The Bank of Canada held its overnight rate at 1.75 per cent this morning. In the statement accompanying the decision, the Bank noted that ongoing trade conflicts have weakened the global economic outlook, which is expected to drag Canadian economic growth below its potential in the second half of this year. The bank is further projecting that growth will register under 2 per cent over the next two years. Inflation is expected to trend at the Bank's target of 2 per cent.

With the expectation that the US Federal Reserve will be lowering its own policy rate later today, the third rate cut this year, there may be extra pressure for the Bank to begin loosening monetary policy at its next meeting.  As reflected by the Bank's statement, while current trade conflicts will test the resilience of the Canadian economy, the Bank does not as yet foresee the need for lower interest rates. However, the Bank stands ready to act if the impact of trade conflicts spreads beyond trade and investment and begin to slow consumer spending or housing activity. Thus far, the Bank appears to judge those risks as contained, which likely mean no change in interest rates this year.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian retail sales decreased by 0.1% in August to $51.5 billion, driven largely by lower sales at food and beverage stores and at gasoline stations. Retail sales were down in 6 of 11 sub-sectors, representing 51% of sales. Regionally, 4 of 10 provinces reported a decrease in August with notable declines reported in Ontario (-0.8%) and Manitoba (-1.6%).

In B.C., retail sales rose by 0.8% to $7.2 billion in August, ending four consecutive months of declines. Vancouver also reported a monthly increase of 1.7% in sales. Provincial sales were up in 7 of 11 sub-sectors, largely driven by sales at food and beverage stores and to a lesser extent, in furniture and home furnishings. On a year-over-year basis, B.C. retail sales were down by 0.4% in August.

Copyright British Columbia Real Estate Association. Reprinted with permission.

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

Vancouver, BC – October 15, 2019

The British Columbia Real Estate Association (BCREA) reports that a total of 6,938 residential unit sales were recorded by the Multiple Listing Service^® (MLS^®) in September, an increase of 24 per cent from the same month last year. The average MLS^® residential price in the province was $697,943, an increase of 2.1 per cent from September 2018. Total sales dollar volume was $4.84 billion, a 26.5 per cent increase from the same month last year.

“Markets across BC built on momentum from the summer,” said BCREA Chief Economist Brendon Ogmundson. “While the year-over-year increase in provincial sales was quite strong, home sales in most areas are simply returning to historically average levels.”

MLS^® residential active listings in the province were up 4 per cent from September 2018 to 39,117 units and were essentially flat compared to August on a seasonally adjusted basis. Overall market conditions remained in a balanced range with a sales-to-active listings ratio of about 18 per cent.    
 
Year-to-date, BC residential sales dollar volume was down 12.4 per cent to $39.7 billion, compared with the same period in 2018. Residential unit sales were 8.9 per cent lower at 57,773 units, while the average MLS^® residential price was down 3.9 per cent year-to-date at $687,530.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Canadian employment increased in September by 54,000 jobs, driven by Ontario (41,000). This brought the unemployment rate down from 5.7% in the previous month to 5.5% in September. Leading the increase in September was full-time employment, while part-time fell. Most of the increase was reported in healthcare, and accommodation and food services.  

Employment in BC fell by 8,400 jobs in September. This marks the fourth consecutive monthly decline, driven by a decline in part-time employment (-17,200), while full-time employment rose (+8,800). By Industry, the most significant employment losses were in information/culture/recreation. The provincial unemployment rate fell by 0.2 percentage points to 4.8%. Compared to one year ago, employment in BC is up by 1% (33,400 jobs). 

Copyright British Columbia Real Estate Association. Reprinted with permission.

Home buyer demand has returned to more historically typical levels in Metro Vancouver over the last three months:

The Real Estate Board of Greater Vancouver* (REBGV) reports that residential home sales in the region totalled 2,333 in September 2019, a 46.3 per cent increase from the 1,595 sales recorded in September 2018, and a 4.6 per cent increase from the 2,231 homes sold in August 2019.

Last month’s sales were 1.7 per cent below the 10-year September sales average. “We’re seeing more balanced housing market conditions over the last three months compared to what we saw at this time last year,” Ashley Smith, REBGV president said. “Home buyers are more willing to make offers today, particularly in the townhome and apartment markets.”

There were 4,866 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2019. This represents a 7.8 per cent decrease compared to the 5,279 homes listed in September 2018 and a 29.9 per cent increase compared to August 2019 when 3,747 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 13,439, a 2.7 per cent increase compared to September 2018 (13,084) and a 0.3 per cent increase compared to August 2019 (13,396).

For all property types, the sales-to-active listings ratio for September 2019 is 17.4 per cent. By property type, the ratio is 12.7 per cent for detached homes, 18.9 per cent for townhomes, and 21.9 per cent for apartments. 

Generally, analysts say that 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. “This is a more comfortable market for people on both sides of a real estate transaction,” said Smith. “Home sale and listing activity were both at typical levels for our region in September.”

The MLS® Home Price Index composite benchmark price for all residential homes in Metro Vancouver is currently $990,600. This represents a 7.3 per cent decrease over September 2018 and a 0.3 per cent decrease compared to August 2019.

Sales of detached homes in September 2019 reached 745, a 46.7 per cent increase from the 508 detached sales recorded in September 2018. The benchmark price for a detached home is $1,406,200. This represents an 8.6 per cent decrease from September 2018 and is virtually unchanged compared to August 2019.

Sales of apartment homes reached 1,166 in September 2019, a 43.6 per cent increase compared to the 812 sales in September 2018. The benchmark price of an apartment property is $651,500. This represents a 6.5 per cent decrease from September 2018 and a 0.4 per cent decrease compared to August 2019.

Attached home sales in September 2019 totalled 422, a 53.5 per cent increase compared to the 275 sales in September 2018. The benchmark price of an attached home is $767,500. This represents a 7.2 per cent decrease from September 2018 and a 0.6 per cent decrease compared to August 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.

Growth in the Canadian economy was flat in July, following fourth months of growth. The goods producing industries reported a decline (-0.7%), led by mining, quarrying, and oil and gas. This was exacerbated by a facility shutdown in Newfoundland and Labrador. In contrast, the service-producers reported a gain (0.3%), leading the way was wholesale trade, professional services and real estate.

We expect growth in the Canadian economy will moderate to between 1.5 and 2 per cent  in the second half of 2019 after posting strong second quarter growth and will post trend growth of about 1.8 per cent in 2020. Significant downside risks remain due to elevated trade tensions and their consequent impact on exports and business investment.

Copyright British Columbia Real Estate Association. Reprinted with permission.