Steve Flynn  RE/MAX Crest Realty- Burnaby 

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Retail sales rose for the third consecutive month in July by 0.6% on a seasonally-adjusted basis, close to Statistic Canada's preliminary estimate of 0.7%. This marks a deceleration from the 23% rise in June and a 21% rise in May, as stores were reopening. Sales were up in 6 of 11 subsectors, led by higher sales at auto dealers and at gas stations. Excluding these two subsectors, retail sales declined by 1.2%. Compared to the same time last year, retail sales were up by 5%.    

Sales were up in five provinces in July, the most notable increases were in BC, Manitoba, and Alberta. In BC, seasonally-adjusted retail sales were up by 2.1% ($7.6 billion) and by 0.9% ($3.4 billion) in Vancouver. Retail sales were up in the majority of subsectors, except in electronics/appliances and at auto dealers.  

Growth in e-commerce sales continued to slow in July, up by 63% year-over-year, following a 71% rise in the previous month. The slowdown is a result of the expansion of the reopening of physical stores. In July, e-commerce sales totaled $2.8 billion, accounting for 4.8% of total retails sales, down from 5% in the previous month. This excludes Canadians purchasing from foreign e-commerce retailers.  
    
Early estimates provided by Statistics Canada for August suggest that retail sales increased by 1.1%. Overall, the recovery in retail sales has been V-shaped with pent-up demand largely dissipated. Government support programs and low interest rates will continue to support retail spending. However, elevated unemployment levels, uncertainty around the continuation of deferral programs, and rising COVID-19 cases could also pose challenges going forward. 



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 August year-over-year, matching last month's increase. Excluding gasoline, the CPI rose by 0.6%. Prices rose in five of eight components year-over-year with notable increases in food, shelter, and personal care, while prices continued to fall for transportation, clothing and footwear, and recreation. The Bank of Canada's three measures of trend inflation rose by 0.1 percentage points, averaging 1.7% in August. 

Regionally, the CPI was positive in five provinces. In BC, CPI rose by 0.2% in August year-over-year, matching last month's increase. Prices continued to rise for alcohol/tobacco/cannabis, food, shelter, household furnishings, and personal care. The increase in personal care was mainly due to higher prices for haircuts. In contrast, downward price pressures were ongoing in recreation, gas, transportation, and clothing and footwear.

As some provinces begin to re-visit containment measures seen earlier in the pandemic, inflation is expected to continue to be weak. In this environment, the Bank of Canada will keep interest rates low. 



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The British Columbia Real Estate Association (BCREA) reports that a total of 10,172 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in August 2020, an increase of 42.8 per cent from August 2019. The average MLS® residential price in BC was $771,309, a 12.7 per cent increase from $684,093 recorded the previous year. Total sales dollar volume in August was $7.8 billion, a 61.1 per cent increase over 2019.

“Very strong provincial home sales continued in August,” said BCREA Chief Economist Brendon Ogmundson. “While pent-up demand from the spring is driving much of the increase, we anticipate a sustained strong level of sales through the fall.”

Total provincial active listings are still down more than 10 per cent year-over-year, with some markets even more under-supplied as the pandemic continues to keep listings low. As a result, prices are sharply rising around the province.

Year-to-date, BC residential sales dollar volume was up 15.8 per cent to $40.4 billion, compared with the same period in 2019. Residential unit sales were up 4.9 per cent to 53,336 units, while the average MLS® residential price was up 10.4 per cent to $757,504. 



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Canadian housing starts increased by 7% m/m to 262,396 units in August at a seasonally adjusted annual rate (SAAR). This represents the fourth consecutive monthly increase and the fastest pace of national homebuilding since 2007, pushing up the six-month average to 213,144 units SAAR. August's increase was driven primarily by the multi-units segment in Ontario, marking the province's strongest pace of homebuilding since 1990. 

In BC, housing starts increased by 6% m/m to 44,883 units SAAR in August, following an increase of 42,883 in July. The increase was primarily driven by the multi-unit segment. Housing starts in August were above the pre-COVID level. In the near term, we can expect housing activity to continue to be supported by sales that occurred prior to the pandemic and historically low borrowing rates. Meanwhile, the value of residential building permits was down sharply in July by 34%. Compared to the same time last year, housing starts were up by 23%.  

Looking at census metropolitan areas in BC: 

- Housing starts in Vancouver were up by 22% m/m to 29,754 units SAAR in August. Both multi-units (25%) and singles (1%) were up. Compared to last year, housing starts were up by 50%, marking the first notable year-over-year increase in 2020.  

- In Victoria, housing starts were down by 34% m/m to 2,732 units SAAR. Compared to a year ago in August, housing starts were up by 64%.  

- In Kelowna, housing starts decreased by 24% m/m to 2,629 unit SAAR. Starts were down by 55% in the region compared to the same time last year. 

- Monthly housing starts in Abbotsford-Mission were up by 195% at 1,431 units SAAR. Compared to the same time last year, new home construction was up by 27%.




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The Bank of Canada held its overnight rate at 0.25 per cent this morning, a level it considers its effective lower bound. The Bank is also continuing its quantitative easing (QE) program, with large scale asset purchases of at least $5 billion per week in Government of Canada bonds. In the statement accompanying the decision, the Bank noted that the Canadian economy is evolving broadly in line with expectations, with a strong re-opening phase to be followed by slower, uneven growth and heavily reliant on policy support. 


Inflation remains close to zero, with downward pressure from energy prices and travel services, and is expected to remain below the Bank's 2 per cent target for some time.  The Bank re-emphasized its commitment to keep its policy rate at its effective lower bound of 0.25 per cent until slack is absorbed in the economy and inflation stabilizes around its 2 per cent target. Its QE program will continue until a recovery is well underway. Given the Bank's' current projections, that means rates could be on hold until 2022.

A recovery in the housing market is well underway with sales in BC surpassing their pre-COVID-19 level.  With the Bank committing to holding its policy rate at 25 basis points until slack in the economy is absorbed, and continuing its quantitative easing program of asset purchases, Canadian mortgage rates should remain at current historical lows for quite some time, providing a significant boost to the BC housing market.



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Canadian employment gained 246,000 jobs in August (1.4%, m/m), following a gain of 419,000 in July. Combined with gains in May and June, national employment is now within 1.1 million of its pre-COVID February level. The national unemployment rate fell by 0.7 percentage points to 10.2% from the previous month. August gains were driven by full-time work, wherein the previous month it was in part-time work. Employment continued to increase at a faster pace in the services sector with the help of growth in educational services, accommodation and food services, and in other services sectors. Compared to the same month last year, Canadian employment was down by 5.3% (-1 million). 

Regionally, employment increased in all provinces except in Alberta and in New Brunswick, with the largest gains in Ontario (142K) and Quebec (54K). In BC, employment grew by 15,000 (0.6%,m/m) in August, which follows a 70,000 gain in July. The province is now at 94% of its pre-COVID February employment level. The gain in August brought down BC's unemployment rate by 0.4 percentage points to 10.7%. Meanwhile, in Vancouver, employment decreased by 2,300 jobs in August. Compared to one year ago, employment in BC was down by 6.6% (-170K) jobs. 

Canadian employment grew for a fourth consecutive month, but the pace of growth is slowing. This was expected as containment restrictions were lifted in the early summer months, but have since halted in an effort to contain rising virus infections. Employment recovery is expected to continue to slow from here on, as many of the hardest-hit industries have reopened and educators start to return to school. 



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Home buyers and sellers remained active across Metro Vancouver* in August, with home sale and new listing activity outpacing the region’s historical averages:

 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,047 in August 2020, a 36.6 per cent increase from the 2,231 sales recorded in August 2019, and a 2.6 per cent decrease from the 3,128 homes sold in July 2020.

 

Last month’s sales were 19.9 per cent above the 10-year August sales average. “People who put their home buying and selling plans on hold in the spring have been returning to the market throughout the summer,” Colette Gerber, REBGV Chair said. “Like everything else in our lives these days, the uncertainty COVID-19 presents makes it challenging to predict what will happen this fall.”

 

There were 5,813 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in August 2020. This represents a 55.1 per cent increase compared to the 3,747 homes listed in August 2019 and a 2.3 per cent decrease compared to July 2020 when 5,948 homes were listed. This was 34.8 per cent above the 10-year August new listings average. The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,803, a 4.4 per cent decrease compared to August 2019 (13,396) and a six per cent increase compared to July 2020 (12,083). 


For all property types, the sales-to-active listings ratio for August 2020 is 23.8 per cent. By property type, the ratio is 23.7 per cent for detached homes, 30.5 per cent for townhomes, and 21.6 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.

 

“Low interest rates and limited overall supply of homes for sale are creating competition in today’s housing market,” Gerber said. “Your local REALTOR® can help you navigate today’s market and ensure that the latest public health requirements are followed at every step of the process. Above all, safety has to remain our top priority during this pandemic.”

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,038,700. This represents a 5.3 per cent increase over August 2019 and a 0.7 per cent increase compared to July 2020.

 

Sales of detached homes in August 2020 reached 1,095, a 55.1 per cent increase from the 706 detached sales recorded in August 2019. The benchmark price of a detached home is $1,491,300. This represents a 6.6 per cent increase from August 2019 and a one per cent increase compared to July 2020.

 

Sales of apartment homes reached 1,332 in August 2020, a 19.4 per cent increase compared to the 1,116 sales in August 2019. The benchmark price of an apartment property is $685,800. This represents a 4.5 per cent increase from August 2019 and a 0.5 per cent increase compared to July 2020.

 

Attached home sales in August 2020 totalled 620, a 51.6 per cent increase compared to the 409 sales in August 2019. The benchmark price of an attached home is $806,400. This represents a 4.4 per cent increase from August 2019 and a 1.1 per cent increase compared to July 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.



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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.