BCREA 2019 Fourth Quarter Housing Forecast


Vancouver, BC – November 6, 2019. The British Columbia Real Estate Association (BCREA) released its 2019 Fourth Quarter Housing Forecast today.


Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 1.8 per cent to about 77,100 units this year, after recording 78,505 residential sales in 2018. MLS® residential sales are forecast to increase 10.9 per cent to 85,500 units in 2020, just below the 10-year average for MLS® residential sales of 85,800 units.


“After a slow start to 2019, MLS® home sales in BC have embarked on a sustained upward trend since the spring,” said Brendon Ogmundson, BCREA Chief Economist. “The dampening effects of federal mortgage rules mean that rather than a return to the heights of recent years, home sales are simply returning to trend after sustaining a significant shock.” 


As demand normalizes, the accumulation of resale inventory has reversed course in many markets around BC. We anticipate that this trend will continue in 2020, with sales and listings finding balance. For most markets, this will mean price growth that is in-line with inflation, though for some supply-constrained areas we are forecasting strong price growth. We anticipate that the MLS® average price will decline 2 per cent in 2019 before rising modestly by 3.6 per cent to $723,000 in 2020.

Read full post

The Canadian economy grew by 0.1% in August, following no growth in July. The goods producing industries reported growth of 0.2% after two months of declines, led by a rebound in manufacturing primarily due to increased sales. A decline of 0.1% was reported in the services producing industries, largely due to decreases in wholesale trade and utilities. Activity at offices of real estate agents and brokers increased 1.8% in August, as housing re-sale activity was up in the majority of Canadian urban markets.

We expect growth in the Canadian economy will moderate to around 1.5 per cent in the second half of 2019 after posting strong second quarter growth and will post trend growth of about 1.8 per cent in 2020. Significant downside risks remain due to elevated trade tensions and their consequent impact on exports and business investment.

Read full post

The Bank of Canada held its overnight rate at 1.75 per cent this morning. In the statement accompanying the decision, the Bank noted that ongoing trade conflicts have weakened the global economic outlook, which is expected to drag Canadian economic growth below its potential in the second half of this year. The bank is further projecting that growth will register under 2 per cent over the next two years. Inflation is expected to trend at the Bank's target of 2 per cent.

With the expectation that the US Federal Reserve will be lowering its own policy rate later today, the third rate cut this year, there may be extra pressure for the Bank to begin loosening monetary policy at its next meeting.  As reflected by the Bank's statement, while current trade conflicts will test the resilience of the Canadian economy, the Bank does not as yet foresee the need for lower interest rates. However, the Bank stands ready to act if the impact of trade conflicts spreads beyond trade and investment and begin to slow consumer spending or housing activity. Thus far, the Bank appears to judge those risks as contained, which likely mean no change in interest rates this year.

Read full post

Canadian retail sales decreased by 0.1% in August to $51.5 billion, driven largely by lower sales at food and beverage stores and at gasoline stations. Retail sales were down in 6 of 11 sub-sectors, representing 51% of sales. Regionally, 4 of 10 provinces reported a decrease in August with notable declines reported in Ontario (-0.8%) and Manitoba (-1.6%).


In B.C., retail sales rose by 0.8% to $7.2 billion in August, ending four consecutive months of declines. Vancouver also reported a monthly increase of 1.7% in sales. Provincial sales were up in 7 of 11 sub-sectors, largely driven by sales at food and beverage stores and to a lesser extent, in furniture and home furnishings. On a year-over-year basis, B.C. retail sales were down by 0.4% in August.

Read full post

Canadian inflation, as measured by the Consumer Price Index (CPI), rose by 1.9 per cent compared to the same time last year, equaling the increase in August. Excluding the impact of lower energy prices, the CPI was up 2.4 per cent year-over-year. The Bank of Canada's three measures of trend inflation were all slightly higher in September, averaging 2.1 per cent. In B.C., CPI inflation ticked higher to 2.4 per cent in September compared to a year ago.

A recent surge in national employment growth combined with inflation at its 2 per cent target, plus some quieting of trade tensions globally, means that the Bank of Canada will likely remain on hold at its October meeting.

Read full post

Vancouver, BC – October 15, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 6,938 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in September, an increase of 24 per cent from the same month last year. The average MLS® residential price in the province was $697,943, an increase of 2.1 per cent from September 2018. Total sales dollar volume was $4.84 billion, a 26.5 per cent increase from the same month last year.

“Markets across BC built on momentum from the summer,” said BCREA Chief Economist Brendon Ogmundson. “While the year-over-year increase in provincial sales was quite strong, home sales in most areas are simply returning to historically average levels.”

MLS® residential active listings in the province were up 4 per cent from September 2018 to 39,117 units and were essentially flat compared to August on a seasonally adjusted basis. Overall market conditions remained in a balanced range with a sales-to-active listings ratio of about 18 per cent.     

Year-to-date, BC residential sales dollar volume was down 12.4 per cent to $39.7 billion, compared with the same period in 2018. Residential unit sales were 8.9 per cent lower at 57,773 units, while the average MLS® residential price was down 3.9 per cent year-to-date at $687,530.   

Read full post

Canadian inflation, as measured by the Consumer Price Index (CPI) rose by 1.9 per cent in August year-over-year, down from a 2 per cent increase in the previous month. This marks 6-months of consecutive year-over-year growth in the CPI, coinciding with strong labour market conditions. Excluding the impact of lower gasoline prices, the CPI rose by 2.4 per cent year-over-year. The Bank of Canada's three measures of trend inflation remain unchanged to average 2 per cent in August.

In B.C., CPI slowed to 2 per cent year-over-year, down from 2.1 per cent in July. The decline was largely driven by gasoline prices, as global oil prices declined slightly in August due to higher production and soft international demand. 

With Canadian inflation just under 2 per cent, the Bank of Canada will have to turn to other economic indicators at their next meeting on October 28. The Bank will have to consider how to balance a stable domestic economy with continued global uncertainty.  

Read full post

Vancouver, BC – September 12, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 7,093 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in August, an increase of 4.9 per cent from the same month last year. The average MLS® residential price in the province was $685,575, an increase of 2.6 per cent from August 2018. Total sales dollar volume was $4.86 billion, a 7.6 per cent increase from the same month last year.

BC home sales continue to recover from a policy-driven downturn,” said BCREA Deputy Chief Economist Brendon Ogmundson. Home sales have been rising through the spring and summer, but still remain well below pre-B20 stress test levels."

MLS® residential active listings in the province were up 10 per cent from August 2018 to 40,098 units and were essentially flat compared to July on a seasonally adjusted basis. Overall market conditions remained in a balanced range with a sales-to-active listings ratio of about 18 per cent.    
 
Year-to-date, BC residential sales dollar volume was down 16 per cent to $34.9 billion, compared with the same period in 2018. Residential unit sales were 12.2 per cent lower at 50,806 units, while the average MLS® residential price was down 4.4 per cent year-to-date at $686,303.   
Read full post

The BC housing market appears to be stabilizing after a year and a half of volatility induced by the B20 mortgage stress test and other policy measures. Total MLS® unit sales are on pace to finish 2019 at just under 75,000 units, a 5 per cent decline from 2018. Home sales posted a sharp rebound over the summer, buttressed by strong employment growth and a decline in mortgage rates. We expect that most markets will normalize around long-term averages in 2020, with total provincial sales reaching 82,710 units.

Growth in the BC economy is projected to slow for a second consecutive year in 2019. A policy driven slowdown in housing activity, a challenging global trade environment and cautious consumer spending have provincial real GDP on pace to grow at about 2.2 per cent this year. Our baseline forecast is for slightly improved economic growth at 2.5 per cent in 2020, as spending on LNG projects ramp up and the impacts of restrictive mortgage credit begin to fade. There remains significant downside risk around this forecast, however, given the uncertain economic outlook in the United States.

Housing starts in the province were much higher than anticipated through the first half of 2019 as some construction activity in the Metro Vancouver area was pushed forward to avoid higher development costs slated to be implemented in the back half of the year. While we do expect the pace of new home construction to moderate, the large pipeline of units under construction ensures that markets will be well supplied in the short-run. A recovery in home sales has slowed the accumulation of resale inventory, with active listings still well short of the previous peak in 2012. That leaves market conditions at the provincial level essentially balanced with little upward pressure on prices. We anticipate that the MLS® average price will decline 2.3 per cent in 2019 before rising modestly by 3.2 per cent to $718,000 in 2020.

Read full post

The Bank of Canada left its target for the overnight rate unchanged at 1.75 per cent this morning. In the statement accompanying the decision the Bank noted escalated trade tensions between the US and China has resulted in weakened  business investment, lower commodity prices and heightened global risk.  While the Canadian economy posted strong growth in the second quarter of this year, the Bank attributes that growth to temporary factors unlikely to be repeated in the back half of the year. Overall, the Bank judges that the economy is operating close to its potential and inflation is in line with its target.  However, rising uncertainty in the global economy is impacting economic growth and further escalation may require additional monetary stimulus.

While the Bank of Canada, as expected, opted to not follow other central banks in lowering its policy rate, it has left the door open to lowering rates should developments in the global economy warrant doing so. Currently, economic conditions in Canada do not require further stimulus, and policymakers remain weary of re-igniting a build-up in household debt particularly after imposing policies designed to bring those debt burdens down.  We expect the  Bank will therefore remain on hold as long as current economic risk does not reach a tipping point, such as an impending recession in the United States.  As the uncertain global outlook keeps bond yields down, Canadian mortgage rates should stay near their current sub-3 per cent level for some time.
Read full post

 


Vancouver, BC – August 13, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 7,930 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in July, an increase of 12.4 per cent from the same month last year. The average MLS® residential price in the province was $684,497, a decline of 1.6 per cent from July 2018. Total sales dollar volume was $5.43 billion, a 10.5 per cent increase from the same month last year.  
 
“BC home sales climbed higher for the first time in 18 months on a year-over-year basis in July,” said BCREA Chief Economist Cameron Muir. Housing demand has also trended higher since March, rising 21 per cent on a seasonally adjusted basis. “Households appear to be adjusting to the tighter credit environment as the shock of the B20 stress test dissipates.” 

MLS® residential active listings in the province trended lower in July, down 3 per cent from June and 6 per cent from April on a seasonally adjusted basis. Active listings were up 12.4 per cent to 41,621 units on a year-over year basis, while overall market conditions remained unchanged from 12 months ago with the sales-to-active listings ratio at 19.1 per cent.   

Year-to-date, BC residential sales dollar volume was down 18.9 per cent to $30 billion, compared with the same period in 2018. Residential unit sales decreased 14.4 per cent to 43,612 units, while the average MLS® residential price was down 5.3 per cent to $687,413.
 


Read full post

Vancouver, BC – July 15, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 6,960 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in June, a decline of 11.8 per cent from the same month last year. The average MLS® residential price in the province was $687,584, a decline of 4 per cent from June 2018. Total sales dollar volume was $4.8 billion, a 15.3 per cent decline from the same month last year.

“BC home sales moderated lower in June after a stronger showing in May,” said BCREA Deputy Chief Economist Brendon Ogmundson. “While mortgage rates offered by lenders have moved below 3 per cent, a static qualifying rate has limited the impact of the lower cost of borrowing.”

Total MLS® residential active listings were up 18.6 per cent to 42,625 units compared to the same month last year and were essentially flat on a seasonally adjusted basis compared to May.

Year-to-date, BC residential sales dollar volume was down 23.4 per cent to $24.5 billion, compared with the same period in 2018. Residential unit sales decreased 18.7 per cent to 35,679 units, while the average MLS® residential price was down 5.8 per cent to $688,080..

Read full post

Read BCREA's latest BCREA Market Intelligence Report: The Impact of the B20 Stress Test on BC Home Sales in 2018 (July 2019). Summary findings include: the decline in home sales in 2018 was largely due to market factors like interest rates and affordability; without the stress test, home sales in BC would have been about 7,500 sales—or 10% higher—in 2018; and approximately $500 million in BC economic activity was lost due the B20 stress test.

Read full post

BCREA 2019 Second Quarter Housing Forecast

Vancouver, BC – June 18, 2019. The British Columbia Real Estate Association (BCREA) released its 2019 Second Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 9 per cent to 71,400 units this year, after recording 78,346 residential sales in 2018. MLS® residential sales are forecast to increase 14 per cent to 81,700 units in 2020. The 10-year average for MLS® residential sales in the province is 84,300 units.

“The shock to affordability from restrictive mortgage policies, especially the B20 stress test, will continue to limit housing demand in the province this year,” said Cameron Muir, BCREA Chief Economist. “However, a relatively strong economy and favourable demographics are likely creating pent-up demand in the housing market,”

The inventory of homes for sale has climbed out of a cyclical low, leading to balanced market conditions in many areas and buyer’s market conditions in some communities and across some products types. Current market conditions are expected to provide little upward pressure on home prices this year, with the average annual residential price forecast to remain essentially unchanged, albeit down 2 per cent to $697,000. Modest improvement in consumer demand is expected to unfold though 2020, pushing the average residential price up 4 per cent to $726,000.

Read full post

Vancouver, BC – June 5, 2019. The BCREA Commercial Leading Indicator (CLI) rose by 1.3 points to 135.2 in the first quarter of 2019. Compared to this time one year ago, the index is 1.1 per cent higher.

“While economic activity remained tepid at the start of 2019, a rebound in financial markets pushed the CLI higher,” says BCREA Deputy Chief Economist Brendon Ogmundson. “That signals a lower risk environment, but a slowing economy may impact future commercial real estate activity.”

Following several years of robust growth, the BC economy continues to slow in the early part of 2019. The economic activity component of the CLI posted a third consecutive quarterly decline. Employment in key commercial real estate sectors was mixed. The CLI measure of office employment now sits at an all-time high, which signals strong future demand for office space. Volatile financial markets led to recent swings in the underlying CLI index, but the trend remains flat, pointing to stable commercial activity in 2019.

Read full post

Vancouver, BC – May 14, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 6,652 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in April, a decline of 18.9 per cent from the same month last year. The average MLS® residential price in the province was $685,304, a decline of 6.2 per cent from April 2018.Total sales dollar volume was $4.6 billion, a 23.9 per cent decline from the same month last year.

“BC home sales were essentially unchanged from March on a seasonally adjusted basis,” said BCREA Chief Economist Cameron Muir. “Prospective home buyers continue to grapple with the decline in their purchasing power caused by federal government changes to mortgage policy.”

Total MLS® residential active listings increased 33.6 per cent to 38,672 units compared to the same month last year. The ratio of sales to active residential listings declined from 28.4 per cent to 17.2 per cent over the same period.

Year-to-date, BC residential sales dollar volume was down 29.8 per cent to $13.9 billion, compared with the same period in 2018. Residential unit sales decreased 24.5 per cent to 20,479 units, while the average MLS® residential price was down 7 per cent to $680,671.

Read full post

Vancouver, BC – April 15, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 5,707 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in March, a decline of 23 per cent from the same month last year. The average MLS® residential price in the province was $687,720, a decline of 5.4 per cent from March 2018. Total sales dollar volume was $3.9 billion, a 27.1 per cent decline from the same month last year.

“BC home sales continue to be adversely impacted by federal mortgage policy,” said BCREA Chief Economist Cameron Muir. “The erosion of affordability caused by the B20 stress test has created near recession level housing demand despite the province boasting the lowest unemployment rates in a decade.”

“The sharp erosion of affordability caused by the B20 stress test is now creating pent-up demand, as many would-be home buyers are forced to wait on the sidelines,” added Muir. “Unfortunately, new home construction is slowing as well, which will likely lead to another housing supply crunch down the road.”

Total MLS® residential active listings increased 36.2 per cent to 34,295 units compared to the same month last year. The ratio of sales to active residential listings declined from 29.4 per cent to 16.6 per cent over the same period.

Read full post

Vancouver, BC – March 13, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 4,533 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in February, a decline of 27 per cent from the same month last year. The average MLS® residential price in the province was $678,625, a decline of 9.3 per cent from February 2018. Total sales dollar volume was $3.08 billion, a 33.8 per cent decline from the same month last year.

“Prospective homebuyers continue to be sidelined by the mortgage stress test,” said Brendon Ogmundson, BCREA Deputy Chief Economist. “As a consequence, and despite a strong BC labour market, sales remained slow in February.”

Total MLS® residential active listings increased 36.5 per cent to 30,891 units compared to the same month last year. The ratio of sales to active residential listings declined from 27.4 per cent to 14.7 per cent over the same period.

“Falling mortgage rates should provide some relief for homebuyers, providing a small boost to affordability heading into the spring,” added Ogmundson.

Read full post

BCREA 2019 First Quarter Housing Forecast Update

Vancouver, BC – February 25, 2019. The British Columbia Real Estate Association (BCREA) released its 2019 First Quarter Housing Forecast Update today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to increase 2 per cent to 80,000 units this year, after recording 78,345 residential sales in 2018. MLS® residential sales are forecast to increase a further 6.9 per cent to 85,500 units in 2020. The 10-year average for MLS® residential sales in the province is 85,800 units.

“The negative shock to affordability and purchasing power created by the B20 stress test on mortgage borrowers is expected to continue constraining housing demand in the province this year,” said Cameron Muir, BCREA Chief Economist. “Favourable demographics along with continuing strong performance of the BC economy is expected to underpin housing demand over the next two years.”

The policy-induced demand shock has contributed to an increase of the inventory of homes for sale in most regions of the province. As a result, market conditions are expected to provide little upward pressure on home prices this year, with the average annual residential price forecast to remain essentially unchanged, albeit up 0.5 per cent to $716,100. Modest improvement in consumer demand is expected to unfold over the next two years as households further adjust to the mortgage stress test.

Read full post

Canadian inflation, as measured by the Consumer Price Index (CPI), registered 2 per cent in the twelve months to December, a slight uptick from 1.7 per cent in November. Lower energy prices were offset by an increase in air transportation, and telephone services.  Excluding the impact of falling gasoline prices, consumer prices were up 2.5 per cent. The Bank of Canada's three measures of trend inflation were all unchanged, averaging 1.9 per cent.   In BC, provincial consumer price inflation was 3 per cent in the 12 months to December. 

With core inflation trending sideways and the economy expected to slow this year, the odds of further Bank of Canada tightening this year are diminishing, which is being reflected by lower 5-year yields in the Canadian bond market. That should result in a dip in Canadian mortgage rates relatively soon, which would provide a much needed boost to a housing market still struggling with the impact of the mortgage stress test.


Copyright British Columbia Real Estate Association. Reprinted with permission.

Read full post

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.

The trademarks MLS®, Multiple Listing Service® and the associated logos identify professional services rendered by REALTOR® members of CREA to effect the purchase, sale and lease of real estate as part of a cooperative selling system.
MLS®, REALTOR®, and the associated logos are trademarks of The Canadian Real Estate Association.