33.2 per cent from the same month last year. The average MLS® residential price in the province was $665,590, a decline of 7.7 per cent from January 2018. Total sales dollar volume was $2.36 billion, a 38.4 per cent decline from the same month last year.


BC households continue to grapple with the policyinduced affordability shock created last year by the federal government, said Cameron Muir, BCREA Chief Economist. The resulting pullback in consumer demand is largely responsible for January's lacklustre performance.


Total MLS® residential active listings increased 41.2 per cent to 29,522 units compared to the same month last year. The ratio of sales to active residential listings declined from 25.4 per cent to 12 per cent over the same period.

Many BC regions are now exhibiting buyer's market conditions, added Muir. However, BC Northern, the Kootenay, Okanagan Mainline and the Vancouver Island markets continue to reflect balance between supply and demand.



Copyright British Columbia Real Estate Association. Reprinted with permission.


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Canadian employment growth was very strong to start 2019. Total employment expanded by 67,000 jobs in January, a 1.8 per cent increase on a year-over-year basis.  The national unemployment rate increased by 0.2 points to 5.8 per cent due to growth in the number of Canadians actively looking for work.

In BC, employment grew by 8,700 jobs in January, though gains were concentrated entirely in part-time work.  On a year-over-year basis, employment was up 2.5 per cent. The provincial unemployment rate ticked 0.3 points higher to 4.7 per cent, the lowest rate of unemployment in Canada.



Copyright British Columbia Real Estate Association. Reprinted with permission.



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The total value of Canadian building permits rose 6 per cent on a monthly basis in December to $8.8 billion. The increase was due to a record level of construction intentions for multi-family dwellings and commercial buildings across Canada.
 
In BC, the total value of permits increased 22 per cent to $2.1 billion, the first time in BC's history that permits have eclipsed the $2 billion mark.  The majority of the increase was the result of strong permit activity for multi-family dwellings and commercial buildings. Total non-residential permits were up 35 per cent on a monthly basis and were 143 per cent higher year-over-year. Residential permits rose 14 per cent compared to November and 7 per cent year-over-year to $1.24 billion.

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

  • Permits in the Abbotsford-Mission CMA increased 62 per cent on a monthly basis to $65.7 million. Year-over-year, permit values were up about 17 per cent.
  • In the Victoria CMA, total permit values fell 28 per cent on a monthly basis to $91.1 million, a 8 per cent decrease over last year.
  • In the Kelowna CMA, permits values fell for a second straight month, declining 21 per cent on a monthly basis to $87 million. However, the value of permits was up 44 per cent compared to December 2017.
  • In the Vancouver CMA, the value of permits rose 26 per cent to nearly $1.4 billion. On a year-over-year basis, the value of permits was 48 per cent higher.
 


Copyright British Columbia Real Estate Association. Reprinted with permission.


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Home listings continue to increase across all housing categories in the Metro Vancouver housing market while home buyer activity remains below historical averages.


The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,103 in January 2019, a 39.3 per cent decrease from the 1,818 sales recorded in January 2018, and a 2.9 per cent increase from the 1,072 homes sold in December 2018.


Last month’s sales were 36.3 per cent below the 10-year January sales average and were the lowest January-sales total since 2009. “REALTORS® are seeing more traffic at open houses compared to recent months, however, buyers are choosing to remain in a holding pattern for the time being,” Phil Moore, REBGV president said.


There were 4,848 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in January 2019. This represents a 27.7 per cent increase compared to the 3,796 homes listed in January 2018 and a 244.6 per cent increase compared to the 1,407 homes listed in December 2018.


The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 10,808, a 55.6 per cent increase compared to January 2018 (6,947) and a 5.2 per cent increase compared to December 2018 (10,275).

For all property types, the sales-to-active listings ratio for January 2019 is 10.2 per cent. By property type, the ratio is 6.8 per cent for detached homes, 11.9 per cent for townhomes, and 13.6 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 across all home types in the region over the last seven months,” Moore said.


The MLS® Home Price Index composite benchmark price for all residential homes in Metro Vancouver is currently $1,019,600. This represents a 4.5 per cent decrease over January 2018, and a 7.2 per cent decrease over the past six months. 


“Economic fundamentals underpinning our market for home buyers and sellers remain strong. Today’s market conditions are largely the result of the mortgage stress test that the federal government imposed at the beginning of last year,” Moore said. “This measure, coupled with an increase in mortgage rates, took away as much as 25 per cent of purchasing power from many home buyers trying to enter the market.”


Sales of detached homes in January 2019 reached 339, a 30.4 per cent decrease from the 487 detached sales recorded in January 2018. The benchmark price for detached homes is $1,453,400. This represents a 9.1 per cent decrease from January 2018, and an 8.3 per cent decrease over the past six months.


Sales of apartment homes reached 559 in January 2019, a 44.8 per cent decrease compared to the 1,012 sales in January 2018. The benchmark price of an apartment property is $658,600. This represents a 1.7 per cent decrease from January 2018, and a 6.6 per cent decrease over the past six months.


Attached home sales in January 2019 totalled 205, a 35.7 per cent decrease compared to the 319 sales in January 2018. The benchmark price of an attached unit is $800,600. This represents a 0.5 per cent decrease from January 2018, and a 6.2 per cent decrease over the past six 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.



Copyright British Columbia Real Estate Association. Reprinted with permission.



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