The Canadian economy jumped 1.1 per cent in February, up for the ninth consecutive month. Goods-producing sectors rose 1.5 per cent while services-producing industries were up 0.9 per cent. Canadian real GDP is roughly 1.5 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy grew 0.5 per cent in March.

With a a very high figure for February and strong preliminary numbers continuing into March, the Canadian economy appears to be on a strong growth path as it emerges from the Omicron-related slowdown. The Bank of Canada has noted that the slack in the Canadian economy is largely absorbed, which is partly why it has hiked rates from 0.25 in March to 1 per cent currently. Amid strong GDP growth and high inflation, the expectation is that the bank will again raise rates at its upcoming June 1st announcement by another 0.5 per cent. BCREA forecasts that the bank will continue raising rates until the overnight policy rate reaches 1.75 per cent, the level which prevailed prior to the COVID-19 crisis.

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Canadian prices, as measured by the Consumer Price Index (CPI), rose 6.7% on a year-over-year basis in March, up from 5.7% in February. This was the largest gain since January 1991 (+6.7%). According to Statistics Canada, price rises were broad-based, with groceries up 8.7% year over year, gasoline up 39.8%, durable goods up 7.3%, restaurants up 5.4%, and shelter costs up 6.8%. Excluding gasoline, the CPI rose 5.5% year over year in March. On a monthly basis, prices were up 1.4%, following an increase of 1% in February. In BC, consumer prices rose 6.0% year-over-year. 

With inflation stubbornly high through the first quarter of the year and unemployment in Canada hitting a record low, the Bank of Canada is now planning to bring its policy rate back to a neutral level, between 1.75 and 2.75 per cent, much faster than previously anticipated. We expect the Bank will continue to tighten until there is clear evidence that inflation and inflation expectations are moderating back to normal levels. This more aggressive policy stance has already been priced into 5-year fixed mortgage rates, which are now on a path to surpassing 4 per cent for the first time in a decade.

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Canadian housing starts fell by 4.0k (-1.6%) to 246.2k units in March at a seasonally-adjusted annual rate (SAAR). Comparing year-over-year, starts were down from March of 2021 (-25.4% y/y). Single-detached housing starts rose 7.1% to 83.9k, while multi-family and others declined 5.6% to 162.3k (SAAR). 

In British Columbia, starts were down 6.7% in March, falling to 32.6k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 4.7% m/m to 8.1k units while multi-family starts declined 11.7% to 20.6k units. Starts in the province were 54.1% below the levels from March 2021. Starts were down by 2.9k units in Vancouver, 3.6k in Victoria, and 0.4k in Abbotsford, but rose 1.5k in Kelowna from last month. The 6-month moving average trend declined 1.5% to 39.6k in BC in March. 

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The British Columbia Real Estate Association (BCREA) reports that a total of 11,463 residential unit sales were recorded by the Multiple Listing Service^® (MLS^®) in March 2022, a decrease of 24.1 per cent from a record March 2021.

The average MLS^® residential price in BC was $1.096 million, a 15.7 per cent increase from $946,813 recorded in March 2021. Total sales dollar volume was $12.6 billion, a 12.1 per cent decline from the same time last year.

“Home sales in the province continue to moderate from record highs of this time last year,” said BCREA Chief Economist Brendon Ogmundson. “Given the sharp rise in Canadian mortgage rates and expected tightening from the Bank of Canada, activity will likely slow further in the second half of this year.”
 
Provincial active listings were 12.4 per cent lower than this time last year with the total inventory of homes for sale in the province at under 20,000 units. That level of inventory remains well below the roughly 40,000 listings needed for a balanced market.  
 
Year-to-date, BC residential sales dollar volume was down 4.1 per cent to $28.8 billion, compared with the same period in 2021. Residential unit sales were down 20.1 per cent to 26,577 units, while the average MLS^® residential price was up 20 per cent to $1.086 million. 

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CONGRATULATIONS to my HAPPY Buyers!

Canadian employment rose by 73,000 (+0.4%) in March hitting a fresh record for employment, according to Statistics Canada. The labour market is increasingly tight, with the Canadian unemployment rate declining to 5.3%, the lowest rate on record since comparable data became available in 1976. The total hours worked rose 1.3% in March while average hourly wages were up 3.4% on a year-over-year basis, up from 3.1% in February. Wage gains are below the inflation rate, however, which clocked in at 5.7% year-over-year in February.

Public health measures continued to ease prior to the survey reference week in March, driving labour market gains. Employment growth occurred in both the services-producing (+42,000; +0.3%) and the goods-producing (+31,000; +0.8%) sectors in March. The labour force participation rate was essentially unchanged at 65%.

BC's labour market continues to moderately outperform Canada's, with employment rising by 10,500 (0.4%) in March. Metro Vancouver's employment growth once again outpaced the province, with employment rising 9,300 (0.6%). Seasonally-adjusted employment in BC is not only above pre-pandemic levels, but hit a record high for a 6th consecutive month. The unemployment rate ticked upwards slightly in March, reaching 5.1%. Among the provinces, only Quebec and Saskatchewan have lower unemployment rates. 

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The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $1,360,500. This represents a 3.6% increase from February 2022 and a a 20.7% increase from March 2021.

Specifically:

- The benchmark price for detached homes increased 3.6% from Feb 2022 and increased 23.4% from Mar 2021.

- The benchmark price for townhouses increased 4.4% from Feb 2022 and increased 28.1% from Mar 2021.

- The benchmark price for apartment/condos increased 3.4% from Feb 2022 and increased 16.8% from Mar 2021.

* 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 Canadian economy rose 0.2% in January, up for the eighth consecutive month. Goods-producing sectors rose 0.8% while services-producing industries remained flat on Omicron-related restrictions. Canadian real GDP is roughly 0.4 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy grew 0.8% in February.

With a high preliminary estimate for February, the Canadian economy appears to be on a strong growth path as it emerges from the Omicron-related slowdown. The Bank of Canada has noted that the slack in the Canadian economy is largely absorbed, which is partly why it hiked rates from 0.25% to 0.5% in early March. Amid strong GDP growth and high inflation, the expectation is that the bank will again raise rates at its upcoming announcement on April 13th by another 0.25% or even 0.5%. BCREA forecasts that the bank will continue raising rates until the overnight policy rate reaches 1.75 per cent, the level which prevailed prior to the COVID-19 crisis.

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Canadian seasonally-adjusted retail sales rose 3.2% to $58.9 billion in January. The increase was driven by a rebound in sales at motor vehicle and parts dealers (+5.3%) and new car dealers (+5.5%). Sales rose in 9 of 11 subsectors of the economy. Core retail sales, which strips out gasoline and vehicle and parts sales, increased 2.9% in January. In volume terms, sales were up 2.9%. 

In BC, seasonally-adjusted sales rose 4% in January. Compared to the same month last year, retail sales were up 2.1% in the province. In the Greater Vancouver region, sales rose 5.4% month-over-month and were up 11% year-over-year. 

In January, Canadian e-commerce sales declined 28% to 3.2 billion. As a result, e-commerce decreased from 6.9% of total retail sales in December to 6.3% in January. This percentage remains elevated relative to pre-pandemic levels.

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Canadian prices, as measured by the Consumer Price Index (CPI), rose 5.7% on a year-over-year basis in February, up from 5.1% in January. This was the largest gain since August 1991 (+6.0%). According to Statistics Canada, price rises were broad-based, with groceries up 7.4% year over year, gasoline up 32.2%, and shelter costs up 6.6%. Excluding gasoline, the CPI rose 4.7% year over year in February. The Bank of Canada's preferred measures of core inflation (which use techniques to strip out volatile elements) rose an average of 3.5% year-over-year in February. In BC, consumer prices rose 4.7% year-over-year in February. 

Tightening monetary policy by the Bank of Canada should slow demand and help to bring inflation down, though that will take time and rising oil and commodity prices caused by the Russian invasion of Ukraine presents a risk of high inflation persisting longer than expected. Volatility in global financial markets briefly interrupted the upward march of long-term interest rates, however bond markets are once again pricing in an aggressively inflation-fighting Bank of Canada. We expect the Bank will increase its overnight rate five more times over the next year, bringing its key policy rate to 1.75 per cent before pausing to assess the impact of higher interest rates on the economy.

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Canadian housing starts rose by 18.1k (7.9%) to 247.3k units in February at a seasonally-adjusted annual rate (SAAR). Comparing year-over-year, starts were down from February of 2021 (7.4% y/y). Single-detached housing starts were largely unchanged from January at 78.1k, while multi-family and others rose 12% to 169.2k (SAAR). 

In British Columbia, starts were down 10.1% in February, falling to 35.5k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 3.1% m/m to 7.4k units while multi-family starts declined 15.1% to 23.9k units. Starts in the province were 21.9% below the levels from February 2021. Starts were down by 5.1k units in Vancouver, 0.5k in Kelowna, and 0.6k in Abbotsford, but rose 1.5k in Victoria from last month. The 6-month moving average trend declined 4.5% to 40.4k in BC in February. 

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The British Columbia Real Estate Association (BCREA) reports that a total of 8,902 residential unit sales were recorded by the Multiple Listing Service^® (MLS^®) in February 2022, a decrease of 18.8 per cent from February 2021. The average MLS^® residential price in BC was $1.109 million, a 24.9 per cent increase from $887,866 recorded in February 2021. Total sales dollar volume was $9.9 billion, a 1.5 per cent increase from the same time last year. 

“While sales are not keeping pace with the unprecedented level of activity we saw this time last year, demand continues to be quite strong,” said BCREA Chief Economist Brendon Ogmundson. “There are some encouraging signs that listings are recovering from historical lows, but there is a very long way to go before markets achieve balance.”
 
Provincial active listings were 19 per cent lower than this time last year with the total inventory of homes for sale in the province at just 16,000 units. That level of inventory is well below the roughly 40,000 listings needed for a balanced market.  

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Canadian employment rose by 337,000 (+1.8%) in February more than reversing a 200,000 decline in January driven by Omicron-related public health measures, according to Statistics Canada. The labour market is increasingly tight, with the Canadian unemployment rate declining to 5.5%, a level lower than prior to the pandemic in February 2020 (5.7%) for the first time. The total hours worked (+3.6%) as well as the employment rate (+1.0%) also rose strongly. 

As public health measures were partly lifted by the survey reference week in February, gains were concentrated in the Accommodation and Food Services (+114,000; +12.6%), and Information, Culture and Recreation (+73,000; +9.9%) sectors. Private sector employment rose by 2.8% to 347,000. On a year-over-year basis, wages were up 3.1%. The number of long-term unemployed Canadians fell by 51,000 (-19.4%) in February. 

In BC, employment rose more modestly than the rest of Canada (+21,000; 0.8%), but growth is very strong given that the province suffered no employment decline in January. Employment growth in February was concentrated in the Vancouver CMA (+18,000). Seasonally-adjusted employment in BC is not only above pre-pandemic levels, but hit a record high for a 5th consecutive month. The unemployment rate continued declining in BC, reaching 4.9%, the lowest rate since January 2020. Among the provinces, only Quebec, Saskatchewan, and Manitoba have lower unemployment rates. 

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The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $1,313,400. This represents a 4.6% increase from January 2022.

Specifically:

- The benchmark price for detached homes increased 4.7% from Jan 2022 and increasd 25% from Feb 2021.

- The benchmark price for townhouses increased 5.9% from Jan 2022 and increased 27.2% from Feb 2021.

- The benchmark price for apartment/condos increased 4.1% from Jan 2022 and increased 15.9% from Feb 2021.

* 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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