Great package, just listed. Three level, 4 bedroom, 3 bathroom, corner townhome. 4 unit complex that is child and pet friendly, and investor alert: rentals are OK. Nicely finished with an open floorplan on the main, 9’ ceilings, and lots of natural light. Kitchen with breakfast bar opens to living and dining areas, warmed by a featured gas fireplace. Powder room on main level too. Upstairs: 3 good sized bedrooms and a 4 piece b...ath. Downstairs: big multipurpose room suitable for bedroom, media room or family room. Full height ceiling. Laundry, 3 piece bath. Note: gas heat, central air, built in vac, security system. Private NW corner allows afternoon sun. Fenced flat yard. Central location near the College and SOEC, and just a short drive to downtown and the beach. Please call Geoff Cowling 250.490.7272 or TF at 1.800. 734.0457 or visit GeoffCowling.com


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The Canadian economy posted blockbuster growth in May, expanding 0.6 per cent on a monthly basis and 4.6 per cent year-over-year.  This was the seventh consecutive month of positive growth for the Canadian economy. Moreover, growth was broad based with output increasing in 14 of 20 industrial sectors.  Given the first two months of GDP data, the Canadian economy is on track to post a second consecutive quarter of growth close to 4 per cent.

Strong economic growth further solidifies the Bank of Canada's case for raising interest rates one more time this year, likely at its October meeting. However, the path of interest rates beyond that rests heavily on the evolution of Canadian inflation, which has been trending well below the Bank's 2 per cent target. 

 

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A further sign of momentum in the Canadian economy this morning as Canadian manufacturing sales increased 1.1 per cent in May, the third consecutive monthly increase.  Overall, sales were higher in 16 of 21 manufacturing sub-sectors, reflecting broad-based strength in the Canadian economy.  Continued strong economic data will likely push the Bank of Canada closer to a second rate increase this fall.
 
In BC, manufacturing sales increased 1.8 per cent on a monthly basis and were up 8.2 per cent year-over-year. A strong manufacturing and trade sector has been a key contributor to economic growth in the province this year, which is on track to record a fourth consecutive year of 3 per cent or more growth in real GDP, the best performance for the provincial economy since 2007. 

 

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The Bank of Canada announced this morning that it is raising its target for the overnight rate by 25 basis points to 0.75 per cent. In the press release accompanying the decision, the Bank noted that Canada's economy has been robust and a significant amount of economic slack has been absorbed. While inflation data has been soft, the Bank expects that this is temporary and that inflation will return to its 2 per cent target by mid-2018.

The motivation for today's rate increase seems primarily to be that the Bank feels that the stimulus it injected into the Canadian economy in 2015 through two rate cuts is no longer required given a recent trend of strong economic and employment growth. If that is the case, a further 25 basis point increase before the end of the year will likely follow.  After that, the pace of rate increases relies heavily on the trend in Canadian inflation, which to date has been well below the Bank's 2 per cent target. If that trend does not reverse by early next year, the Bank may decide to stop at a 1 per cent overnight rate until higher inflation emerges. 

As bond markets reprice rate expectations, Canadian mortgage rates have returned to levels observed at the beginning of the year. We expect that mortgage rates will rise further in the second half of 2017, finishing near 3 per cent for a five-year fixed rate. 


 

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Canadian housing starts increased 9 per cent in June to 212,695 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts continues to trend higher at about 215,459 units SAAR, the highest level in almost five years.

In BC, total housing starts declined 19 per cent on a monthly basis to a still robust 37,279 units SAAR and were down 22 per cent on a year-over-year basis.  Single detached starts fell 2 per cent month-over-month but were 14 per cent higher year-over-year. Multiple unit starts fell 24 per cent month-over-month and were down 31 per cent year-over-year.

Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA were actually down 34 per cent year-over-year with a 2 per cent decline posted in single units starts and a 40 per cent drop in multiple units starts compared to last year. The record level of units currently under construction is likely putting downward pressure on new starts as the industry is close to capacity.
  • In the Victoria CMA market, housing starts declined 42 per cent year-over-year with multiple unit starts at only half the level of June 2016. Single unit starts increased 5 per cent.  
  • New home construction in the Kelowna CMA was up 80 per cent year-over-year but fell by half on a monthly basis compared to a big increase in new home construction in May. 
     
  • Housing starts in the Abbotsford-Mission CMA more than doubled on a both a monthly and year-over-year basis due to more than 230 new multiple units starts in June. 

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Canadian employment increased by 45,000 jobs in June and is up by almost 100,000 jobs over the past two months. The national unemployment rate ticked lower by 0.1 points to 6.5 per cent and total hours worked was up 1.4 per cent over the past 12 months.  While the majority of June's employment gains were in part-time work, Canada has added 250,000 full-time jobs in the past year.  Today's strong jobs number provides the Bank of Canada with supporting evidence that the Canadian economy no longer needs the extra stimulus put in place in 2015. That likely pushes the Bank closer to raising its overnight rate as early as next week.
 
In BC, employment continues to expand rapidly. The province added 20,000 new jobs in June, a 4.4 per cent increase over the past 12 months. The provincial unemployment rate fell 0.5 points to 5.1 per cent.

 

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The total value of Canadian building permits jumped 8.9 per cent in April to the third highest value on record. The increase was primarily due to higher residential construction intentions in Ontario. 

The total value of permits issued in BC increased 4.4 per cent on a monthly basis and were up 8.3 per cent year-over-year. Residential permits rose 7.6 per cent on a monthly basis and were 8.3 per cent higher year-over year while non-residential permits declined 3.5 per cent on a monthly basis but were 8.3 per cent higher year-over-year.

Construction intentions were higher in three of BC's four census metropolitan areas (CMA):

  • Permits in the Abbotsford-Mission CMA  fell almost 40 per cent in May to $45 million after a very strong April. Year-over-year, permit values were more than double the value of May 2016.
  • In the Victoria CMA, total construction intentions totaled close to $130 million, a 20 per cent monthly increase and a doubling of permit values from one year ago.
  • In the Kelowna CMA, permits were 39 per cent lower on a monthly basis and 10 per cent down from May 2016 at about $71 million.
  • In the Vancouver CMA, permit activity was up 14 per cent to $722 million.  However, on a year-over-year basis, construction intentions fell 6.1 per cent.

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Canadian inflation, as measured by the Consumer Price Index (CPI), registered just 1.3 per cent in the 12 months to May. That is down from 1.6 per cent in April.   The Bank of Canada's new core measure of inflation, called CPI-common,  was also up 1.3 per cent for the fourth consecutive month.   In BC, provincial consumer price inflation was 1.9 per cent in the 12 months to May.

Given the Bank of Canada's recent hawkish turn on monetary policy, the trend in inflation will be even more important in coming months. So far, there is little in the inflation numbers to justify an interest rate increase, though the very strong economic growth over the past year could put some upward pressure on prices soon.

 

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Canadian manufacturing sales increased 1.1 per cent in April, with the largest contribution coming from higher sales in the petroleum, coal and metals sectors. Overall, sales were higher in 13 of 21 manufacturing sub-sectors, reflecting broad-based strength in the Canadian economy. 
 
In BC,  manufacturing sales increased 1.2 per cent on a monthly basis and were up 8.8 per cent year-over-year.  The manufacturing and export sector continues to be a significant driver of economic growth for the province this year. Through the first five months of the year, we are tracking growth in the BC economy at 3.8 per cent.

 

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The US Federal Reserve's Open Market Committee (the Fed) raised its target overnight rate this morning, the third such increase  in the past six months. This morning's increase brings its the federal funds rate into a range of 1 to 1.25 per cent. The Fed's statement accompanying the decision noted a continuation of a strong US labour market conditions despite a recent slowing of job growth. Household spending has picked up and the Fed expects the economy to expand at a moderate pace. While inflation remains below the Fed's 2 per cent target, it is expected to stabilize at 2 per cent over the medium term.

The Fed once again stated that it expects the US economy to evolve in a way that necessitates further but gradual increases to its overnight rate, which means there will likely be at least one more rate increase this year.  A tightening cycle in the United States, combined with a shift in bias toward tightening at the Bank of Canada could put some upward pressure on Canadian interest rates in coming months, reversing the downtrend observed recently.

 

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Vancouver, BC – June 13, 2017. The British Columbia Real Estate Association (BCREA) reports that a total of 12,402 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in May, down 7.9 per cent from the same period last year. Total sales dollar volume was $9.33 billion, down 4.0 per cent from May 2017. The average MLS® residential price in the province was $752,536, a 4.2 per cent increase from the same period last year.

“Market conditions have tightened considerably this spring as an upturn in consumer demand has not been accompanied by a rise in homes listed for sale," said Cameron Muir, BCREA Chief Economist. "The supply of homes for sale in the province has fallen 50 per cent over the past five years."

"The entire southern portion of the province is experiencing a shortage of housing supply, which makes continuing upward pressure on home prices inevitable, at least in the near term," added Muir. Total active listings in the province were down 11.1 per cent to 28,404 units from May 2016. The ratio of home sales to active listings was well over 20 per cent in nine of the province's 11 real estate boards, and over 50 per cent in Vancouver, the Fraser Valley, Chilliwack and Victoria.

Year-to-date, BC residential sales dollar volume was down 25.2 per cent to $30.6 billion, when compared with the same period in 2016. Residential unit sales declined 20.1 per cent to 43,158 units, while the average MLS® residential price was down 5.7 per cent to $709,541.

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Canada added 54,000 jobs in May following flat employment gains in April.  However,  the national unemployment rate edged up 0.1 points to 6.6 per cent as the number of people joining the workforce in search of a job outpaced hiring. 

The BC economy continues to add jobs at a torrid pace. The province added 12,300 new jobs in May, a more than 4 per cent increase over the past 12 months. The provincial unemployment rate inched up 0.1 points to 5.6 per cent as the strong BC economy draws job searchers into the provincial workforce.

 

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The total value of Canadian building permits declined 0.2 per cent to 7.1billion in April, the third consecutive monthly decline. Lower construction intentions for single-family homes, primarily in the Toronto CMA, was a main contributor to April's decline.

Permit activity bounced back in BC following a large decline in March, led by strong construction intentions for multi-family dwellings.  The total value of permits increased 22.9 per cent on a monthly basis and were essentially flat year-over-year. Residential permits rose 19 per cent on both a monthly basis but were 7.4 per cent lower year-over year while non-residential permits were up 34 per cent on a monthly basis and 24 per cent year-over-year.

Construction intentions were higher in three of BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA  more than tripled on a monthly basis while the Victoria CMA saw permit values increase 25 per cent on a monthly basis and 28 per cent year-over-year. In the Kelowna CMA, permits were 8.9 per cent lower on a monthly basis but were 50 per cent higher than permit values in April 2016. In the Vancouver CMA, permit activity bounce back from a decline in April, posting a 25 per cent monthly increase but were 18 per cent lower compared to April 2016.

 

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The Canadian economy expanded 3.7 per cent in the first quarter of 2017, led by an acceleration in household consumption spending as well as a nearly 3 per cent rise in business investment. The latter is a particularly welcome sign for the economy given that business investment had declined in eight of the previous nine quarters.  A build up of inventories, especially in the manufacturing sector was also a significant contributor to growth in the first quarter, but also signals a slowing in the second quarter as firms produce fewer goods and wind down that inventory.

Although the Canadian economy has grown much faster than the Bank's estimate of potential growth for three consecutive quarters, it is not expected that the economy will sustain that level of growth for much longer. We forecast that real GDP growth will fall back to an average of 1.5 per cent quarterly growth for the remainder of 2017. However, the strong start to the year means that annual growth for this year is likely to register close to 2.5 per cent, the strongest economic growth in three years. Despite faster growth, a significant amount of slack remains in the economy and there is therefore very little pressure on inflation. Without a signal that inflation is going to push higher, the Bank will remain sidelined at least until early 2018 when it expects remaining slack in the economy will be eliminated.

 

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Vancouver, BC – May 30, 2016. The BCREA Commercial Leading Indicator (CLI) increased for the fifth consecutive quarter, rising 0.5 index points from the fourth quarter of 2016 to the first quarter of 2017. The index now sits at 128.0, a 4 per cent increase from a year ago and a 0.4 per cent gain on a quarterly basis.

“The rising CLI mirrors the overall robust trend in the provincial economy," says BCREA Economist Brendon Ogmundson. "The commercial real estate sector stands to benefit from BC's strong economic growth through increased demand for commercial space and the attraction of invesment dollars."

The underlying CLI trend, which smooths often noisy economic data, continues to push higher due to ongoing strength in economic activity, particularly from the retail and wholesale trade sectors. That uptrend signals further growth in investment, leasing and other commercial real estate activity over the next two to four quarters.

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1150 sq ft one level rancher with 3 beds and 1 bath. Some fix ups like roof, vinyl windows, and ductless heating/cooling have already been done in the last few years. The house was closed off through the winter and unoccupied, so bring your handyman - sweat equity awaits a prudent buyer here. It will need a fix up and appliances, but bones appear to be solid. Knocking out one kitchen wall would create an open great room too. Primo location on a quiet and pretty street walking distance to downtown, the Farmers’ Market, South Okanagan Events Centre, Hockey Academy, Community Centre and not all that far from Lake Okanagan. Would rent in the $1750 range after fix ups. An owner-occupier will like this combo too. Option for quick possession. Call Geoff Cowling 250.490.7272 or TF at 1.800. 734.0457  or visit GeoffCowling.com

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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 inflation is broadly in line with the Bank's projection, though intense retail competition is pushing inflation temporarily lower.  The Bank also noted that the tightening of mortgage regulations implemented in the Fall of 2016 have yet to have a substantial cooling effect on markets but it does expect those measures will contribute to a more sustainable debt profile for Canadian households.

Although the Canadian economy has expanded well above the Bank's estimate of potential growth for three consecutive quarters, including a first quarter that is tracking at close to 4.5 per cent growth in real GDP, the Bank is not optimistic that the economy will sustain that level of growth for much longer.  Moreover,  despite faster growth, a significant amount of slack remains in the economy and there is therefore very little pressure on inflation. Without a signal that inflation is going to push higher, the Bank will remain sidelined at least until early 2018 when it expects remaining slack in the economy will be eliminated.

 

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Canadian manufacturing sales increased 1 per cent from April to March, as sales of transportation equipment and food sales flourished. Overall, sales were higher in 16 of 21 manufacturing sub-sectors, reflecting broad-based strength in the Canadian economy. 

The BC manufacturing sector continued to be a significant driver of provincial growth in March, posting a 2.9 per cent increase in sales, led by a 10.5 per cent jump in wood products. On a year-over-year basis,  total manufacturing sales were up 4.7 per cent.  While manufacturing has been one of the stand-out sectors in the BC economy since last summer, headwinds from US trade policy, particularly new tariffs on softwood lumber, could take the air of the sectors in coming months.

 

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Vancouver, BC – May 15, 2017. The British Columbia Real Estate Association (BCREA) that a total of 9,865 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in April, down 23.9 per cent from the same period last year. Total sales dollar volume was $7.19 billion, down 25.4 per cent from April 2016. The average MLS® residential price in the province was $728,955, a 2 per cent decrease from the same period last year.

“BC home sales are on an upward trend this spring, led by a sharp increase in consumer demand in the Lower Mainland," said Cameron Muir, BCREA Chief Economist. The seasonally adjusted annual rate (SAAR) of home sales was over 106,000 units in April, significantly above the five-year SAAR for April of 89,000 units.

The supply of homes for sale declined 17 per cent from April 2016. On a seasonally adjusted basis, active residential listings have declined 50 per cent since 2012 and are now at their lowest level in over 20 years. The imbalance between supply and demand is continuing to drive home prices higher in most regions, further eroding affordability.

Year-to-date, BC residential sales dollar volume was down 31.8 per cent to $21.3 billion, when compared with the same period in 2016. Residential unit sales declined 25.0 per cent to 30,757 units, while the average MLS® residential price was down 9.2 per cent to $692,220.

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The total value of Canadian building permits declined 5.8 per cent to $7 billion in March, the second consecutive monthly decline.

BC posted the largest decrease at the provincial level due to fewer permit applications for multiple family residential projects, slowed perhaps by the record number of units already under construction.  The total value of permits fell 21.4 per cent on a monthly basis and 11.4 per cent year-over-year. Residential permits were down close 26 per cent on both a monthly basis and 14 per cent lower year-over year while non-residential permits were down 4 per cent on a monthly basis and 2.5 per cent year-over-year.

Construction intentions were actually higher across three of BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA increased 53 per cent from February to March and were up 29 per cent year-over-year. The Victoria CMA saw permit values increase 10 per cent on a monthly basis but were 6 per cent lower year-over-year. In the Kelowna CMA, permits rose 60 per cent on a monthly basis were more than triple the value in March 2016. Conversely, the Vancouver CMA, where construction is probably at capacity, posted a 40 per cent monthly decline in permit activity on a monthly basis and was down 32 per cent year-over-year.

 

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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. 

 

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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. 


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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. 


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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.


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