Geoff Cowling

Vancouver, BC – December 14, 2018. The British Columbia Real Estate Association (BCREA) reports that a total of 5,179 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in November, down 33.1 per cent from the same month last year. The average MLS® residential price in BC was $718,903, a decline of 1.9 per cent from November 2017. Total sales dollar volume was $3.7 billion, a 34.3 per cent decline from November 2017.

“BC households continue to struggle with the sharp decline in purchasing power caused by the B20 mortgage stress test,” said Cameron Muir, BCREA Chief Economist. “Most BC regions are now exhibiting relative balance between supply and demand.”

Total active residential listings were up nearly 31 per cent to 33,500 units in November, compared to the same month last year. However, it should be noted that this compares to 2017, when active listings for the month of November were at their lowest level in more than 15 years.

Year-to-date, BC residential sales dollar volume was down 23.1 per cent to $53.4 billion, compared with the same period in 2017. Residential unit sales declined 23.6 per cent to 74,847 units, while the average MLS® residential price was up 0.7 per cent to $713,302.

Total Canadian employment surged 94,000 jobs in November, almost all in full-time work. The national unemployment rate fell 0.2 points lower to 5.6 per cent, the lowest it has been since 1976. Total employment was up 1.5 per cent, or 227,000 jobs compared to this time last year.
 
In BC, employment grew by 16,000 in November, though full-time employment declined.  On a year-over-year basis, employment was up 1.7 per cent and the provincial unemployment rate rose 0.3 points to 4.4 per cent as the number of people looking for work expanded faster than those finding employment.

Copyright British Columbia Real Estate Association. Reprinted with permission.

Vancouver, BC – December 6, 2018.

The BCREA Commercial Leading Indicator (CLI) was essentially unchanged from the second to the third quarter of 2018. Compared to this time one year ago, the index is 1.3 per cent higher.

“Slowing activity, particularly in the retail sector, led to a flattening of the CLI last quarter,” says BCREA Deputy Chief Economist Brendon Ogmundson. “A flattening index tends to point to a slower, yet still positive growth environment over the next year.”

While overall economic activity supportive of increased demand for commercial real estate has moderated, the third quarter did see a significant jump in office employment. If that increase is sustained, it would reflect an increased need for office space in the future, leading to increased investment and leasing activity in the office sector.

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 that growth in the Canadian economy will be challenged by Alberta's cutbacks in oil production but investment outside of the energy sector is expected to strengthen.  On inflation, the Bank judges that prices in the economy are evolving in a way consistent with an economy operating at full capacity.  Given the Bank of Canada judges the economy is currently acting at full capacity and inflation is running slightly above its 2 per cent target, its bias remains tilted towards “normalizing” its policy rate back to its estimated neutral level of between 2.5 and 3.5 per cent.  With that bias in place, the timing of rate increases, rather than their direction, is the more pertinent issue.

However, the deep discount for Canadian Western Select oil, and the ramifications of limited Alberta oil production, is one reason to be skeptical that the Bank will accomplish its objective to return to a neutral 3 per cent rate over the medium term. However, other cracks in the economy are starting to appear as well, including the highly publicized closing to GM’s Oshawa plant which will have a material impact on growth in Ontario.  Those factors, along with a slowing housing market across Canada and a potentially sharp slowdown in US economic growth next year, may give the Bank pause.  For those reasons, our baseline forecast is that the Bank will only be able to bring its overnight rate to 2.5 per cent during this tightening cycle.

Copyright British Columbia Real Estate Association. Reprinted with permission.