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Canadian real GDP grew by 0.4% in October, following a 0.8% increase in September. This is the weakest rate of growth since May but marks the sixth consecutive monthly increase in GDP since the steepest drop in Canadian history was observed earlier this year. Sixteen of the twenty industries reported an increase in output. Leading the increase was professional services (1.0%), while accommodation and food services reported a steep decline (-3.9%) as patios closed up and heightened restrictions were implemented.

Early estimates from Statistics Canada indicate that real GDP grew by 0.4% in November. We continue to anticipate growth, albeit at a slower rate as the economy has once again been hampered by rising COVID-19 cases and lockdowns in many provinces. The soft handoff to the new year will mean that the first quarter of 2021 will struggle to report any growth.



Copyright British Columbia Real Estate Association. Reprinted with permission.


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Canadian Retail Sales (Oct) - December 18, 2020


Retail sales rose for the sixth consecutive month in October by 0.4% on a seasonally-adjusted basis, which is higher than Statistic Canada's preliminary estimate of no change. Sales were up in 6 of 11 subsectors, representing 50.9% of retail sales. The increase was led by higher sales at auto and parts dealers. Compared to the same time last year, retail sales were up by 7.5%.    

Sales were up in seven provinces in October. In BC, seasonally-adjusted retail sales were up by 2.1% ($8.0 billion) and by 2.8% ($3.7 billion) in Vancouver. Contributing the most to the increase were sales at health and personal care stores. Compared to the same time last year, BC retail sales were up by 11.5%.   

In October, e-commerce sales totaled $3.1 billion, accounting for 5.2% of total retails sales, which is down from 5.6% in the previous month. Meanwhile, e-commerce sales were up by 68% from a year ago. This excludes Canadians purchasing from foreign e-commerce retailers.  
    
Despite the rising cases of COVID-19 and stricter lockdown measures in many provinces, positive retail sales are expected going into the holiday season, especially in e-commerce.    



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Canadian Inflation (Nov) - December 16, 2020


Canadian inflation, as measured by the Consumer Price Index (CPI) rose by 1.0% in November year-over-year. This is the largest increase since the pandemic started in March. Excluding gasoline, the CPI rose by 1.4%. Prices rose in six of eight components year-over-year in November, with the recreation, education, and reading index contributing the most to the increase. Growth in the Bank of Canada's three measures of trend inflation remains unchanged from the previous month, averaging 1.7%. 

Regionally, the CPI was positive in eight provinces. In BC, CPI rose by 1.1% in November year-over-year, up from October's increase of 0.5%. Strong price growth continued for health and personal care (3.3%) and shelter (2.4%). In contrast, gas prices continue to be a drag on BC's inflation (-12.3%). 

Costs for shelter continue to increase, as rental rates rise and record-low interest rates put downward pressure on mortgage costs, making single-family homes more attractive to households demanding more space. As containment measures expand in many provinces, consumers are spending more on furniture and household appliances, which remain above pre-pandemic levels. Canadian inflation is expected to remain subdued in the near future. In this environment, the Bank of Canada will continue to keep interest rates low.



Copyright British Columbia Real Estate Association. Reprinted with permission.

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Canadian Housing Starts (Nov) - December 16, 2020



Canadian housing starts increased by 14% m/m to 246,033 units in November at a seasonally adjusted annual rate (SAAR), following an increase in the previous month. Housing starts increased in 9 of 10 provinces with the strongest gains in BC and the Atlantic. Building activity in the multi-unit segment rebounded after two consecutive months of decline. November's strong performance increased the six-month moving average to a historic high of 231,491 units SAAR.  

In BC, housing starts increased by 53% m/m to 46,608 units SAAR in November, following two consecutive months of decline. Building activity was up by 76% in the multi-unit segment, while single-detached starts were down by 1%. The increase in the multi-unit segment was concentrated in Vancouver. In the near term, we can expect housing activity to continue to be supported by strong demand and historically low borrowing rates but are not expected to remain at elevated levels. The value of BC residential building permits was down by 12% in October. Compared to the same time last year, housing starts were down by 2% in BC.



Copyright British Columbia Real Estate Association. Reprinted with permission.

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BC Housing Market Posts Strongest November on Record


Vancouver, BC – December 14, 2020. 


The British Columbia Real Estate Association (BCREA) reports that a total of 9,416 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in November 2020, an increase of 42.1 per cent from November 2019. The average MLS® residential price in BC set a record of $816,074, a 9.3 per cent increase from $746,310 recorded the previous year. 


“Home sales were once again unseasonably strong in November with several markets setting records for the month,” said BCREA Chief Economist Brendon Ogmundson. “While demand continues to be strong, the supply of listings has reached near-record lows in several parts of the province, with prices rising sharply as a result.”

Active listings were down close to 14 per cent year-over-year in November, which contributed to a 34.8 per cent sales-to-active listings ratio. Consequently, the provincial average price rose 9.3 per compared to this time last year with many markets seeing even stronger price growth.

Year-to-date, BC residential sales dollar volume was up 32.3 per cent to $66.43 billion, compared with the same period in 2019. Residential unit sales were up 18.7 per cent to 85,625 units, while the average MLS® residential price was up 11.4 per cent to $775,845.



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Mortgage Rate Forecast (December 2020)


Highlights:

  • Bank of Canada actions have pushed mortgage rates to record lows
  • Canadian economy bounced back in the third quarter, but the second
    wave looms
  • Bank of Canada on hold, but when will quantitative easing end?


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The Bank of Canada maintained 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, purchasing at least $4 billion of Government of Canada bonds per week and re-affirmed its forward guidance on future interests moves, committing to holding the policy rate at 0.25 per cent until slack in the economy is absorbed and inflation is sustainably trending at 2 per cent.   In the statement accompanying the decision, the Bank noted that the recovery underway will be choppy due to rising cases of COVID-19 and will continue to require extraordinary monetary support from the bank.

Current slack in the economy, along with low energy prices, is holding Canadian inflation well below its target of 2 per cent. Total CPI inflation is trending under 1 per cent while the Bank of Canada’s measures of “core” inflation remain below target despite the massive expansion of the Bank’s balance sheet necessary to facilitate its quantitative easing program. With the arrival of viable vaccines, we may see the Canadian economic recovery materially accelerate in the second half of 2021. If that occurs, the first stage of tighter monetary policy from the Bank will be how and when it decides to taper purchases of government bonds over the next year. As it does,  we may start to see a divergence in variable and fixed rates by early summer as bond yields rise and fixed mortgage rates move marginally higher.



Copyright British Columbia Real Estate Association. Reprinted with permission.

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I have sold a property at 2006 1239 Georgia ST W in Vancouver

I have sold a property at 2006 1239 Georgia ST W in Vancouver.
Hot Bachelor Unit! At the Venus building in Coal Harbour, excellent starter unit for living or investment! Views: water, mountain, steps away to Robson St & SeaWall, Stanley Park, Marina; great studio suite w/quality built-in furniture; updates in recent years include: w/pull down Murphy bed & lots of closet spaces & built-in office desk, living room feature: floor to ceiling windows w/ gas F/P (incl in mtnce fee), open kitchen w/SS appliances, gas stove & strong hood fan vent. Nice balcony to enjoy scenic downtown, water & mountain views ; (1 locker, 1 parking, 1 pet okay) & rentals min 6 months. Building w/full gym, indoor pool/sauna, concierge, rec area & terrace, guest suites available. School Catchment: Lord Roberts Elementary & King George Secondary.
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New property listed in Coal Harbour, Vancouver West

I have listed a new property at 2006 1239 Georgia ST W in Vancouver.
Hot Bachelor Unit! At the Venus building in Coal Harbour, excellent starter unit for living or investment! Views: water, mountain, steps away to Robson St & SeaWall, Stanley Park, Marina; great studio suite w/quality built-in furniture; updates in recent years include: w/pull down Murphy bed & lots of closet spaces & built-in office desk, living room feature: floor to ceiling windows w/ gas F/P (incl in mtnce fee), open kitchen w/SS appliances, gas stove & strong hood fan vent. Nice balcony to enjoy scenic downtown, water & mountain views ; (1 locker, 1 parking, 1 pet okay) & rentals min 6 months. Building w/full gym, indoor pool/sauna, concierge, rec area & terrace, guest suites available. School Catchment: Lord Roberts Elementary & King George Secondary.
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Canadian employment gained 62k jobs in November (0.3%, m/m), increasing in Ontario, BC, and the Atlantic provinces. This is the seventh consecutive month of increases, putting national employment within 574k of its pre-COVID February level. The national unemployment rate decreased by 0.4 percentage points to 8.5%, continuing the steady fall from the record high of 13.7% in May. Compared to the same month last year, Canadian employment was down by 2.5% (-482k). 

In BC, employment grew by 24k (1.0%, m/m) in November, following a gain of 34k in the previous month. The province is now at 99% of its pre-COVID February employment level. The unemployment rate fell for the sixth consecutive month, down by 0.9 percentage points to 7.1%. Meanwhile, in Vancouver, employment increased by 18k jobs (1.2%, m/m). Compared to one year ago, employment in BC was down by 1.8% (-47K) jobs. 

Despite the new restrictions introduced and new COVID-related workplace safety requirements, employment still grew in BC but at a slower rate than the previous months. Gains in full-time work were partly offset by losses in part-time employment. Several industries saw increases, including accommodation and food services, transportation and warehousing, wholesale and retail trade, and construction. On the whole, we can expect employment growth to continue to slow as COVID-19 cases rise, and some provinces could prolong containment measures well into December and early 2021, as Quebec just announced heightened restrictions around holiday gatherings.



Copyright British Columbia Real Estate Association. Reprinted with permission.

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Canadian Quarterly Real GDP Q3, 2020 - December 2, 2020



Following a record contraction of the Canadian economy in the first half of 2020, the third quarter saw a vigorous rebound in economic growth.  Real GDP was up 8.9 per cent in the third quarter, or 40.5 per cent on an annualized basis, bringing the economy back to about 5 per cent of its pre-COVID-19 level.   Household spending rebounded, rising 13 per cent in the quarter, while investment in housing was up 30.2 per cent. Household savings, while down from its record setting second quarter, continues to be elevated through the pandemic and registered 14.6% in the third quarter. That compares to just 2 per cent in the fourth quarter of 2019.

The distressing second wave of COVID-19, and the restrictions it has necessitated, jeopardizes the recovery currently underway. We still expect the economy to post positive real GDP growth in the fourth quarter, though there is certainly the risk that a renewed fear of public spaces combined with targeted restrictions will prompt a modest retracing of output. The ultimate economic impact of COVID-19 by the end of 2020 will be a Canadian economy producing about 5.5 per cent less output than it did before the pandemic. That said, promising results from vaccine trials should lead the way to very strong growth in 2021 as pent-up consumption spending floods back into the economy. We expect Canadian real will growth by an average of 4 per cent over the next two years. 

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