Canadian Monthly GDP (January’18) – March, 2018

The Canadian economy contracted on a monthly basis in January with real GDP edging down 0.1 per cent.  The decline was the result of lower output in the energy extraction sector as well as lower real estate activity due to the implementation of new mortgage qualification rules.  The output of real estate agents and brokers fell 12.8 per cent in January, the largest monthly decline since November 2008.

Given today’s release, growth in the Canadian economy is tracking at about 1 per cent for the first quarter, a further slowdown from the already somewhat sluggish fourth quarter of 2017. Despite rising inflation, sharply slower economic growth should give the Bank of Canada pause about further increases in its overnight rate.

For more information, please contact: Gino Pezzani.

Statement – Speculation Tax: Clarity Appreciated; More Needed

Vancouver, BC – March 27, 2018. The British Columbia Real Estate Association (BCREA) was pleased to see more details of the proposed speculation tax. Refinement of the areas of the province where the tax applies and the introduction of different rates for different owners indicate a more strategic approach, and provide greater certainty.

We look forward to more answers as the speculation tax takes shape, and more opportunities to minimize its negative impact in all affected areas for all homeowners who pay income tax in Canada. For example, homeowners in the City of Vancouver could potentially be charged twice for leaving their homes vacant: once by the city and once by the province. Communities could face economic problems, due to fewer visitors, less consumer spending and lower housing prices.

Also, development properties are often bought years before they are developed, and the proposed tax would add costs that would be passed on to consumers, regardless of where they pay tax.

Finally, perhaps consideration should be given to offering incentives for homeowners to rent their properties, rather than a tax penalty.

BCREA urges the BC Government to undertake a formal, public consultation on the proposed speculation tax, to ensure the best input and insights are available, and to assure those affected that this measure is being carefully considered from all angles.

For more information, please contact: Gino Pezzani.

What Is The Likelihood of Your Future Success?

A woman visited a fortune teller to find out if her future would be successful, but instead of answering any of the questions, the fortune teller gave the woman a box. She explained that it was a magic box that had the power to make dreams come true.

She handed the woman a notepad and told the woman to write down three things she wanted and then place the paper in the box. She told her to take the box home and shake it three times each morning upon waking and three times in the evening before going to bed, making sure to repeat her wishes aloud each time. The fortune teller also told the woman she’d have to return the box in one year.

A year later, the woman visited the fortune teller. “I followed your instructions, and everything I hoped for came true,” the woman said. “This box really does hold powerful magic!”

“My dear, the magic is not in that box,” the fortune teller replied. “The magic is inside of you. You just needed to remind yourself of the things you wanted to help awaken your determination to get them.”

Canadian Retail Sales and Inflation – March, 2018

Canadian retail sales increased 0.3 per cent on monthly in basis in January and were 3.6 per cent higher compared to last January. Sales were higher in 7 of 11 sub-sectors representing 63 per cent of total retail trade.  With today’s data, and all other data available thus far for the first quarter, we are tracking Canadian economic growth at just 0.9 per cent for the first quarter of 2018.  In BC, after growing nearly 10 per cent in 2017,retail sales growth has slowed, falling 1 per cent on a monthly basis in January but rising 6.2 per cent compared to January 2017.

Canadian inflation, as measured by the Consumer Price Index (CPI), jumped higher in February, registering 2.2 per cent year-over-year, up from 1.7 per cent in January. The Bank of Canada’s three measures of trend inflation were all higher as well and now are either very close to or exceeding the Bank’s 2 per cent inflation target.   In BC, provincial consumer price inflation was 2.8 per cent in the 12 months to February.

Today’s data is somewhat mixed in its impact on monetary policy in Canada. On the one hand, the Canadian economy appears to be slowing considerably, while on the other, inflation continues to close in on the Bank’s target of 2 per cent.  We believe the Bank will continue to hold interest rates steady until summer or fall to get a better grasp on the direction of the economy before acting.

For more information, please contact:  Gino Pezzani.

Video Update for February 2018 Housing Market Summary

REBGV President Jill Oudil provides a summary of February 2018 housing market statistics.