April 18, 2018


BCREA ECONOMICS NOW



The Bank of Canada decided to leave the target for the overnight policy rate unchanged at 1.25 per cent this morning. In the statement accompanying the decision, the Bank noted that inflation is forecast to be slightly higher in 2018 than originally expected but will return to the Bank's 2 per cent target once the impact of higher gas prices and minimum wage increases dissipate.  While the mortgage stress test has been a contributor to weaker growth in the first quarter of 2018, the Bank expects the economy to be operating at above potential over the next three years, growing at an average rate of about 2 per cent.

Although the Bank held steady today, with inflation rising to the Bank's two per cent target and many Canadian firms operating at or near capacity, interest rates are very likely headed higher this year.  Headwinds from the trade sector have moderated, energy prices are higher and growth for the first quarter appears to be firming after a slow start. Given those trends, the Bank is likely to adjust its policy rate higher in coming months. That will translate to higher mortgage rates which, combined with the erosion of purchasing power from the mortgage stress test, will temper housing demand in 2018.

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Vancouver, BC – April 12, 2018.


The British Columbia Real Estate Association (BCREA) reports that a total of 7,409 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in March, a 24.6 per cent decrease from the same month last year.


The average MLS® residential price in BC was $726,930, up 5.3 per cent from the previous year. Total sales dollar volume was $5.39 billion, a 20.6 per cent decline from March 2017.


More burdensome mortgage qualifications are having the predictable effect of swiftly curbing housing demand,” said Cameron Muir, BCREA Chief Economist. “You simply cannot pull as much as 20 per cent of the purchasing power away from conventional mortgage borrowers and not create a downturn in consumer demand.”


Despite the decline in consumer demand, the supply of homes for sale remains low in most BC regions. Total active listings on the market are essentially unchanged from March 2017, and are at or near a 12-year low across the province. As a result, home prices are expected to continue an upward trajectory.


Year-to-date, BC residential sales dollar volume was down 1.7 per cent to $13.9 billion, compared with the same period in 2017. Residential unit sales decreased 9.4 per cent to 18,927 units, while the average MLS® residential price was up 8.5 per cent to $732,243.

 


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BCREA ECONOMICS NOW


Canadian Housing Starts - April 10, 2018


Canadian housing starts fell 3 per cent on a monthly basis in march to 225,213 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts was steady at about 226,000 units SAAR.

In BC, total housing starts jumped 48 per cent on a monthly basis to 46,629 units SAAR with multiple unit starts rising over 60 per cent. On a year-over-year basis, total starts in the province were 4 per cent higher. 

Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA were up 60 per cent on a monthly basis after falling close to 40 per cent in February. Year-over-year, Vancouver starts were up 6 per cent. The 32,000 unit annual pace set in March was the result of an increase in both condo and rental units in core parts of the Metro area including the City of Vancouver, Richmond and North Vancouver.
  • In the Victoria CMA, housing starts were down 5 per cent on a monthly basis but were almost double the level of March 2017 due to a surge of new multi-unit starts. Apartment starts were 77 per cent higher than March last year while single detached starts were down 32 per cent.
  • In the Kelowna CMA, new home construction bounced back from a slow February with total housing starting rising by over 4 times the previous months activity.  However, starts were down 68 per cent compared to what was a very busy March of 2017.
  • Housing starts in the Abbotsford-Mission CMA  increased 71 per cent on a monthly basis but were down 20 per cent year-over-year, largely due to lower single detached starts. Multiple unit starts were essentially flat compared to last year.
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Vancouver, BC – March 9, 2018.

The British Columbia Real Estate Association (BCREA) released its 2017 Fourth Quarter Housing Forecast today.



Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 8.6 per cent to 94,855 units in 2018, after decreasing 7.5 per cent in 2017.


A record 112,209 unit sales were recorded in 2016. The ten-year average for MLS® residential sales in BC is 84,800 units. Strong employment growth, consumer confidence and favourable demographics have been highly supportive of housing demand over the last four years.


However, slower economic growth, tougher mortgage qualification rules, and a rising interest rate environment are expected to slow the pace of housing demand over the next two years.


“Housing demand in the province is expected to moderate this year and in 2019,” said Cameron Muir, BCREA Chief Economist. “More stringent mortgage qualifications and rising interest rates will further erode affordability and household purchasing power.”

The 5-year qualifying rate is forecast to rise 35 basis points to 5.49 per cent by Q4 2018, and another 21 basis points to 5.70 per cent by Q4 2019. “With home prices already at an elevated level, BC households are more vulnerable to rising interest rates.”

The supply of homes for sale continues to trend at or near decade lows in most BC regions. However, this condition hasn’t gone unnoticed by home builders. There are over 60,000 homes now under construction in the province, well above the previous peak of 45,000 units recorded in 2008. In Metro Vancouver, over 42,000 units are in the pipeline, 56 per cent more than recorded in 2008. Slowing consumer demand combined with a surge in new home completions over the next several quarters will create more balance in the housing market and produce less upward pressure on home prices. The average MLS® residential price in the province is forecast to increase 6.0 per cent to $752,000 this year, and a further 4.0 per cent to $781,800 in 2019.

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Courtesy BCREA

March 8, 2018


In BC, total housing starts fell 26 per cent monthly basis to 30,622 units SAAR with both single and multiple unit starts posting monthly declines of over 20 per cent. On a year-over-year basis, total starts in the province were 9 per cent higher. 

Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA were down 37 per cent on a monthly basis at 20,000 units SAAR but were 12 per cent higher compared to February of last year.  Construction activity is particularly strong in the condo markets of Burnaby, the North Shore and the city of Vancouver.
  • In the Victoria CMA, housing starts nearly tripled on a monthly basis to an annualized rate of almost 4,000 units due to a number of multiple unit projects breaking ground. Total starts in the Victoria CMA were up 48 per cent year-over-year. Construction activity is being driven by new apartment rentals and condos.
  • The Kelowna CMA saw housing starts decline over 60 per cent on a monthly basis in February with relatively little new construction occurring in the month. The CMHC counted just 22 single units and 15 multiple unit starts.

Housing starts in the Abbotsford-Mission CMA  increased 200 per cent year-over-year as construction of more than 300 new multiple units got underway in February.  However, the annualized pace of starts fell 6 per cent from January at just under 800 units SAAR

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BCREA ECONOMICS NOW


Bank of Canada Interest Rate Announcement  - March 7, 2018

The Bank of Canada opted to maintain its target for the overnight interest rate this morning at 1.25 per cent.  In the statement accompanying the decision, the Bank noted that although growth in the Canadian economy slowed more than expected in the fourth quarter of 2017, the economy is expected to operate at capacity going forward. The bank cited recent trade policy developments, mainly the threat of a trade war with the United States, as a significant risk to its outlook for growth and inflation.

The Canadian economy is at or very close to full-employment, meaning there is little room for Canadian firms to expand output without putting undue pressure on inflation. There are signs core inflation is already firming up. Two of the Bank’s three core inflation measures are closing in on the Bank’s 2 per cent target and all three measures have increased significantly in the past six months. Absent any unforeseen challenges to the Canadian economy, monetary policy will be biased in the direction of higher interest rates.  However, the Bank will likely hold off raising its overnight rate while it assesses the impact of tighter monetary policy over the past year, the impact of newly implemented B-20 guidelines on mortgage qualification rules, and heightened risk to Canadian exports from US trade policy

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Housing was the dominant issue in the Provincial budget released on February 20, 2018

 

The government released a 30-point housing strategy aimed at reducing housing demand, curbing tax fraud, building affordable housing, and increasing security for renters. 

New tax measures include increasing property taxes and property transfer taxes on residential properties valued above $3 million, expanding the foreign buyer tax, and implementing a housing speculation tax.

“We welcome the provincial government’s commitment to address money laundering concerns and increase the supply of affordable, social, and rental housing in our province,” Jill Oudil, Board president said. “We’re concerned, however, about the series of tax measures announced today. The budget introduces new taxes, hints at future taxes, and hikes existing taxes on housing. Taxes don’t make homes more affordable.”

Below is a summary of the key real estate measures announced today. There’s considerable information to go through. We’re analyzing each item to understand the implications to you and your clients and will report back with more information and analysis in future communications.

Affordable housing

  • The province is investing $6 billion in affordable housing to create 114,000 homes over the next 10 years.
  • The province will enhance local government capacity to build and retain affordable housing.
  • The province will require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases.
  • The province intends to track beneficial ownership information.
  • The province will collect additional information to increase transparency and strengthen enforcement in real estate.

Tax measures

Speculation tax

  • The province will implement a new speculation tax on residential properties, targeting foreign and domestic homeowners who don’t pay income tax in BC. This includes those who leave homes vacant.
  • The tax will apply to the Metro Vancouver, Fraser Valley, Capital, and Nanaimo Regional districts and in the municipalities of Kelowna and West Kelowna.
  • In 2018, the tax rate will be $5 per $1,000 of assessed value. In 2019, the tax rate will rise to $20 per $1,000 of assessed value.
  • The province will administer the tax and will collect data to enforce it including, social insurance numbers, household information, and world-wide income information.

Foreign buyer tax

  • Effective Feb. 21, 2018, the foreign buyer tax will increase to 20 per cent from 15 per cent and will be extended to the Fraser Valley, Capital, Nanaimo, and Central Okanagan Regional Districts.
  • If the property is located in the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, or Nanaimo Regional District, and the property transfer is registered on or after February 21, 2018, there are transitional rules available here.

Property Transfer Tax

Effective Feb. 21, 2018, the Property Transfer Tax on residential properties above $3 million will increase to five per cent from three per cent.

Provincial School Tax

Beginning in 2019, the provincial school tax will increase on most residential properties in excess of $3 million.

Database on pre-sale condo assignments

The province will require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases. The information will be reported to a designated government office and shared with federal and provincial tax authorities to ensure taxes are paid.

Online accommodation PST and MRDT

Online accommodation platforms are enabled to collect and remit the Provincial Sales Tax and Municipal and Regional District Tax (Hotel Room Tax).

Property tax treatment for ALR land

As part of the Agricultural Land Reserve (ALR) review, the province is examining residential land in the ALR to ensure land is used for farming.

Clarity of property ownership

Compelling access to MLS®

The province plans to enable tax administrators to compel access to information relevant to property transfers, such as information held in a MLS® database. (We’re asking government for clarification.)

Beneficial land ownership registry

The province will require additional information about beneficial ownership on the PTT form.

Administered by the LTSA, the information will be publicly available and shared with federal and provincial tax and law enforcement authorities. Legislation will be introduced to require BC corporations to hold accurate and up to date information on beneficial owners in their own record offices available to law enforcement, tax and other authorities.

Task force on money laundering and tax evasion

The province will work with the federal government to formalize a multi-agency working group on tax evasion, money laundering and housing.

Residential Tenancy Branch

Increased funding to the Residential Tenancy Branch to reduce wait time, improve service and deal with disputes more quickly, as well as strengthening the Residential Tenancy Act and the penalties for those who repeatedly break the law.

Read the Homes for BC 30-point plan for housing affordability

Read the Budget press release

Read the Fiscal Plan (opens a 157-page pdf)

Read the Budget 2018 Speech


Compliments of REBGV

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Vancouver, BC – February 15, 2018. TheBritish Columbia Real Estate Association (BCREA) reports that a total of 5,306 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in January, an increase of 18.3 per cent from the same period last year.


The average MLS® residential price in BC was $721,477, up 16.2 per cent from the previous year.


Total sales dollar volume was $3.83 billion, a 37.4 per cent increase from January 2017.

“BC home sales dipped 10 per cent from December to January, on a seasonally adjusted basis," said Cameron Muir, BCREA Chief Economist. "New mortgage rules requiring conventional borrowers to qualify at a higher interest rate likely contributed to the decline in home sales last month.


The impact was magnified by a strong December as many households advanced their purchase decisions ahead of the policy's implementation."


Despite the decline in January transactions, the seasonally adjusted annual rate of home sales was 101,800 units.

Compared to January 2017, market conditions tightened in all BC board areas except Victoria, where the sales-to-active listings ratio declined from 46.3 per cent to 40.5 per cent. Despite this decline, Victoria remains in strong sellers' market territory.


Total active listings in the province were down 8.6 per cent to 20,901 units, compared to the same period last year.

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Metro Vancouver Housing Starts - February 8, 2018

 

BC saw total housing starts fall 16 per cent to 41,648 units SAAR in December on a monthly basis. However, total starts in BC were up 59 per cent year-over-year.


Single detached starts were up 1 per cent on a monthly basis but increased 78 per cent compared to January 2017 while multiple starts were down 21 per cent month-over-month and were 54 per cent higher year-over-year.

Looking at census metropolitan areas (CMA) in BC: 

  • Total starts in the Vancouver CMA were higher across all home types, nearly doubling the pace of construction in January 2017. There were a total of 2,599 housing starts across the region compared to just 1,334 the same time last year.
  • In the Victoria CMA, housing starts slowed from the record setting pace of previous months, falling 52 per cent on a monthly basis. However, new home construction remains robust at a more than 3,000 unit annual rate in seasonally adjusted terms.
  • The Kelowna CMA saw an increase from 51 units last January to 87 total starts in January 2018. Much of the increase was the result of new rental unit projects.
  • Housing starts in the Abbotsford-Mission CMA rose 42 per cent on a monthly basis in January with balanced growth across multiple and single detached starts.  However, total housing starts were well behind the pace set in January of 2017.

For more information, please contact: 

Cameron Muir

Brendon Ogmundson

Chief Economist

Economist

Direct: 604.742.2780

Direct: 604.742.2796

Mobile: 778.229.1884

Mobile: 604.505.6793

Email: cmuir@bcrea.bc.ca

Email: bogmundson@bcrea.bc.ca

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Courtesy RECBC - January 17, 2-18


The Bank of Canada opted to raise the target for its overnight interest rate this morning 25 basis points  to 1.25 per cent.  In the statement accompanying the decision, the Bank cited recent strong economic data and rising inflation as motivations for the rate increase.


The Bank expects growth in the Canadian economy to slow to 2.2 per cent in 2018 and 1.6 per cent in 2019 with consumption and new home construction contributing less to growth than in years past.  With the economy returning to full-capacity, inflation is forecast to remain at 2 per cent over the medium term. 


The Bank also flagged risk to its outlook from ongoing NAFTA negotiations and noted it would remain cautious in considering future interest rate adjustments.

With the Canadian unemployment rate hitting a 40-year low and inflation ticking higher in recent months, the Canadian economy would seem to be operating at full capacity.


That argues for a more hawkish approach to monetary policy in order to bring interest rates closer to what the Bank estimates would be neutral for the economy, that is, a level in which the economy is neither running too hot nor too cold.  While today's rate increase was widely anticipated, it did come earlier in the year than previously expected and likely signals further rate increases to come in 2018. 


Canadian mortgage rates have already moved higher in anticipation of Bank of Canada tightening, which means a much tighter borrowing environment in 2018, particularly given newly implemented mortgage qualifying rules for low-ratio buyers. 

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Vancouver, BC – January 12, 2017.

Courtesy of BCREA


The British Columbia Real Estate Association (BCREA) reports that a total of 103,763 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in 2017, a decline of 7.5 per cent from a record 112,211 unit sales in 2016.


The average MLS® residential price in BC was $709,579 in 2017, up 2.7 per cent from the previous year. Total sales dollar volume was $73.63 billion, down 5.1 per cent from 2016.


“Robust housing demand in 2017 was underpinned by a strong economy, employment growth and rising wages," said Cameron Muir, BCREA Chief Economist. "Above trend migration, both international and interprovincial, also bolstered housing demand, while broader demographic fundamentals added fuel to condominium sales in urban centres and to all home types in retirement-oriented communities."


The BC housing market ended the year with a strong December. Home sales increased 4 per cent from November, on a seasonally adjusted basis. However, the year-end results were likely pushed higher by some homebuyers advancing their purchases to avoid tougher mortgage qualification rules in the new year.


In December, a total of 5,738 residential unit sales were recorded by the MLS® across the province, an increase of 21.5 per cent from the same period last year. Total sales dollar volume was $4.2 billion, up 36.3 per cent from December 2016. The average MLS® residential price in the province was $734,108, up 12.1 per cent from the same month last year.

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The total value of permits issued in BC declined for a second consecutive month, falling 13.8 per cent on a monthly basis and 5 per cent year-over-year to $1.18 billion.  Residential permits fell almost 18 per cent on a monthly basis and were 22 per cent lower than this time last year. Non-residential permits declined about 6 per cent on a monthly basis but were 62 per cent higher year-over-year.

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

  • Permits in the Abbotsford-Mission CMA  fell 16.6  per cent on a monthly basis to just over $30 million. Year-over-year, permit values were more than double the value of July 2016.
  • In the Victoria CMA, total construction intentions totaled just under $50 million, a 74 per cent decline from October and 18 per cent decline in permit values from one year ago.
  • In the Kelowna CMA, permits were 21.5 per cent higher a monthly basis and 24 per cent higher compared to November 2016 at $76.4 million.
  • The Vancouver CMA recorded permit activity valued at $708.3 million, a decline of 8.6 per cent on a monthly basis and an 18 per cent decrease year-over-year. The value of multi-family residential permits fell 29.5 per cent while single-detached permit values were essentially unchanged.
For more info please contact BCREA
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Please visit our Open House at 204 538 SMITHE ST in Vancouver.

Open House on Saturday, November 11, 2017 2:00PM - 4:00PM

HOT PRICE! ACT FAST for this chic New York style 2 level 2 bedroom townhouse. It's the only Downtown townhome under $1M. Beautifully updated and on quiet side of the building overlooking landscaped courtyard. Live the Urban Lifestyle at the edge of Downtown & Yaletown. Enjoy two outdoor patios. This designer style home features crown mouldings, stainless steel appliances, sliding glass doors to second bedroom, tasteful wall treatments, all new flooring and blinds, built-in electric fireplace, a unique floorplan & 2 huge insuite storage spaces, plus locker & parking. Nothing to do but move in! Boutique style Mode is a concrete building with only 8 floors and a pro-active strata. 100 transit & walkscore! Pets & rentals welcomed. Open house Saturday & Sunday, November 11th & 12th, 2-4 pm.

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Please visit our Open House at 204 538 SMITHE ST in Vancouver.

Open House on Sunday, November 12, 2017 2:00PM - 4:00PM

HOT PRICE! ACT FAST for this chic New York style 2 level 2 bedroom townhouse. It's the only Downtown townhome under $1M. Beautifully updated and on quiet side of the building overlooking landscaped courtyard. Live the Urban Lifestyle at the edge of Downtown & Yaletown. Enjoy two outdoor patios. This designer style home features crown mouldings, stainless steel appliances, sliding glass doors to second bedroom, tasteful wall treatments, all new flooring and blinds, built-in electric fireplace, a unique floorplan & 2 huge insuite storage spaces, plus locker & parking. Nothing to do but move in! Boutique style Mode is a concrete building with only 8 floors and a pro-active strata. 100 transit & walkscore! Pets & rentals welcomed. Open house Saturday & Sunday, November 11th & 12th, 2-4 pm.

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Please visit our Open House at 1201 1277 NELSON ST in Vancouver.

Open House on Saturday, November 4, 2017 2:00PM - 4:00PM

Welcome home to 1277 Nelson, a sought after West End building at the top of the hill and offering views of English Bay, the mountains, and the neighbourhood from your floor-to-ceiling windows. Suite is in move in condition, has an open floor plan and boasts lovely hardwood floors. Features include insuite laundry, parking and storage locker, live-in caretaker, gym, visitor parking, and a great area at the back of the building. Well looked after building with pro-active strata. Sorry no pets and rentals restricted to a minimum of 6 months. Steps to Nelson Park, St Paul's Hospital, Robson Street, and English Bay.98 Walkscore. Priced to Sell! Open House: Sat, Nov 4th, 2:00-4:00 PM.

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Please visit our Open House at 204 538 SMITHE ST in Vancouver.

Open House on Saturday, October 28, 2017 2:00PM - 4:00PM

HOT PRICE! ACT FAST for this chic New York style 2 level 2 bedroom townhouse. It's the only Downtown townhome under $1M. Beautifully updated and on quiet side of the building overlooking landscaped courtyard. Live the Urban Lifestyle at the edge of Downtown & Yaletown. This designer style home features crown mouldings, stainless steel appliances, sliding glass doors to second bedroom, tasteful wall treatments, all new flooring and blinds, built-in electric fireplace, a unique floorplan & 2 huge insuite storage spaces, plus locker & parking. Nothing to do but move in! Boutique style Mode is a concrete building with only 8 floors and a pro-active strata. 100 transit & walkscore! Pets & rentals welcomed. Open Oct 28 & 29, 2-4 pm.

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Please visit our Open House at 204 538 SMITHE ST in Vancouver.

Open House on Sunday, October 29, 2017 2:00PM - 4:00PM

HOT PRICE! ACT FAST for this chic New York style 2 level 2 bedroom townhouse. It's the only Downtown townhome under $1M. Beautifully updated and on quiet side of the building overlooking landscaped courtyard. Live the Urban Lifestyle at the edge of Downtown & Yaletown. This designer style home features crown mouldings, stainless steel appliances, sliding glass doors to second bedroom, tasteful wall treatments, all new flooring and blinds, built-in electric fireplace, a unique floorplan & 2 huge insuite storage spaces, plus locker & parking. Nothing to do but move in! Boutique style Mode is a concrete building with only 8 floors and a pro-active strata. 100 transit & walkscore! Pets & rentals welcomed. Open Oct 28 & 29, 2-4 pm.

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Please visit our Open House at 1820 WOODLAND DR in Vancouver.

Open House on Saturday, October 21, 2017 1:30PM - 2:30PM

Sophisticated 2 year old quality built half duplex in a sought after location boasting a Walkscore of 95. Steps to the Drive and close to Commercial Skytrain, Olympic village neighborhood and Downtown Vancouver. Unique 3 levels, high ceilings, 4 bedrooms & den, 4 bathrooms plus garage and security system. Excellent layout features a spacious main floor with designer kitchen situated off the large dining/living room with the 3/4 inch solid maple wide plank flooring, top of the line stainless steel appliance including gas stove Master bedroom with vaulted ceilings, walk in closet and a balcony. Enjoy summers entertaining on the backyard patio with gas hookup for BBQ. 2 bedroom accommodation on lower level. Practically a house! Outstanding value! Open House: Sat, Oct 21st, 1:30-2:30 PM.

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The British Columbia Real Estate Association (BCREA) reports that a total of 8,340 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in September, an increase of 9.9 per cent from the same period last year. Total sales dollar volume was $5.8 billion, up 30.2 per cent from September 2016.

 

The average MLS® residential price in the province was $693,774, up 18.5 per cent from September 2016.

 

“BC home sales rose nearly 5 per cent from August on a seasonally adjusted basis," said Cameron Muir, BCREA Chief Economist. "Total active listings on the market continue to trend at ten-year lows in most BC regions, limiting unit sales and pushing home prices higher. While the economic fundamentals support elevated housing demand, rising home prices are eroding affordability, particularly for first-time buyers."

 

Year-to-date, BC residential sales dollar volume was down 12.8 per cent to $57.6 billion, when compared with the same period in 2016.

Residential unit sales declined 13 per cent to 81,608 units, while the average MLS® residential price was down 0.2 per cent to $705,501.

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