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Canadian Inflation (May 2022) - June 22, 2022
Canadian prices, as measured by the Consumer Price Index (CPI), rose 7.7 per cent on a year-over-year basis in May, up from 6.8 per cent last month. This was the fastest growth rate since January 1983. According to Statistics Canada, price rises were broad-based, with groceries up 9.7 per cent year-over-year, gasoline up 48 per cent, and shelter costs up 7.4 per cent. Excluding gasoline, the CPI rose 6.3 per cent year over year in May. Month-over-month, on a seasonally-adjusted basis, prices were up 1.1 per cent, the fastest pace since the introduction of the series in 1992. In BC, consumer prices rose 8.1 per cent year-over-year. Average hourly wages grew 3.9 per cent year-over-year in May, indicating a decline in purchasing power.
A steep trajectory for the overnight rate implies that the 5-year fixed mortgage rate could reach the 5 per cent level for the first time since 2009 while variable mortgage rates may rise to as high as 4.5 per cent. With the stress test for both insured and uninsured borrowers, prospective homebuyers are currently being qualified at a rate of 6.49 per cent with a strong possibility of qualifying at 7 per cent soon, a rate that has not been a reality in the Canadian mortgage market since the early 2000s.
Given how aggressive markets expect the Bank of Canada to be, any good news on inflation, or any significant deterioration in the Canadian economy, could see a significant reversal in the most recent jump in Canadian bond yields. However, the baseline case for now is a Bank of Canada that is single-minded in its pursuit of lower inflation.
A steep trajectory for the overnight rate implies that the 5-year fixed mortgage rate could reach the 5 per cent level for the first time since 2009 while variable mortgage rates may rise to as high as 4.5 per cent. With the stress test for both insured and uninsured borrowers, prospective homebuyers are currently being qualified at a rate of 6.49 per cent with a strong possibility of qualifying at 7 per cent soon, a rate that has not been a reality in the Canadian mortgage market since the early 2000s.
Given how aggressive markets expect the Bank of Canada to be, any good news on inflation, or any significant deterioration in the Canadian economy, could see a significant reversal in the most recent jump in Canadian bond yields. However, the baseline case for now is a Bank of Canada that is single-minded in its pursuit of lower inflation.
Canadian Employment (April 2022) - May 6, 2022
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Canadian Retail Sales (February 2022) - April 22, 2022
Canadian seasonally-adjusted retail sales rose 0.1 per cent to $59.9 billion in February. Despite declining sales at sales at motor vehicle and parts dealers (-5.1 per cent), higher sales at clothing and clothing accessories stores (+15.1 per cent) and gasoline stations (+6.2 per cent) drove the total upwards. Core retail sales, which strips out gasoline and motor vehicle and parts dealers, increased 1.4 per cent in February. In volume terms, sales were down 0.4 per cent.
In BC, seasonally-adjusted sales declined 0.9 per cent in February. Compared to the same month last year, retail sales were up 0.2 per cent in the province. In the Greater Vancouver region, sales fell 0.7 per cent month-over-month and were up 6 per cent year-over-year.
In February, Canadian e-commerce sales declined 16 per cent to 2.6 billion. As a result, e-commerce decreased from 6.2 per cent of total retail sales in January to 5.3 per cent in February. This percentage remains elevated relative to pre-pandemic levels.
In BC, seasonally-adjusted sales declined 0.9 per cent in February. Compared to the same month last year, retail sales were up 0.2 per cent in the province. In the Greater Vancouver region, sales fell 0.7 per cent month-over-month and were up 6 per cent year-over-year.
In February, Canadian e-commerce sales declined 16 per cent to 2.6 billion. As a result, e-commerce decreased from 6.2 per cent of total retail sales in January to 5.3 per cent in February. This percentage remains elevated relative to pre-pandemic levels.
Canadian Inflation (March 2022) - April 20, 2022
| 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. |
Bank of Canada Interest Rate Announcement - April 13, 2022
The Bank of Canada raised its overnight policy rate by 0.5 per cent to 1 per cent. This was the first rate increase of more than 0.25 per cent since May 2000. The Bank will also begin so called "quantitative tightening" , meaning it will be shrinking its balance sheet over time, reversing the expansion that occurred in response to the pandemic. In the statement accompanying the decision, the Bank noted that growth in Canada is strong and the economy is moving into a phase of excess demand with tight labour markets and significant pressure on consumer prices. The Bank expects the Canadian economy will grow 4.25 per cent this year before slowing to 3.25 per cent next year. On inflation, the Bank anticipates inflation will gradually decline from its current 6 per cent rate to 2.5 per cent by the second half of 2023. Finally, the Bank signalled that interest rates will need to rise further and that the timing and and pace of future increases will be guided by the Banks ongoing assessment of the economy.
With inflation stubbornly high through the first quarter of the year, exacerbated by the impact of the Russian invasion of Ukraine, and unemployment in Canada hitting a record low, the Bank has opted for a more aggressive stance. Clearly the Bank 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.
With inflation stubbornly high through the first quarter of the year, exacerbated by the impact of the Russian invasion of Ukraine, and unemployment in Canada hitting a record low, the Bank has opted for a more aggressive stance. Clearly the Bank 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.
Canadian Monthly Economic Growth (January 2022) - March 31, 2022
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.
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.
Canadian Inflation (February 2022) - March 16, 2022
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.
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.
Canadian Inflation (January 2022) - February 16, 2022
| Canadian prices, as measured by the Consumer Price Index (CPI), rose 5.1% on a year-over-year basis in January, up from 4.8% in December. On a month-over-month basis, the CPI rose 0.9% in January (0.6% seasonally adjusted). The Bank of Canada's preferred measures of core inflation (which use techniques to strip out volatile elements) rose an average of 3.2% year-over-year in January. Prices rose year-over-year across all major components of the index, but prices were driven in particular by a 6.2% rise in shelter costs, the highest rate of appreciation since February 1990. Goods (+7.2%) continued to rise at a faster pace than services (+3.4%) in January. In BC, consumer prices rose 4.3% year-over-year in January, driven in part by a 4.2% increase in average rents. While inflation may moderate over the second half of this year, especially if gasoline prices come down from record highs and home price growth slows, we expect that inflation will still be trending well above the Bank of Canada's 2 per cent target in 2022. To counteract this inflation, the Bank of Canada will begin raising its overnight rate at its March 2 meeting. We expect the Bank will increase its overnight rate a total of six 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. |
Canadian Employment (January 2022) - February 4, 2022
Canadian employment declined by 200,000 (-1.0%) in January following seven consecutive months of gains, according to Statistics Canada. Employment losses in January were driven by stricter public health measures implemented to control Omicron in Ontario, Quebec, and in the Maritimes during the survey reference week of January 9 to 15.
In January, youth, core-aged women, and workers in food and accommodation suffered the largest drops in employment. Part-time workers saw steeper losses (-117,000; -3.3%) relative to full-time workers (-83,000; -0.5%). In January, 10% of workers reported being absent from work due to sickness or injury. The Canadian unemployment rate rose 0.5% to 6.5% in January, while the labour force participation rate declined 0.4% to 65%.
In BC, the economic story diverged from much of the rest of the country. Employment rose modestly (+4,200; 0.2%), remaining at the highest level since the pandemic began. The unemployment rate continued declining in January, reaching 5.1%. For the first time since the pandemic began, the unemployment rate in BC reached pre-pandemic levels, falling below the level of February 2020. BC is now tied with Manitoba for the lowest unemployment rate among the provinces.
In January, youth, core-aged women, and workers in food and accommodation suffered the largest drops in employment. Part-time workers saw steeper losses (-117,000; -3.3%) relative to full-time workers (-83,000; -0.5%). In January, 10% of workers reported being absent from work due to sickness or injury. The Canadian unemployment rate rose 0.5% to 6.5% in January, while the labour force participation rate declined 0.4% to 65%.
In BC, the economic story diverged from much of the rest of the country. Employment rose modestly (+4,200; 0.2%), remaining at the highest level since the pandemic began. The unemployment rate continued declining in January, reaching 5.1%. For the first time since the pandemic began, the unemployment rate in BC reached pre-pandemic levels, falling below the level of February 2020. BC is now tied with Manitoba for the lowest unemployment rate among the provinces.
Provincial Housing Market Activity Normalizing into 2022 BCREA 2022 First Quarter Housing Forecast Update
Vancouver, BC – February 2, 2022. The British Columbia Real Estate Association (BCREA) released its 2022 First Quarter Housing Forecast Update today.
Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 17 per cent from a record high 2021 to 103,250 units this year. In 2023 MLS® residential sales are forecast to fall an additional 12 per cent to 90,200 units.
“We expected home sales in 2022 do moderate from the frenetic pace of 2021,” said BCREA Chief Economist Brendon Ogmundson. “However, sales activity will remain high by historical standards.”
The BC housing market is entering 2022 with the lowest level of active listings on record and significant demand-side momentum. That means strong sales should persist through the first few months of the year and supply will remain severely limited. As a result, continued upward pressure on home prices is expected in all markets.
As a result, home prices are expected to rise by 8.5 per cent in 2022 with much of that gain happening in the first half of the year. With sales activity normalizing in 2023 and inventories rebuilding, market conditions around the province should improve and price growth is anticipated to slow to 2.7 per cent.
Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 17 per cent from a record high 2021 to 103,250 units this year. In 2023 MLS® residential sales are forecast to fall an additional 12 per cent to 90,200 units.
“We expected home sales in 2022 do moderate from the frenetic pace of 2021,” said BCREA Chief Economist Brendon Ogmundson. “However, sales activity will remain high by historical standards.”
The BC housing market is entering 2022 with the lowest level of active listings on record and significant demand-side momentum. That means strong sales should persist through the first few months of the year and supply will remain severely limited. As a result, continued upward pressure on home prices is expected in all markets.
As a result, home prices are expected to rise by 8.5 per cent in 2022 with much of that gain happening in the first half of the year. With sales activity normalizing in 2023 and inventories rebuilding, market conditions around the province should improve and price growth is anticipated to slow to 2.7 per cent.
Canadian Monthly Economic Growth (November 2021) - February 1, 2021
The Canadian economy expanded 0.6 per cent in November on a month-over-month basis, propelled by strong growth across essentially all sectors. Canadian real GDP is now 0.2 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy was essentially flat in December.
At its most recent meeting, the Bank of Canada noted that the slack in the Canadian economy has been largely absorbed. Growth in the economy accelerated in the fourth quarter with real GDP growth tracking at 6.4 per cent annualized. Even with an expected Omicron driven slowdown in the first quarter of 2022, the Canadian economy is clearly on a very strong growth path. With inflation elevated and the robust growth, the Bank of Canada will begin raising its overnight rate at its March 2nd meeting, continuing quarterly rate hikes until the overnight policy rate reaches 1.75 per cent. Canadian 5-year fixed rates have already risen substantially, returning to their pre-pandemic level of about 2.9 per cent
At its most recent meeting, the Bank of Canada noted that the slack in the Canadian economy has been largely absorbed. Growth in the economy accelerated in the fourth quarter with real GDP growth tracking at 6.4 per cent annualized. Even with an expected Omicron driven slowdown in the first quarter of 2022, the Canadian economy is clearly on a very strong growth path. With inflation elevated and the robust growth, the Bank of Canada will begin raising its overnight rate at its March 2nd meeting, continuing quarterly rate hikes until the overnight policy rate reaches 1.75 per cent. Canadian 5-year fixed rates have already risen substantially, returning to their pre-pandemic level of about 2.9 per cent
Canadian Retail Sales (November 2021) - January 21, 2022
Canadian seasonally-adjusted retail sales rose 0.7% to $58.1 billion in November. The rise was driven by sales at gasoline stations (+4.9%), building material and garden equipment and supplies dealers (+3.0%) and food and beverage stores (+1.0%). Core retail sales, which strips out gasoline and vehicle and parts sales, increased 0.5% in November. Part of this growth was due to price growth--retail sales rose 0.2% in volume terms.
In BC, seasonally-adjusted sales rose 0.8% in November. Compared to the same month last year, retail sales were up 3.3% in the province. In the Greater Vancouver region, sales rose 0.7% month-over-month and were up 9.4% year-over-year.
In November, Canadian e-commerce sales rose from $3.3 billion to $4.3 billion. As a result, e-commerce increased from 5.4% of total retail sales in October to 6.9% in November. This percentage remains elevated relative to pre-pandemic levels.
In BC, seasonally-adjusted sales rose 0.8% in November. Compared to the same month last year, retail sales were up 3.3% in the province. In the Greater Vancouver region, sales rose 0.7% month-over-month and were up 9.4% year-over-year.
In November, Canadian e-commerce sales rose from $3.3 billion to $4.3 billion. As a result, e-commerce increased from 5.4% of total retail sales in October to 6.9% in November. This percentage remains elevated relative to pre-pandemic levels.
Canadian Inflation (December 2021) - January 19, 2022
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.
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.
A Record Year for the BC Housing Market
Vancouver, BC – January 12, 2022. 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.
“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.
Canadian Employment (December 2021) - January 7, 2021
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.
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.
Canadian Retail Sales (October 2021) - December 21, 2021
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Mortgage Rate Outlook
A lot has changed in the Canadian mortgage market in a very short period of time. The benchmark five-year government of Canada bond yield raced higher in October, nearly doubling in just under a month as financial markets and central banks once again pivoted their attention from the pandemic back to inflation. Indeed, a more hawkish-sounding Bank of Canada ended its Quantitative Easing program and signaled that its first rate increase may now occur in the middle of 2022, or about three-to-six months earlier than previously expected. These changes in the Bank's policy and language have prompted a dramatic market reassessment of both the timing and number of rate increases that may occur over the next year.
As a result of rising cost of capital for banks, Canadian fixed mortgages are also on the rise. The average five-year fixed rate increased from just over 2 per cent in September to 2.6 per cent currently. Based on our outlook for economic growth and inflation, as well as the Bank of Canada's new timetable for tightening monetary policy, we anticipate that the average five-year fixed rate will return to its pre-pandemic level of 3 per cent by the fourth quarter of 2022. Variable rates are forecast to rise along with the first Bank of Canada rate increase early in the third quarter of next year. The Bank considers its equilibrium overnight rate to be between 1.75 and 2.75 per cent. However, in Canada's last tightening cycle in 2018, the Bank was only able to bring its overnight rate to the lower end of that range before the economy showed signs of weakness. Two rate increases next year would bring the overnight rate to 0.75 per cent and implies a variable rate of about 2 per cent by the end of next year.
November Home Sales Lead to New Annual Record in BC
Vancouver, BC – December 15, 2021. 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.
“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.
Canadian Inflation (November 2021) - December 15, 2021
| 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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BC employment figures
US Real GDP Growth (Q4'2016) - January 27, 2017
US real GDP growth registered a weaker than expected 1.9 per cent growth the final quarter of 2016, and 1.6 per cent growth for the year as a whole. Growth was pulled lower by a widening US trade deficit, while consumer demand and business investment were robust. Most economists expect US economic growth to accelerate to about 2.2 per cent in 2017.
The pace of economic growth in the United States could be a key determinant in the BC housing market this year. While faster US growth is generally positive for the BC economy, a stronger pace of growth along with a possibly significant shift in the fiscal outlook due to the large tax cuts and ramped-up spending plans of the Trump administration, is already translating to rising long-term interest rates as markets anticipate higher inflation and consequent monetary tightening by the US Federal Reserve. In turn, that uptrend in rates is putting pressure on Canadian mortgage rates, with many lenders increasing their best offered rates.
Copyright British Columbia Real Estate Association. Reprinted with permission.
Canadian Retail Sales - January 20, 2017
Canadian retail sales inched 0.2 per cent higher in November. Sales were higher in just 5 of 11 sub-sectors, with motor vehicle and parts dealers and building materials supplies leading the way. E-commerce sales accounted for 3 per cent of total retail sales, the highest proportion to date in 2016. Given today's data, we are currently tracking fourth quarter Canadian real GDP growth at 1.5 per cent.
In BC, retail sales were down 0.7 per cent on a monthly basis, but were 5.5 per cent higher year-over-year. Year-to-date, retail sales in the province are up 6.5 per cent.
Copyright British Columbia Real Estate Association. Reprinted with permission.
Canadian Manufacturing Sales - January 19, 2017
Canadian manufacturing sales rose 1.5 per cent in November after posting a moderate decline the previous month. Sales were higher in 14 of 21 manufacturing sub-sectors. After adjusting for inflation, the total volume of sales was 1.2 per cent higher.
In BC, where the manufacturing sector is a significant employer and a key driver of economic growth, sales were up 2.4 per cent on a monthly basis and 9.2 per cent year-over-year. The manufacturing sector has been on a significant upswing after a slow first half with sales posting nearly 8 per cent growth over the second half of the year. That growth is adding to already strong momentum in other sectors and supporting housing demand across BC communities where manufacturing, particularly of forestry products, is an important driver of local economic activity.
Copyright British Columbia Real Estate Association. Reprinted with permission.
Bank of Canada Interest Rate Announcement - January 18, 2017
The Bank of Canada announced this morning that it is holding the target for its overnight rate at 0.5 per cent. In the press release accompanying the decision, the Bank noted that uncertainty in the global outlook, particularly with regard to policies in the United States, is undiminished. The Canadian economy is forecast to grow 2.1 per cent in both 2017 and 2018, implying the Canadian economy will return to full capacity in mid-2018. On inflation, the Bank noted that it continued to be lower than expected but should return to it 2 per cent target in coming months.
Political uncertainty in the United States will likely govern the direction of both policy rates and long-term bond yields over the next year. The interest rate on 5-year government of Canada bonds has risen to its highest point in a year, which is adding upward pressure to mortgage rates offered by Canadian lenders. While the Canadian economy is forecast to post steady growth in 2017, overall slack in the Canadian economy remains persistent. Without a significant uptick in economic growth, inflation will likely continue to trend at or below the Bank's 2 per cent target. That, along with lingering uncertainty, will keep the Bank sidelined through 2017 with a chance of lowering its target rate should current downside risks to the economy become realized.
Copyright British Columbia Real Estate Association. Reprinted with permission.
