Steve Flynn  RE/MAX Crest Realty- Burnaby 

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The Canadian economy contracted by 11.5 per cent from the first to the second quarter, or 38.9 per cent on a quarterly annualized basis, the steepest quarterly decline on record going back to 1961. Consumer spending fell 13.1 per cent as the start of the COVID-19 pandemic caused record job losses and prompted stores to close.  Business investment was down 16.2 per cent and exports fell 18.4 per cent as our trading partners dealt with the fallout of COVID-19 in their own economies.

The good news in an otherwise historically bad GDP report was that positive economic growth resumed with vigor following the record decline in April. The Canadian economy grew 4.8 per cent in May and 6.5 per cent in June, the highest monthly growth on record.  We are currently tracking third quarter real GDP growth at close to 8 per cent, or more than 30 per cent on a quarterly annualized basis. While that is a sharp and welcome rebound in economic activity, there is still quite a way to go before the Canadian economy is fully recovered. In fact, we do not expect real GDP to return to its pre-COVID-19 level until 2022.  That means that the current near-zero Bank of Canada policy rate and the resulting historically low 5-year fixed mortgage rates will be around for quite some time to come.



Copyright British Columbia Real Estate Association. Reprinted with permission.


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Canadian inflation, as measured by the Consumer Price Index (CPI) rose by 0.1% in July year-over-year, down from a 0.7% rise in the previous month. Excluding gasoline, the CPI rose by 0.7%. Inflation grew at a slower pace than in June due to a broad-based slowdown in price growth. Prices rose in five of eight components year-over-year, while prices fell for air transportation (-8.6%) and accommodations (-27%). This is the first year-over-year price decline in the transportation component since December 2015. Meanwhile, the Bank of Canada's three measures of trend inflation fell by 0.1 percentage points, averaging 1.6% in July. 

Regionally, the CPI was positive in five provinces. In BC, CPI rose by 0.2% year-over-year, following a 0.5% rise in June. Prices for food, alcohol/tobacco/cannabis, and health and personal care continued to rise in July, while downward pressure on gas prices eased up as people were using their vechicles more.

The impact of COVID-19 on some of the hard hit components are beginning to dissipate, excluding the transportation and accommodation sectors, which usually see a rise in the summer months. The path of inflation going forward will be a constant tension between various incentives such as reduced fees, discounts and promotions, against lower revenues due to physical distancing measures.



Copyright British Columbia Real Estate Association. Reprinted with permission.


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Canadian housing starts increased by 16% m/m to 245,604 units in July at a seasonally adjusted annual rate (SAAR), which was well above pre-COVID levels . This brought up the national housing starts six month average to 204,376 units SAAR. Housing starts were up across the country with notable growth in the Prairies and Atlantic Canada.  

In BC, housing starts was up 9% m/m to 42,381 units SAAR in July, following an increase of 38,840 in June. The increase was primarily driven by the multi-unit segment. Housing starts in July are back at pre-COVID levels. That being said, housing starts in the province showed resilience during the height of the pandemic when restrictions were the tightest. In the near term, we can expect housing activity to continue to be supported by pent-up demand and historically low borrowing rates. Compared to the same time last year, housing starts are down by 16%. Meanwhile, the value of residential building permits for June was up by 20% in the province.  

Looking at census metropolitan areas in BC: 

- Housing starts in Vancouver were up by 4% m/m in July to 24,395 units SAAR. Multi-units were up by 5%, while singles were down by 4%. Compared to last year in July, housing starts were down by 23%, which marks the fourth consecutive month of negative year-over-year growth.  

- In Victoria, housing starts were up by 77% m/m to 4,161 units SAAR. Compared to a year ago in July, housing starts were up by 14%.  

- In Kelowna, housing starts increased by 21% m/m to 3,457 unit SAAR. Starts were up by 138% in the region compared to the same time last year. 

- Monthly housing starts in Abbotsford-Mission were down by 18% at 479 units SAAR. Compared to the same time last year, new home construction was down by 84%.



Copyright British Columbia Real Estate Association. Reprinted with permission.



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Home buyer and seller activity in Metro Vancouver* exceeded historical levels in July:

 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,128 in July 2020, a 22.3 per cent increase from the 2,557 sales recorded in July 2019, and a 28 per cent increase from the 2,443 homes sold in June 2020. Last month’s sales were 9.4 per cent above the 10-year July sales average.

 

“We're seeing the results today of pent up activity, from both home buyers and sellers, that had been accumulating in our market throughout the year,” Colette Gerber, REBGV Chair said. “Low interest rates and limited overall supply are also increasing competition across our market.”

 

There were 5,948 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in July 2020. This represents a 28.9 per cent increase compared to the 4,613 homes listed in July 2019 and a 2.8 per cent increase compared to June 2020 when 5,787 homes were listed.

 

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,083, a 15.1 per cent decrease compared to July 2019 (14,240) and a 5.8 per cent increase compared to June 2020 (11,424).

 

“Safety remains the top priority for our REALTOR® community,” Gerber said. “We continue to limit in-person interactions with clients and employ different technology solutions to ensure home buyers and sellers can get as much information as possible in a virtual setting.”

 

For all property types, the sales-to-active listings ratio for July 2020 is 25.9 per cent. By property type, the ratio is 25.1 per cent for detached homes, 31.1 per cent for townhomes, and 24.7 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.

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,031,400. This represents a 4.5 per cent increase over July 2019 and a 0.6 per cent increase compared to June 2020.

 

Sales of detached homes in July 2020 reached 1,121, a 33.3 per cent increase from the 841 detached sales recorded in July 2019. The benchmark price for a detached home is $1,477,800. This represents a five per cent increase from July 2019 and a 0.9 per cent increase compared to June 2020.

 

Sales of apartment homes reached 1,400 in July 2020, a 12.6 per cent increase compared to the 1,243 sales in July 2019. The benchmark price of an apartment property is $682,500. This represents a 4.2 per cent increase from July 2019 and a 0.3 per cent increase compared to June 2020.

 

Attached home sales in July 2020 totalled 607, a 28.3 per cent increase compared to the 473 sales in July 2019. The benchmark price of an attached home is $797,700. This represents a 3.7 per cent increase from July 2019 and a 0.9 per cent increase compared to June 2020.



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.




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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.