US Real GDP Growth Q3’2018 – October, 2018

US real GDP growth remained strong in the third quarter at 3.5 per cent, albeit down from 4.2 per cent in the second quarter. Economic growth was led by a strong contribution from consumer spending, which grew at its fastest rate since 2014, while an accumulation of business inventories made its largest contribution to growth since 2015. Government spending grew at its fastest rate in two years, but business investment slowed and net exports created their largest drag on growth in 33 years as US tariffs dampened trade. Today’s data gives the US Federal Reserve further reason to keep tightening monetary policy, which will put further upward pressure on medium term interest rates in the US and Canada.

The US economy has been riding high this year from debt-financed government stimulus, but that growth is expected to slow in 2019 as that stimulus fades and higher interest rates and a continued trade war act to slow the economy.

For more information, please contact: Gino Pezzani.

Bank of Canada Interest Rate Announcement – October, 2018

The Bank of Canada raised its target for the overnight rate by 25 basis points to 1.75 per cent this morning. In the statement accompanying the decision, the Bank noted that the Canadian economy is expected to average growth of 2 per cent over the second half of 2018 before slowing to 1.9 per cent next year.  The renegotiation of NAFTA is expected to lower uncertainty and boost business investment and exports while households spending and the housing market are stabilizing after the implementation of the B20 mortgage stress test. Inflation is expected to remain close to 2 per cent over the Bank’s two year projection horizon.

The resolution of NAFTA negotiations earlier in the fall paved the way for the Bank of Canada to resume its rate tightening this morning.  While inflation data came in slightly soft in September, the Canadian economy is still operating above its long-run trend which should keep inflation near the Bank’s 2 per cent target. The Bank will meet one final time in 2018 at its December meeting, at which we expect policymakers will maintain the target rate at is current level before raising the target rate to 2 per cent in January 2019.  As the target rate continues on its path higher, Canadian mortgage rates will continue to rise, ultimately resulting in a 6 per cent qualifying rate by the end of 2019.

For more information, please contact:  Gino Pezzani.

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People Foods That Are Bad For Dogs

While tempting to give Fido goodies, not knowing what is and isn’t safe for dogs can cause serious harm. In particular, you should avoid giving your dog these common human treats:

Alcohol and food containing alcohol can cause vomiting, diarrhea, decreased coordination, central nervous system depression, difficulty breathing, tremors, abnormal blood acidity, coma and even death. Under no circumstances should your pet be given any alcohol.

Chocolate, coffee and caffeine all contain substances called methylxanthines, which are found in cacao seeds, the fruit of the plant used to make coffee, and in the nuts of an extract used in some sodas. When ingested by pets, methylxanthines can cause vomiting and diarrhea, panting, excessive thirst and urination, hyperactivity, abnormal heart rhythm, tremors, seizures and even death. Note that darker chocolate (including baking chocolate) is more dangerous than lighter chocolate.

Grapes and raisins can cause dogs to develop acute kidney injury with anuria (a lack of urine production). The phenomenon was first identified by the Animal Poison Control Center (APCC), run by the American Society for the Prevention of Cruelty to Animals (ASPCA). Approximately 140 cases were seen by the APCC in the one year from April 2003 to April 2004, with 50 developing symptoms.

Be A Confident Mariner

Many years ago, Rene Henry invited some friends for an afternoon on his sailboat on Santa Monica Bay. But the good times soured when a thick blanket of fog appeared, making visibility almost nonexistent.

For Henry, who sailed every month of the year, the fog was of no concern. GPS was not available at this time, but armed with a compass and nautical charts, Henry plotted a course to bring the boat safely back to the marina.

Suddenly, Henry’s boat was nearly cut off by several sailboats that emerged from the fog. Henry’s guests noticed that the long line of boats was headed in a different direction from their own and suggested that the best course of action was to follow their lead. “All those captains couldn’t be wrong”, they said.

Henry was confident in the course he had charted, but agreed to recheck his calculations. He shifted control of the wheel over to his friend, so he could go below deck. When he returned, he realized his friend had taken them off course to follow the other boats.

Despite his friends’ fears, Henry repositioned himself at the wheel and put the boat back on the course he’d established previously. His years of sailing experience had made him an able mariner, and sure enough, he delivered his party safely back to the marina.

Later that evening, Henry received a call from a friend who told him about how several sailboats had crashed onto the breakers at Venice Beach due to the fog.

Henry’s experience is a good example of why you should trust your abilities, and never blindly follow someone else’s lead.

BC Home Sales Continue at Slower Pace in September

Vancouver, BC – October, 2018. The British Columbia Real Estate Association (BCREA) reports that a total of 5,573 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in September, a 33.2 per cent decrease from the same month last year. The average MLS® residential price in BC was $685,749, down 1.1 per cent from September 2017. Total sales dollar volume was $3.8 billion, a 34 per cent decline from September 2017.

“BC home sales continue at a slower pace compared to last year,” said Cameron Muir, BCREA Chief Economist. “The impact on affordability and purchasing power caused by the mortgage stress test and moderately higher interest rates are negating the effect of the extraordinarily strong performance of BC’s economy over the last five years.”

Year-to-date, BC residential sales dollar volume was down 21.3 per cent to $45 billion, compared with the same period in 2017. Residential unit sales decreased 22.5 per cent to 63,251 units, while the average MLS® residential price was up 1.5 per cent to $716,096.

For more information, please contact:  Gino Pezzani.

Canadian Building Permits – October, 2018

The total value of Canadian building permits rose 0.4 on a monthly basis in August to $8.1 billion on broad strength in the non-residential sector. Residential building permits declined for a third consecutive month.

In BC, the total value of permits reached a record high of $1.8 billion, smashing the previous record set earlier this year by nearly 13 per cent. Residential permits increased 17 per cent from July and were up 31 per cent year-over-year. Non-residential permits were up 77 per cent on a monthly basis and passed the $600 million threshold for the first time as the result of large office building projects in Vancouver.

Construction intentions August were mixed in BC’s four census metropolitan areas (CMA):
• Permits in the Abbotsford-Mission CMA increased 11 per cent on a monthly basis to $31.3 million. Year-over-year, permit values were down 9 per cent.
• In the Victoria CMA, total construction intentions were down 9 per cent to $71.1 million, a 40 per cent decline over this time last year.
• In the Kelowna CMA, permits values decreased by 14.5 per cent on a monthly basis to $96.6 million, but were up 4 per cent year-over-year.
• In the Vancouver CMA, the value of permits rose 66.4 per cent on a monthly basis and accounted for three quarters of all permit values in BC. Most of the increase came from the City of Vancouver, though the City of Burnaby issued over $250 million worth of apartment building permits in August.

For more information, please contact: Gino Pezzani.

September 2018 Housing Market Video Update – Real Estate Board of Greater Vancouver

Stats Centre Reports September 2018 for Housing in Great Vancouver

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Canadian Housing Starts – October, 2018

Canadian housing starts declined 5 per cent on a monthly basis in September to 188,683 units at a seasonally adjusted annual rate (SAAR).  The trend in Canadian housing starts continued to moderate lower, averaging 208,000 units SAAR over the past six months.

It was a volatile month for new home construction in BC. Total housing starts fell 43 per cent on a monthly basis to 25,611 units SAAR and were down 31 per cent year-over-year. On a monthly basis, starts of multiple units were down more than half from August to just 16,980 units SAAR while single detached fell 3 per cent to 8,631 units SAAR. Compared to September 2017, multiple units starts were down 37 per cent while single detached starts were 20 per cent lower.

Looking at census metropolitan areas (CMA) in BC:

  • Total starts in the Vancouver CMA were down 42 per cent on a monthly basis to 14,390 units SAAR as multiple units starts dropped 50 per cent from August. Compared to this time last year, total starts in Vancouver were 21 per cent lower. September new home construction in Metro Vancouver was concentrated in Surrey which accounted for a quarter of all starts.
  • In the Victoria CMA, housing starts fell 56 per cent after a surge of new starts in August. Total housing starts were still on a 3,000 annual pace in September. That is well below the torrid pace of new home construction seen in Victoria over the past year, but still relatively strong.
  • In the Kelowna CMA, new home construction slowed substantially in September, falling to just 750 units SAAR from August’s near 4,000 unit annual pace. On a year-over-year basis, total starts were down 84 per cent to just 67 total units.  Housing starts in Kelowna have fallen off of the record pace of 2017, but remain above the 10-year average for the city.
  • Housing starts in the Abbotsford-Mission CMA rose 23 per cent on a monthly basis, driven by a 44 per cent increase in multiple unit projects and strong single-detached starts. However, total housing starts were down 80 per cent compared to last September, which saw very strong multiple unit starts.

For more information, please contact:  Gino Pezzani.