Canadian real GDP grew by 0.7% in November, following a 0.4% increase in the previous month. This is the seventh consecutive monthly gain since the steepest drops in Canadian history was observed in March and April. This brings GDP 3% below the February pre-pandemic level of output. Fourteen of the twenty industries reported an increase in output.

Leading the increase were the mining and oil and gas sectors (3.9%) due to higher international demand. Manufacturing was up (1.7%) as a result of higher inventory formation, and multiple global COVID-19 vaccine announcements drove activity in finance and insurance (1.3%). In contrast, declines were reported at clothing stores (-5.4%), personal care stores (-1.8%), auto dealers (-0.6%), and real estate agent and broker offices (-2.6%). Housing resale activity was down in November in the majority of large Canadian cities.

Early estimates from Statistics Canada indicate that real GDP grew by 0.3% in December. This is good news, indicating that the economy is showing resilience given the second wave of infections and lockdowns in many large provinces.

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-monthly-real-gdp-nov-january-29-2021

Future Martian colonists may have a tough time growing crops to eat, the Science News website reports.

Scientists recently tried planting lettuce and a weed, arabidopsis thaliana, in three kinds of Martian-type dirt. One type was made of material from Hawaii and another type from the Mojave Desert - both resemble the kind of dirt found on Mars. The third was created from volcanic rock, clays, salts and other chemicals observed by NASA’s Curiosity rover.

The lettuce and the weed both grew in the natural Martian-like soils under controlled lighting and temperature conditions when fertilized with a cocktail of nitrogen, potassium, calcium and other nutrients; but failed in artificial dirt. The reason: Terran soil contains microbes and organic material that helps plants grow, but the dirt of Mars is composed of crushed rock and nothing more, meaning that potential Martian colonists will have to put a lot of work into transforming it into soil that will sustain plant growth.

This month’s COVID-19 Recovery Dashboard shows that home sales staged a remarkable recovery during the pandemic and recession in 2020 that will fuel momentum in 2021. However, record low levels of supply across the province will likely translate into considerable upward pressure on prices until listings pick-up. Consumer confidence is still weak amid rising COVID-19 cases and tightened restrictions, which have reduced movement around the province. Meanwhile, business confidence is up as manufacturing and international trade have recovered from their pre-pandemic levels, and the vaccine rollout has led many businesses to expect a rise in sales in 2021. For a more comprehensive overview of BC's economic recovery, click here.

About BCREA’s COVID-19 Recovery Dashboard
The BCREA Economics team has created the COVID-19 Recovery Dashboard to help REALTORS® monitor BC’s economic recovery. This dashboard focuses on the sectors and activities that have been most significantly impacted by the pandemic, including:
• Housing Markets
• Retail, Restaurant Reservations and Movement
• Jobs and Hours Worked
• Manufacturing and International Trade
• Business and Consumer Confidences
• Tourism
To monitor the province’s progress, we benchmark each indicator to February 2020, the month before the pandemic was declared. This dashboard is updated each month.

BCREA's updated COVID-19 Recovery Dashboard is available here.
For more information, please contact: Gino Pezzani.

Provincial Housing Market Set Up for Very Strong 2021

Vancouver, BC – January, 2021. The British Columbia Real Estate Association (BCREA) released its 2021 First Quarter Housing Forecast Update today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to rise 15.6 per cent to 108,680 units this year, after recording 94,021 sales in 2020. In 2022, MLS® residential sales are forecast to pull back 9 per cent to 98,850 units.

“After an unprecedented and often surprising performance in 2020, the provincial housing market is set up for a very strong year in 2021,” said Brendon Ogmundson, BCREA Chief Economist. “A strong economic recovery and record-low mortgage rates will continue to drive strong demand this year.”

On the supply side, new listings activity recovered through the second half of 2020, but not nearly enough to see any accumulation in overall inventory. As a result, market conditions will start 2021 very tight, with the potential for strong price increases through the spring and summer until new supply comes online. We are forecasting a 7.7 per cent rise in the MLS® average price this year, followed by a further 3 per cent in 2022.

For more information, please contact: Gino Pezzani.

A young apprentice approached the town baker asking to learn the art of baking bread. He promised to work hard and follow instructions precisely. The baker happily accepted the young apprentice.

The baker began by saying, “First, we must prepare our baking room and assemble our ingredients. Today, we will be using ingredients from each of the four elements: wheat from the earth, yeast from the air, and water and salt from the sea. The fourth element of fire will transform these ordinary ingredients and produce something entirely wonderful and new - a rich crusty loaf of bread, which is far grander than any of the ingredients alone.”

The apprentice followed instructions and even worked ahead preparing the area, cleaning without the slightest break. At one point even thinking the old baker may have taken a few too many breaks.

The two had worked from dawn until dusk, the apprentice was exhausted but finally, it was time to take the bread out of the oven. The apprentice noticed his loaf did not rise and expand like the baker’s. “Why is my loaf heavy and flat, and yours is light and airy? I used the same flour, the same water and the same yeast as you, yet your bread is so different from mine.”

The baker said, “I used one more ingredient than you – time! While you were working ahead, I was taking time to relax. But the time was not only for me, it was also for the dough. Only when given undisturbed time will the gas bubbles form inside the dough, which produces both flavor and texture."

It is equally important to work hard and relax, in order to transform into something greater than we expect.

The Bank of Canada maintained its overnight rate at 0.25 per cent this morning, a level it considers its effective lower bound. The Bank reiterated what it calls "extraordinary forward guidance" in committing to leaving the overnight rate at 0.25 per cent until slack in the economy is absorbed and inflation sustainably returns to its 2 per cent target. The Bank projects that will not occur until 2023. The Bank is also continuing its quantitative easing (QE) program, purchasing at least $4 billion of Government of Canada bonds per week. In the statement accompanying the decision, the Bank noted that the economic recovery has been interrupted by the second wave of COVID-19, but the arrival of effective vaccines has boosted the medium-term outlook for economic growth. The Bank expects the Canadian economy will grow 4 per cent in 2021 and 5 per cent in 2022.

The restrictions in place to mitigate the impact of the second wave of COVID-19 mean that the economy is likely going to get off to a slow start in 2021. However, as vaccinations accelerate in coming months, the Canadian economic recovery will gain steam in the second half of 2021. Depending on the strength of the recovery, we may see the Bank taper its purchases of government bonds in 2022, which could put moderate upward pressure on 5-year fixed mortgage rates. However, that still means the current extremely low interest rate environment will be around for quite some time.

For more information, please contact: Gino Pezzani.

Canadian housing starts decreased by 12.6% m/m to 228,279 units in December at a seasonally adjusted annual rate (SAAR), following a strong increase of 14% in the previous month. Housing starts decreased in 8 of 10 provinces with the largest decline in Manitoba (-40.5%). Building activity declined in both the single-detached (-6.2%) and multi-unit (-15.5%) segments. Despite December's decline, housing starts finished 2020 higher than the previous year. Also, the six-month moving average was still a robust 239,052 units SAAR.

In BC, housing starts decreased by 12.1% m/m to 43,602 units SAAR in December, following a strong increase of 51% in November. Building activity was down by 15.7% in the multi-unit segment, while single-detached starts were up by 1.5%. The decline in the multi-unit segment was led by Vancouver.

The pullback in December was not unexpected as tighter COVID-19 restrictions were put in place. We can still expect housing activity to be supported by strong demand and historically low borrowing rates. The value of BC residential building permits was up by 22% in November with a strong increase in the multi-unit segment, which will contribute positively to economic growth. Compared to the same time last year, housing starts were up by 1.2% in BC.

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-housing-starts-dec-january-18-2021