Posted on
October 30, 2024
by
Steve Flynn
Canadian retail sales rose 0.4 per cent to $66.6 billion in August from the previous month. Compared to the same time last year, retail sales are also up by 1.4 per cent. However, core retail sales, which exclude gasoline and automobile items, were down 0.4 per cent month-over-month. In volume terms, adjusted for rising prices, retail sales rose 0.7 per cent in August.
Retail sales in British Columbia were down 1.0 per cent in August month-over-month, while down 0.6 per cent compared to the same time last year. In the CMA of Vancouver, retail sales were down 1.4 per cent from the prior month and unchanged from August 2023.
August's retail sales show some positive signs in Canadian consumption while highlighting underlying weaknesses that have remained a challenge throughout 2024. On one hand, headline sales rose for a second consecutive month, and we saw the largest year-over-year gain since April. However, contracting core retail sales—which exclude volatile items—demonstrate an unsatisfactory level of consumer spending across goods and services, supporting the Bank of Canada's decision to cut rates by 50 basis points earlier this week. Moving toward their next meeting, the Bank will monitor whether retail activity (headline and core), GDP growth, and employment strengthen. Positive trends in these areas, coupled with CPI inflation returning to its midpoint, would propel the Bank back onto its regular trajectory of 25 basis point cuts until reaching their neutral range. Copyright British Columbia Real Estate Association. Reprinted with permission.
Posted on
October 23, 2024
by
Steve Flynn
The Bank of Canada lowered its overnight policy rate by 50 basis points this morning from 4.25 per cent to 3.75 per cent. In the statement accompanying the decision, the Bank noted that the economy continues to operate in excess supply as the labour market has softened and economic growth has been modest. However, the Bank does expect growth to strengthen rising from 1.2% this year to 2.1% in 2025. On inflation, the Bank stated that inflationary pressures are no longer broad-based and that consumer and business inflation expectations have largely normalized. The Bank expects inflation to remain close to its 2% target with upward pressures from shelter costs diminishing.
While the Bank normally reserves movements larger than 25 basis points for more urgent times, with inflation considerably undershooting the Bank’s forecast, monetary policy was about 40bps tighter in real terms than desired and it seems like the Bank preferred to catch-up all at once rather than risk falling further behind the curve. However, it has also risked setting a new precedent and will have to communicate its intentions going forward very carefully to avoid a market over-reaction. We expect that the Bank will be cutting again in December, though the Bank did not necessarily provide any hints on whether to expect a return to 25 basis point reductions or another jumbo-sized cut. Rather, the Bank simply cited the 50 basis point reduction was to support economic growth and to keep inflation in its preferred range of 1-3%, which is to say it did not say much at all. If inflation continues to fall from its current 1.6% pace or if the economy is looking increasingly weak, it would seem there is now a precedent for more aggressive cuts to the Bank's policy rate. Interestingly, Canadian 5-year bond yields (the key benchmark for 5-year fixed mortgage rates) have ticked slightly higher in recent days, back above 3%. Copyright British Columbia Real Estate Association. Reprinted with permission.
Posted on
October 17, 2024
by
Steve Flynn
The British Columbia Real Estate Association (BCREA) reports that 5,579 residential unit sales were recorded in Multiple Listing Service® (MLS®) systems in September 2024, up a little under 1 per cent from September 2023. The average MLS® residential price in BC in September 2024 was down 2.8 per cent at $942,969 compared to an average price of $969,907 in September 2023. The total sales dollar volume was $5.3 billion, a 2.1 per cent decline from the same time the previous year. BC MLS® unit sales were 25 per cent lower than the ten-year average for September.
“Thus far, falling mortgage rates have not had the expected impact on home sales,” said BCREA Chief Economist Brendon Ogmundson. “That said, there has been interesting regional variation with markets on Vancouver Island and in the North recording more historically normal activity while the Lower Mainland and parts of the Interior lag behind.”
Year-to-date, BC residential sales dollar volume is down 3.2 per cent to $56 billion, compared with the same period in 2023. Residential unit sales are down by 4.1 per cent year-over-year at 57,069 units, while the average MLS® residential price is up 1 per cent to $981,393. Copyright British Columbia Real Estate Association. Reprinted with permission.
Posted on
October 16, 2024
by
Steve Flynn
Canadian prices, as measured by the Consumer Price Index (CPI), rose 1.6 per cent on a year-over-year basis in September, down from a 2.0 per cent increase in August. This marks the slowest year-over-year increase since February 2021. Month-over-month, on a seasonally adjusted basis, CPI was unchanged in September. The deceleration in headline CPI was driven by a 10.7 per cent decrease in gasoline prices in September. This drop is largely attributed to lower crude oil prices due to pessimistic outlooks on economic growth, coupled with lower costs associated with switching to winter blends. Excluding gasoline, the CPI rose 2.2 per cent in September, matching August's increase. Mortgage interest costs were up 16.7 per cent, and rent was up 8.2 per cent from last September, both decreasing from August's numbers of 18.8 and 8.9 per cent, respectively. Overall, shelter costs rose 5.0 per cent year-over-year in September, down from 5.3 per cent in August. Finally, goods costs fell 1.0 per cent, while services costs rose 4.0 per cent year-over-year. In BC, consumer prices rose 2.0 per cent year-over-year, down from 2.4 per cent in August. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, remained unchanged from August at 2.3 and 2.4 per cent year-over-year, respectively. Canada's inflation report for September strongly resembles the patterns of August's report, with different takeaways. Similar to August, the stark dropoff in September's headline CPI is driven by sharp decreases in gasoline prices, with CPI ex-gasoline remaining at 2.2 per cent. Nonetheless, this downward pressure is a function of concerns regarding future economic conditions, thus serving as a proxy for investor/consumer expectations. Moreover, 9 out of 11 special aggregate CPIs published by Statistics Canada fell from August's levels, suggesting that consumption levels are weaker than expected by the Bank of Canada. Despite median and trimmed CPI remaining at 2.3 and 2.4 per cent, the strong dip in headline CPI will raise concerns that inflation is decelerating too quickly due to a weakening economy. Taken together, September's inflation report significantly increases the probability of a 50 basis point cut next week, in hopes of reigniting the economy for our final quarter. Copyright British Columbia Real Estate Association. Reprinted with permission.
Posted on
October 13, 2024
by
Steve Flynn
Canadian employment rose by 0.2 percent from the previous month, growing by 47,000 jobs to 20.582 million in September. Both unemployment and employment rates fell by 0.1 points to 6.5 per cent and 60.7 per cent, respectively. Average hourly wages rose 4.6 per cent year-over-year to $35.59 last month, while total hours worked were up 1.2 per cent from September of the previous year.
Employment in B.C. fell 0.6 per cent to 2.821 million with a loss of 18,000 jobs in September, marking the fifth consecutive month of provincial job losses. Employment in Metro Vancouver rose 0.2 per cent to 1.587 million in September. The unemployment rate in B.C. rose by 0.2 points to 6 per cent. On a similar trend, Vancouver's unemployment rate rose by 0.4 points year-over-year to 6.7 per cent.
September's employment statistics are a beginning sign of a rebounding labour market, with the unemployment rate ticking downward for the first time since January. Moreover, headline job growth is driven by strong private sector expansion (+61,000 jobs), suggesting that firms are willing to incur greater costs amidst continually improving borrowing conditions from the Bank's cutting cycle. Overall, these numbers indicate a slight economic bounceback, which may reduce the odds of a 50 basis point cut later this month. However, September's CPI report will provide more clarity on the economy's expectations of the Bank of Canada's announcements moving forward. Copyright British Columbia Real Estate Association. Reprinted with permission.
Posted on
October 8, 2024
by
Steve Flynn
Home sales registered on the MLS® in Metro Vancouver* declined 3.8 per cent year over year in September, suggesting recent reductions in borrowing costs are having a limited effect in spurring demand so far. Greater Vancouver REALTORS® (GVR)2 reports that residential sales in the region totalled 1,852 in September 2024, a 3.8 per cent decrease from the 1,926 sales recorded in September 2023. This was 26 per cent below the 10-year seasonal average (2,502). “Real estate watchers have been monitoring the data for signs of renewed strength in demand in response to recent mortgage rate reductions, but the September figures don’t offer the signal that many are watching for,” Andrew Lis, GVR’s director of economics and data analytics said. “Sales continue trending roughly 25 per cent below the ten-year seasonal average in the region, which, believe it or not, is a trend that has been in place for a few years now. With the September data, sales are now tracking slightly below our forecast however, but we remain optimistic sales will still end 2024 higher than 2023.” There were 6,144 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2024. This represents a 12.8 per cent increase compared to the 5,446 properties listed in September 2023. This was also 16.7 per cent above the 10-year seasonal average (5,266). The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 14,932, a 31.2 per cent increase compared to September 2023 (11,382). This is 24.2 per cent above the 10-year seasonal average (12,027). Across all detached, attached and apartment property types, the sales-to-active listings ratio for September 2024 is 12.8 per cent. By property type, the ratio is 9.1 per cent for detached homes, 16.9 per cent for attached, and 14.6 per cent for apartments. Analysis of the historical data suggests 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 some buyers choosing to stay on the sidelines, inventory levels have sustained the healthy gains achieved over the course of this year, providing much more selection to anyone searching for a home,” Lis said. With all this choice available, prices have trended sideways for the past few months. The September figures, however, are now showing modest declines across all segments on a month over month basis. This downward pressure on prices is a result of sales not keeping pace with the number of newly listed properties coming to market, which has now put the overall market on the cusp of a buyers’ market. With two more policy rate decisions to go this year, and all signs pointing to further reductions, it’s not inconceivable that demand may still pick up later this fall should buyers step off the sidelines.” The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,179,700. This represents a 1.8 per cent decrease over September 2023 and a 1.4 per cent decrease compared to August 2024. Sales of detached homes in September 2024 reached 516, a 9.8 per cent decrease from the 572 detached sales recorded in September 2023. The benchmark price for a detached home is $2,022,200. This represents a 0.5 per cent increase from September 2023 and a 1.3 per cent decrease compared to August 2024. Sales of apartment homes reached 940 in September 2024, a 4.9 per cent decrease compared to the 988 sales in September 2023. The benchmark price of an apartment home is $762,000. This represents a 0.8 per cent decrease from September 2023 and a 0.8 per cent decrease compared to August 2024. Attached home sales in September 2024 totalled 378, a 7.4 per cent increase compared to the 352 sales in September 2023. The benchmark price of a townhouse is $1,099,200. This represents a 0.5 per cent decrease from September 2023 and a 1.8 per cent decrease compared to August 2024. *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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