Canadian prices, as measured by the Consumer Price Index (CPI), rose 4.8% on a year-over-year basis in December, up from 4.7% in November. On a month-over-month basis, the CPI declined 0.1% in December, the first monthly decline since December 2020. The Bank of Canada's preferred measures of core inflation (which use techniques to strip out volatile elements) rose an average of 2.9% year-over-year in December. Higher prices for food (+5.2%), passenger vehicles (+7.2%) and homeowners' home and mortgage insurance (+9.3%) were major drivers of growth in the headline CPI. Supply-chain difficulties continued contributing to price gains, as well as the flooding and infrastructure damage in BC. In BC, consumer prices were essentially flat month-over-month, and up 3.9% on a year-over-year basis. 

Inflation continues to run ahead of the Bank of Canada's 2 per cent target. Although transportation costs appear to be trending down, food and shelter costs are on the rise. While the food prices may reflect temporary supply chain issues, a recovery in Canadian rents and rising mortgage costs mean the shelter component of CPI may continue to rise in 2022. As a result, we expect this elevated level of inflation to persist through 2022 before prices begin moderating. The Bank of Canada has signaled that it will begin raising its policy rate this year, and markets are now expecting those rate increases to happen much earlier than previously anticipated, perhaps as early as the Bank of Canada meeting next week.

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Canadian housing starts fell to 236.1k units in December at a seasonally-adjusted annual rate (SAAR). This brings the total number of housing starts in 2021 to 271.2k, 16% above the previous record in 2004. Housing starts were down by 67.7k (22.3% m/m) in December (SAAR). Comparing year-over-year, starts were up slightly from December of 2020 (1.3% y/y). Single-detached housing starts dipped 3.4% in December to 70.8k, while multi-family and others dropped 28.3% to 165.3k (SAAR). 

In British Columbia, starts were up 39.1% in December, rising to 55.3k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 20.5% m/m to 8.7k units while multi-family starts leaped 47.9% to 42.3k units. Starts in the province were 26.7% above the levels from December 2020. Starts were up by 7.7k units in Vancouver, 3.6k in Victoria, 1.9k in Kelowna, and 1.5k in Abbotsford. The 6-month moving average trend declined 4.1% to 44.2k in December in BC. 

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The British Columbia Real Estate Association (BCREA) reports that a record 124,854 residential unit sales were recorded by the Multiple Listing Service^® (MLS^®) in 2021, a 32.8 per cent increase from the 94,001 units sold in 2020. The annual average MLS^® residential price in BC was $927,877, an 18.7 per cent increase from $781,572 recorded the previous year. Total sales dollar volume was $115.8 billion, a 57.7 per cent increase from 2020.

“Last year was a record year for BC homes sales with seven market areas setting new highs,” said BCREA Chief Economist Brendon Ogmundson. “Listings activity could not keep up with demand throughout the year. As a result, we start 2022 with the lowest level of active listings on record.” 

A total of 6,871 MLS^® residential unit sales were recorded across the province in December down 17.6 per cent from a record-setting December 2020. The average MLS^® residential price in BC passed the $1 million mark for the first time as the average price in three of the largest markets in the province were over $1 million in December. Total sales dollar volume was $7.1 billion, a 1.2 per cent increase year-over-year. 

Total active residential listings were down 41.2 per cent to a record low of 12,179 units. The supply situation is particularly concerning in the Fraser Valley, Chilliwack and Vancouver Island where there is one month or less of supply at the current pace of sales.  

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Canadian employment grew for the seventh consecutive month in December according to Statistics Canada, rising by 55,000 to 19.371 million (0.3%, m/m). Canadian employment had recovered to its pre-pandemic level in September and is now roughly 1.3% above that level. Since the prior survey period, public health measures were largely unchanged. The survey occurred prior to the emergence of the Omicron variant and restrictions were very low across the country. 

December employment gains were most pronounced among males aged 25-54, Ontarians, and those within the construction and education sectors. Fulltime employment increased by 123,000 (+0.8%) in December, whereas employment among those working part-time declined by 68,000 (-1.9%). The Canadian unemployment rate declined for a seventh consecutive month to 5.9%, the lowest level since the onset of the pandemic. The unemployment rate is now within 0.2% of the rate in February of 2020 (5.7%). 

In BC, employment was essentially flat (+400, m/m), remaining at the highest level since the pandemic began. The unemployment rate, however, declined in December, reaching 5.3%, the lowest level since the pandemic began. Only Quebec and Manitoba currently have a lower unemployment rate in Canada. 

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The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $1,230,200. This represents a 17.3% increase from December 2020.

Specifically:

- The benchmark price for detached homes increased 2.1% from Nov 2021 and increasd 22% from Dec 2020.

- The benchmark price for townhouses increased 1.5% from Nov 2021 and increased 22% from Dec 2020.

- The benchmark price for apartment/condos increased 1.2% from Nov 2021 and increased 12.8% from Dec 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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Canadian seasonally-adjusted retail sales rose 1.6% to $57.6 billion in October. The rise was driven by a rebound in sales at motor vehicle and parts dealers (+2.2%) as new car sales (+2.8%) recovered from previous declines. The effects of the semiconductor shortage which had curtailed sales of new cars eased somewhat in October. Preliminary estimates, based on roughly 40.9% of respondents reporting so far to Statistics Canada, indicate that retail sales rose 1.2% in November. 

In BC, seasonally-adjusted sales rose 0.3% in October. Compared to the same month last year, retail sales were up 1.6% in the province. Clothing sales rose the largest amount on a year-over-year basis in October, up 13.3%. In the Greater Vancouver region, sales rose 1.5% month-over-month and were up 10.8% year-over-year. 

In October, Canadian e-commerce sales rose from $3.2 billion to $3.3 billion. As a result, e-commerce increased from 5.4% of total retail sales in August to 5.5% in October. This percentage is lower than at most points since the onset of the pandemic but is elevated compared to pre-pandemic levels. 

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Congrats to my Happy BUYER!

Canadian prices, as measured by the Consumer Price Index (CPI), rose 4.7% on a year-over-year basis in November, matching the rate in October. On a month-over-month basis, the CPI was up 0.2% in November. The Bank of Canada's preferred measures of core inflation (which use techniques to strip out volatile elements) rose an average of 2.7% year-over-year in November. Higher prices for gasoline (+43.6%), furniture (+8.7%) and food (+4.4%) were the main drivers of growth in the headline CPI. Continuing supply-chain difficulties continued contributing to price gains, but the flooding in BC had no effect as data was collected prior to the floods in November. In BC, consumer prices were up 0.2% month-over-month, and up 3.3% on a year-over-year basis. 

Inflation continues to run ahead of the Bank of Canada's 2 per cent target. The driving force behind rising prices in November year-over-year was a 10% increase in transportation costs due to rising gasoline prices. Inflation from shelter costs was up month-over-month as home prices trended higher after flattening out over the summer. Those categories account for about 65% of the year-over-year rise in consumer prices in November. We expect this elevated level of inflation to persist through next year before prices begin moderating. The Bank of Canada is clearly concerned about rising consumer prices and have signaled that it will begin raising its policy rate in the second or third quarter of 2022.

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The British Columbia Real Estate Association (BCREA) reports that a total of 9,159 residential unit sales were recorded by the Multiple Listing Service^® (MLS^®) in November 2021, a decrease of 3.4 per cent from November 2020. The average MLS^® residential price in BC was $993,922, a 22.1 per cent increase from $814,310 recorded in November 2020. Total sales dollar volume was $9.1 billion, a 17.9 per cent increase from the same time last year. 

“Provincial MLS^® home sales reached a new annual record in November with still one month to go in 2021,” said BCREA Chief Economist Brendon Ogmundson. “Home sales have already surpassed the previous annual record of 112,425 units set in 2016.” 

Total active residential listings continued to tumbler lower, falling 39 per cent year-over-year to a record low for the province. Active listings are now about half of the level reached prior to the pandemic. 

Year-to-date, BC residential sales dollar volume is up 63.6 per cent to $108.7 billion compared to the same period in 2020. Residential unit sales were up 37.7 per cent to 117,973 units, while the average MLS^® residential price was up 18.8 per cent to $921,806. 

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Canadian housing starts rose to 301.3k units in November, reversing 5 months of consecutive declines. Housing starts were up by 62.9k (26.4% m/m) in November at a seasonally-adjusted annual rate (SAAR). Comparing year-over-year, starts were up strongly from November of 2020 (15% y/y). Single-detached housing starts dipped 1% in November to 73.3k, while multi-family and others jumped 38.9% to 228k (SAAR). 

In British Columbia, starts were up 9.8% in November, rising to 39.8k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts dropped 2.8% m/m to 7.2k units while multi-family starts offset this drop with a 13.7% rise to 28.5k units. Starts in the province were 20.1% below the levels from November 2020. Starts were down by 2.2k units in Vancouver but were offset by a 3.6k unit rise in Kelowna in November. The 6-month moving average trend declined 1.3k in November in BC.

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Canadian employment grew for the sixth consecutive month in November according to Statistics Canada, rising by 154,000 to 19.316 million (0.8%, m/m). Canadian employment had recovered to its pre-pandemic level in September and is now roughly 1% above that level. Since the prior survey period, public health measures were largely unchanged except for some capacity limits and distancing requirements being further eased in Ontario and Quebec. 

Employment gains in November were quite widely distributed across sectors of the economy. Employment increased in both the services-producing sector (+127,000) and the goods-producing sector (+26,000), while the employment rate for women aged 25 to 54 hit the highest rate ever recorded at 80.7%. The Canadian unemployment rate declined for a sixth consecutive month to 6.0%, the lowest level since the onset of the pandemic. The unemployment rate is now within 0.3% of the rate in February of 2020 (5.7%). 

In BC, employment grew by 4,600 to 2.697 million (0.17%, m/m), once again hitting the highest level since the pandemic began. The unemployment rate was flat in November, remaining at 5.6%, the lowest level since the pandemic began. Only Manitoba has a lower unemployment rate in Canada, while Quebec is tied with BC for the second-lowest rate. 

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