Canadian inflation, as measured by the Consumer Price Index (CPI) rose by 1.9 per cent in August year-over-year, down from a 2 per cent increase in the previous month. This marks 6-months of consecutive year-over-year growth in the CPI, coinciding with strong labour market conditions. Excluding the impact of lower gasoline prices, the CPI rose by 2.4 per cent year-over-year. The Bank of Canada's three measures of trend inflation remain unchanged to average 2 per cent in August.

In B.C., CPI slowed to 2 per cent year-over-year, down from 2.1 per cent in July. The decline was largely driven by gasoline prices, as global oil prices declined slightly in August due to higher production and soft international demand.  

With Canadian inflation just under 2 per cent, the Bank of Canada will have to turn to other economic indicators at their next meeting on October 28. The Bank will have to consider how to balance a stable domestic economy with continued global uncertainty.   

Copyright British Columbia Real Estate Association. Reprinted with permission.

Click on the video for a very informative review of August's market:

Canadian housing starts increased by 1.9% in August to 226,639 units at a seasonally adjusted annual rate (SAAR). The trend in Canadian housing starts was up, averaging 218,998 units SAAR over the past six months, continuing a robust trend. 

In BC, housing starts were down by 26% on a monthly basis to 639,266 units SAAR. This largely reflects activity that was pushed forward in previous months as developers tried to get ahead of a new development charge in Vancouver. Compared to the same time last year, provincial starts were down 17%. On a monthly basis, starts of multi-units were down by 33%, while singles were up by 4%.

Looking at census metropolitan areas in BC: 

• Housing starts in Vancouver were down by 38% in August at 19,858 units SAAR, following a 23% decrease in the previous month. This marks the lowest level since October 2018. The decline was entirely in the multi unit segment. Compared to last year in August, housing starts in Vancouver were down by 20%. 

• In Victoria, housing starts were down by 55% on a monthly basis to 1,645 units SAAR. Compared to a year ago, housing starts were down by 77%.

• In Kelowna, housing starts increased by 298% in August to 5,844 units SAAR, rebounding from low levels the previous month. Year-over-year, starts were up by 47%. 

• Monthly housing starts in Abbotsford-Mission were down by 62% at 1,125 units SAAR, down from high levels reported the previous month. Compared to this time last year, new home construction was up by 234% due to strong multi-unit starts.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian employment increased in August by 81,100 jobs. An increase in the participation rate kept the unemployment rate unchanged at 5.7%. Leading the increase in August was part-time employment (57,200) and almost entirely in the private sector on the service side. Regionally, the largest gains in employment were reported in Ontario (57,800) and Quebec (19,700). 

In contrast, employment in BC fell by 8,300 jobs in August. This marks the third consecutive monthly decline. The August decline was driven by part-time employment, raising the provincial unemployment rate by 0.6 percentage points to 5%. Compared to one year ago, employment in BC is up 3% (73,800 jobs).   

Copyright British Columbia Real Estate Association. Reprinted with permission.

The Bank of Canada left its target for the overnight rate unchanged at 1.75 per cent this morning. In the statement accompanying the decision the Bank noted escalated trade tensions between the US and China has resulted in weakened  business investment, lower commodity prices and heightened global risk.  While the Canadian economy posted strong growth in the second quarter of this year, the Bank attributes that growth to temporary factors unlikely to be repeated in the back half of the year. Overall, the Bank judges that the economy is operating close to its potential and inflation is in line with its target.  However, rising uncertainty in the global economy is impacting economic growth and further escalation may require additional monetary stimulus.

While the Bank of Canada, as expected, opted to not follow other central banks in lowering its policy rate, it has left the door open to lowering rates should developments in the global economy warrant doing so. Currently, economic conditions in Canada do not require further stimulus, and policymakers remain weary of re-igniting a build-up in household debt particularly after imposing policies designed to bring those debt burdens down.  We expect the  Bank will therefore remain on hold as long as current economic risk does not reach a tipping point, such as an impending recession in the United States.  As the uncertain global outlook keeps bond yields down, Canadian mortgage rates should stay near their current sub-3 per cent level for some time.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Home buyer activity increased to more typical levels in Metro Vancouver* throughout the summer months:

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,231 in August 2019, a 15.7 per cent increase from the 1,929 sales recorded in August 2018, and a 12.7 per cent decrease from the 2,557 homes sold in July 2019.

Last month’s sales were 9.2 per cent below the 10-year August sales average. “Home sales returned to more historically normal levels in July and August compared to what we saw in the first six months of the year,” said REBGV President Ashley Smith. 

There were 3,747 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in August 2019. This represents a 3.5 per cent decrease compared to the 3,881 homes listed in August 2018 and an 18.8 per cent decrease compared to July 2019 when 4,613 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 13,396, a 13.3 per cent increase compared to August 2018 (11,824) and a 5.9 per cent decrease compared to July 2019 (14,240).

For all property types, the sales-to-active listings ratio for August 2019 is 16.7 per cent. By property type, the ratio is 12 per cent for detached homes, 18.4 per cent for townhomes, and 21.2 per cent for apartments. Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“With more demand from home buyers, the supply of homes listed for sale isn’t accumulating like earlier in the year. These changes are creating more balanced market conditions,” Smith said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $993,300. This represents an 8.3 per cent decrease over August 2018 and a 0.2 per cent decrease compared to July 2019.

Sales of detached homes in August 2019 reached 706, a 24.5 per cent increase from the 567 detached sales recorded in August 2018. The benchmark price for detached homes is $1,406,700. This represents a 9.8 per cent decrease from August 2018 and a 0.7 per cent decrease compared to July 2019.

Sales of apartment homes reached 1,116 in August 2019, an 8.9 per cent increase compared to the 1,025 sales in August 2018. The benchmark price of an apartment property is $771,000. This represents a 7.4 per cent decrease from August 2018 and a 0.1 per cent increase compared to July 2019.

Attached home sales in August 2019 totalled 409, a 21.4 per cent increase compared to the 337 sales in August 2018. The benchmark price of an attached unit is $654,000. This represents a 7.8 per cent decrease from August 2018, a 0.2 per cent increase compared to July 2019.

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

Copyright British Columbia Real Estate Association. Reprinted with permission.