Two boys walk into a bakery on a dare. They have no money in their pockets, but are determined to score a few treats. When the baker isn’t looking, the first boy, Tyler, swipes three cookies from a tray on the counter and sticks them in his jacket pocket.

“Guess I won this challenge,” he says to his friend Chuck.

“Watch and learn,” Chuck replies as he walks to the counter and rings the bell. “What can I get for you?” the baker asks.

“Just your undivided attention,” Chuck answers.

“Gather around folks. I am the Amazing Chuck, and I know magic.”

A small crowd assembles around Chuck and Tyler. Chuck turns to the baker and says, “If you would be so kind as to give me a cookie, I will show you all a trick.”

The curious baker obliges and hands Chuck a cookie from the tray on the counter. Chuck takes the cookie, looks it over, and then stuffs it in his mouth. When he is finished, he says, “That was pretty tasty. Might I have another?”

The baker is becoming skeptical and says, “This isn’t much of a trick as far as I can tell.” He hands Chuck another cookie and watches as Chuck gobbles it down, as he did with the first one.

While smacking his lips, Chuck says, “Trust me, this is going to be the most amazing magic trick you ever witnessed. I know you have your doubts, but please, sir, I just need one more cookie for this trick to work.”

“This better be a heck of a good trick,” the baker says as he hands a third cookie to Chuck.

Just as before, Chuck devours the cookie. He then pats his belly and rubs his hands together. He rolls up his shirtsleeves and shows his palms to the baker and says, “Abracadabra!”

“I don’t see anything,” the baker says.

Chuck points to Tyler and says, “Let’s check his pocket.”

In BC in January, the housing market warmed up again, with sales rising while new listings and starts fell. Sales rose in all areas of the province from December. Rental costs in Vancouver and Victoria remain broadly elevated relative to most other points since the onset of the pandemic.

Retail sales declined in December in BC with the arrival of the Omicron variant but remain 11 per cent above February 2020 levels. As of January, restaurant reservations in Vancouver are at roughly 60 per cent of the pre-pandemic level. Compared to Toronto and Montreal, Vancouver restaurants avoided lockdowns during the month of January. In BC, Google’s measure of movement trends is currently about 16 per cent below pre-pandemic levels.

Although aggregate employment has recovered in BC to pre-pandemic levels, the accommodation and food service sector was about 15 per cent below the pre-pandemic level in January. The labour market has served high-income workers much better than low-income workers. Employment in high-income industries is about 8 per cent above pre-pandemic employment levels, while employment in low-income industries is about 5 per cent below pre-pandemic employment levels. Manufacturing and imports edged up in December, while exports declined slightly. Business confidence declined slightly in January, while consumer confidence drifted sideways. The number of US and non-US tourists has been rising each month since restrictions were eased last summer, reaching about 45 per cent of pre-pandemic levels in November.   

For a more comprehensive overview of BC's economic recovery, click here.

For more information, please contact: Gino Pezzani.

Canadian prices, as measured by the Consumer Price Index (CPI), rose 5.1% on a year-over-year basis in January, up from 4.8% in December. On a month-over-month basis, the CPI rose 0.9% in January (0.6% seasonally adjusted). The Bank of Canada's preferred measures of core inflation (which use techniques to strip out volatile elements) rose an average of 3.2% year-over-year in January. Prices rose year-over-year across all major components of the index, but prices were driven in particular by a 6.2% rise in shelter costs, the highest rate of appreciation since February 1990. Goods (+7.2%) continued to rise at a faster pace than services (+3.4%) in January. In BC, consumer prices rose 4.3% year-over-year in January, driven in part by a 4.2% increase in average rents. 

While inflation may moderate over the second half of this year, especially if gasoline prices come down from record highs and home price growth slows, we expect that inflation will still be trending well above the Bank of Canada's 2 per cent target in 2022. To counteract this inflation, the Bank of Canada will begin raising its overnight rate at its March 2 meeting. We expect the Bank will increase its overnight rate a total of six times over the next year, bringing its key policy rate to 1.75 per cent before pausing to assess the impact of higher interest rates on the economy.

For more information, please contact: Gino Pezzani.
Link: https://mailchi.mp/bcrea/canadian-inflation-january-2022

Canadian housing starts fell to 230.8k units in January at a seasonally-adjusted annual rate (SAAR). Housing starts were down by 7.7k (3% m/m) in January (SAAR). Comparing year-over-year, starts were down from January of 2021 (26.9% y/y). Single-detached housing starts rose 8.9% in January to 78.5k, while multi-family and others dropped 8.5% to 152.2k (SAAR). 

In British Columbia, starts were down 29.2% in January, falling to 39.4k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts fell 23.4% m/m to 7.2k units while multi-family starts declined 33.4% to 28.2k units. Starts in the province were 33.7% below the levels from January 2021. Starts were down by 4.4k units in Vancouver, 4.2k in Victoria, 5.2k in Kelowna, and 0.1k in Abbotsford. The 6-month moving average trend declined 4.4% to 42.3k in BC in January. 

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-housing-starts-january-2022

Vancouver, BC – February, 2022. The British Columbia Real Estate Association (BCREA) reports that a total of 6,138 residential unit sales were recorded by the Multiple Listing Service^® (MLS^®) in January 2022, a decrease of 14.7 per cent from January 2021. The average MLS^® residential price in BC was $1,042,169, a 23.5 per cent increase from $843,918 recorded in January 2021. Total sales dollar volume was $6.4 billion, a 5.3 per cent increase from the same time last year. 

“Sales activity is down compared to record levels at the start of last year,” said BCREA Chief Economist Brendon Ogmundson. “However, the level of sales activity remains strong compared to the long-term average and inventory is still incredibly low. As a result, it will take quite some time to get back to healthy balance in the BC market.”

Total active listings remain near record lows with just 13,000 total listings in the province. For context, a healthy level of re-sale listings for the province is closer to 40,000 listings. As a result of this listings drought, markets all over the province are seeing significant upward pressure on prices.   

For more information, please contact: Gino Pezzani.

For the complete news release, including detailed statistics, click here.

Canadian employment declined by 200,000 (-1.0%) in January following seven consecutive months of gains, according to Statistics Canada. Employment losses in January were driven by stricter public health measures implemented to control Omicron in Ontario, Quebec, and in the Maritimes during the survey reference week of January 9 to 15.

In January, youth, core-aged women, and workers in food and accommodation suffered the largest drops in employment. Part-time workers saw steeper losses (-117,000; -3.3%) relative to full-time workers (-83,000; -0.5%). In January, 10% of workers reported being absent from work due to sickness or injury. The Canadian unemployment rate rose 0.5% to 6.5% in January, while the labour force participation rate declined 0.4% to 65%. 

In BC, the economic story diverged from much of the rest of the country. Employment rose modestly (+4,200; 0.2%), remaining at the highest level since the pandemic began. The unemployment rate continued declining in January, reaching 5.1%. For the first time since the pandemic began, the unemployment rate in BC reached pre-pandemic levels, falling below the level of  February 2020. BC is now tied with Manitoba for the lowest unemployment rate among the provinces. 

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-employment-january-2022

To view the BCREA Housing Forecast Update PDF, click here.

BCREA 2022 First Quarter Housing Forecast Update

Vancouver, BC – February, 2022. The British Columbia Real Estate Association (BCREA) released its 2022 First Quarter Housing Forecast Update today.

Multiple Listing Service^® (MLS^®) residential sales in the province are forecast to decline 17 per cent from a record high 2021 to 103,250 units this year. In 2023 MLS^® residential sales are forecast to fall an additional 12 per cent to 90,200 units.

“We expected home sales in 2022 do moderate from the frenetic pace of 2021,” said BCREA Chief Economist Brendon Ogmundson. “However, sales activity will remain high by historical standards.”

The BC housing market is entering 2022 with the lowest level of active listings on record and significant demand-side momentum. That means strong sales should persist through the first few months of the year and supply will remain severely limited. As a result, continued upward pressure on home prices is expected in all markets.

As a result, home prices are expected to rise by 8.5 per cent in 2022 with much of that gain happening in the first half of the year. With sales activity normalizing in 2023 and inventories rebuilding, market conditions around the province should improve and price growth is anticipated to slow to 2.7 per cent. 

For the complete news release, including detailed statistics, click here.

For more information, please contact: Gino Pezzani.

The Canadian economy expanded 0.6 per cent in November on a month-over-month basis, propelled by strong growth across essentially all sectors. Canadian real GDP is now 0.2 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy was essentially flat in December.

At its most recent meeting, the Bank of Canada noted that the slack in the Canadian economy has been largely absorbed. Growth in the economy accelerated in the fourth quarter with real GDP growth tracking at 6.4 per cent annualized. Even with an expected Omicron driven slowdown in the first quarter of 2022, the Canadian economy is clearly on a very strong growth path. With inflation elevated and the robust growth, the Bank of Canada will begin raising its overnight rate at its March 2nd meeting, continuing quarterly rate hikes until the overnight policy rate reaches 1.75 per cent. Canadian 5-year fixed rates have already risen substantially, returning to their pre-pandemic level of about 2.9 per cent.

For more information, please contact: Gino Pezzani.
Link:  https://mailchi.mp/bcrea/canadian-monthly-economic-growth-november-2021