Canadian employment rose slightly to 20.08 million in March, up by 35,000 (0.2 per cent). The Canadian unemployment rate held steady at 5 per cent, hovering just above all-time lows. Employment gains were concentrated in transportation and warehousing (+41,000); business, building and other support services (+31,000); and finance, insurance, real estate, rental and leasing (+19,000). Average hourly wages were up 5.3 per cent from March of last year, while total hours worked were up 1.6 per cent year-over-year. 

Employment in BC was unchanged in March, along with Metro Vancouver. However, the unemployment rate in BC fell to 4.5 per cent and in Metro Vancouver to 4.8 per cent. This reversed the jump in unemployment last month caused by increased labour force participation. Only Quebec currently has a lower unemployment rate than BC. 

Link: https://mailchi.mp/bcrea/canadian-employment-march-2023-april-6th-2023

For more information, please contact: Gino Pezzani.

Housing demand impact of record-high immigration is five times as large as the Foreign Buyers Ban: report 

Vancouver, BC – March, 2023. To fully offset a deterioration in housing affordability, new home completions in BC need to increase 25 per cent above their historical average level for the next five years to a record level of about 43,000 completions per year, a new report has revealed.
 
According to the latest Market Intelligence report from the BC Real Estate Association (BCREA), two significant federal government policies – the Foreign Buyers Ban and record-high immigration targets – will shape housing demand in BC over the next three years. 

Summary Findings:

• There is weak evidence that Canada’s Foreign Buyers Ban will achieve its objective of lowering home prices, with an estimated reduction in home sales of 2,400 units in BC over the two-year ban.

• BC will welcome an estimated 217,500 new permanent residents from 2023 to 2025 or 100,500 more new permanent residents than would be expected based on historical average immigration levels. This translates to a 20,500-unit increase in housing demand from new permanent residents.

The demand impact of the increase in immigration is approximately five times as large as the Foreign Buyers Ban and is estimated to place significant upward pressure on home prices. 

                                                          Read the Report

“Lowering price growth so that income growth can catch up to prices is integral to improving housing affordability in BC,” says Brendon Ogmundson, BCREA Chief Economist. “In our simulations, an appropriate supply response can offset the negative impact on affordability from an immigration-driven demand shock and if sustained, can achieve a permanent improvement in affordability in BC.  

Immigration plays a vital role in the economy by supporting economic growth, creating job opportunities, and bringing diversity to communities. However, as detailed in this report, immigration also adds significantly to housing demand. As the population continues to grow and global migration patterns persist, it is essential to create policies and programs that support and welcome immigrants while addressing the consequent pressures on an already stressed housing market.
 
“To ease the pressure on the housing market that arises from sudden changes in housing demand, governments can take steps to increase housing supply,” Ogmundson adds, “This can include zoning changes to allow for more housing construction, increasing funding for affordable housing programs, and providing incentives for developers to build more housing units.”

The BCREA Housing Monitor Dashboard has been updated with the latest data up to March 27, 2023. Click here to access the latest dashboard.

For more information, please contact: Gino Pezzani.

Canadian seasonally-adjusted retail sales rose 1.4 per cent in January to $66.4 billion. Sales rose in 7 of 9 subsectors, but were led by higher sales at motor vehicle and parts dealers (+3 per cent) and gasoline and fuel vendors (+2.9 per cent). Core retail sales, which strips out gasoline and motor vehicle and parts dealers, rose 0.5 per cent. In volume terms, sales rose 1.5 per cent in January. As of January 2023, Statistics Canada broadened and modified its definition of Retail Trade, making the current series not precisely comparable with the previous series.

In BC, seasonally-adjusted sales rose 1.8 per cent in January. Compared to the same month last year, retail sales were up 3.3 per cent in the province. In the Greater Vancouver region, sales rose 3.4 per cent month-over-month and were up 3.2 per cent year-over-year. 

Link: https://mailchi.mp/bcrea/canadian-retail-sales-january-2023-march-24-2023

For more information, please contact: Gino Pezzani.

To view the March 2023 Mortgage Rate Forecast PDF, click here.

Highlights:

• Economic uncertainty driving substantial volatility in Canadian bond markets.

• Is the Canadian economy just slowing or something worse?

• Inflation trending the right direction, will that be enough to keep the Bank of Canada on hold? 

For more information, please contact: Gino Pezzani.

Canadian prices, as measured by the Consumer Price Index (CPI), rose 5.2 per cent on a year-over-year basis in February, a decrease from the 5.9 per cent rate in January. This large drop was mostly due to base year effects, as inflation increased strongly this month last year. Grocery prices continue to rise too-quickly, up 10.6 per cent from last year, the seventh consecutive month of double-digit annual price growth. Mortgage interest costs were up 23.9 per cent year-over-year, the fastest pace since 1982, as Canadians renewed or initiated higher-rate mortgages. In contrast, the Homeowner's Replacement Cost, which tracks home prices, continued to slow, increasing 3.3 per cent year-over-year in February, down from 4.3 per cent in January. Month-over-month, on a seasonally-adjusted basis, prices were up 0.1 per cent in February. In BC, consumer prices rose 6.2 per cent year-over-year.

There continue to be encouraging signs that the bout of rapid price appreciation that began in February of last year is waning. Although food prices continue to rise quickly, most other categories in the index are trending back toward normal price trends. The Bank of Canada's measures of core inflation, which strip out volatile components, each ticked downwards for a third month in a row. The three-month annualized change in seasonally-adjusted CPI is now well within the bank's 1-3 per cent target range, hitting 1.6 per cent in February. Although price appreciation may be moderating, it is still well above the Bank of Canada's 2 per cent target, and while the Bank has announced a conditional pause on further rate hikes, they could change course if inflation does not continue to cool. 

Link: https://mailchi.mp/bcrea/canadian-inflation-february-2023

For more information, please contact: Gino Pezzani.

Canadian housing starts rose 13 per cent to 243,959 units in February at a seasonally-adjusted annual rate (SAAR). Starts were down 2 per cent from February of 2022. Single-detached housing starts rose 2 per cent to 64,281 units, while multi-family and others rose 17 per cent to 179,677 (SAAR). 

In British Columbia, starts fell by 25 per cent in February to 37,389 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts fell 9 per cent m/m to 5,308 units while multi-family starts fell 30 per cent to 28,367 units. Starts in the province were 8 per cent above the levels from February 2022. Starts were up by 1.1k in Kelowna and 1k in Abbotsford, while falling 2k in Victoria and 14k in Vancouver from last month. The 6-month moving average trend fell 3.8 per cent to 48.8k in BC in November. 

Link: https://mailchi.mp/bcrea/canadian-housing-starts-february-2023

For more information, please contact: Gino Pezzani.

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

Vancouver, BC – March, 2023. The British Columbia Real Estate Association (BCREA) reports that a total of 4,775 residential unit sales were recorded in Multiple Listing Service^® (MLS^®) systems in February 2023, a decrease of 46.5 per cent from February 2022. The average MLS^® residential price in BC in 2023 was 941,575, down 14.7 per cent compared to the average price of over $1.1 million in February 2022, recorded at the market's peak. The total sales dollar volume was $4.5 billion, representing a 54.4 per cent decrease from the same time in the previous year. 

“While activity across provincial housing markets remains well below normal,” said BCREA Chief Economist Brendon Ogmundson. “There are encouraging signs that the market is balancing out. Home sales rose month-over-month in most markets, and prices appear to be firming up in the face of low supply.”

Worth mentioning, the provincial MLS^® average price was up 8.5 per cent month-over-month to its highest level since July 2022, partially due to a more stable market but also because of the composition of sales reverting to a more normal mix following low sales of single detached homes through the Lower Mainland in January.

For more information, please contact: Gino Pezzani.

February listing data show slow sales resulting in below-average sales activity in the Metro Vancouver area.

With sales remaining well-below historical norms, the number of available homes for sale in the region have continued inching upwards.

Here's a summary of the February 2023 housing market statistics.

Canadian employment rose slightly to 20.05 million in February, up by 22,000 (0.1 per cent). The Canadian unemployment rate held steady at 5 per cent, hovering just above all-time lows. Employment gains were concentrated in health care and social assistance (+15,000), public administration (+10,000), and utilities (+7,500), while employment fell in business, building and other support services (-11,000). Employment among those aged 55 to 64 rose by 25,000 (+0.7 per cent) as older workers returned to the labour force. Average hourly wages were up 5.4 per cent from February of last year, while total hours worked were up 1.4 per cent year-over-year.

Employment in BC rose by 6,700 (0.2 per cent) to 2.777 million in February, while Metro Vancouver's employment rose by 0.6 per cent month over month. Both BC and Metro Vancouver's unemployment rates jumped to 5.1 per cent, however. This was driven by an increase in workers entering the labour force, particularly middle-aged females, rather than a decrease in employment. BC's unemployment rate now matches Ontario, while Manitoba, Saskatchewan, and Quebec have a lower rate. 

Link: https://mailchi.mp/bcrea/canadian-employment-february-2023-march-10-2023

For more information, please contact: Gino Pezzani.

As signalled in its previous interest rate announcement, The Bank of Canada maintained its overnight rate at 4.5 per cent this morning. In the statement accompanying the decision, the Bank noted that restrictive monetary policy is weighing on demand and it expects weak economic growth for the next couple of quarters. That weak growth should moderate wage growth in a currently tight labour market and ease competitive pressures on prices, ultimately leading to inflation reaching 3 per cent by the middle of 2023.  As for the possibility of future rate increases, the Bank stated that it will continue to assess economic developments and the impact of past interest rate increases and is prepared to increase its policy rate further if needed.

Economic data in Canada has been mixed of late.  Labour markets remain very strong while economic growth appears to have somewhat stalled. Inflation, while still high on a year-over-year basis, has come down significantly on a monthly basis with total CPI trending at 2.5 per cent annualized over the past three months and core measures of inflation trending at between 2.5 and 3.5 per cent. Uncertainty as to the direction of the economy has led to significant volatility in bond yields as financial markets grasp for clues on future monetary policy decisions. As a result, 5-year bond yields in Canada (an important benchmark for fixed mortgage rates) have soared back to their previous highs. Consequently, after falling to start the year, fixed mortgage rates have ticked slightly higher. However, we still anticipate that mortgage rates will end the year lower once the full impact of the past year of rate increases is felt on economic growth and inflation.

Link:  https://mailchi.mp/bcrea/bank-of-canada-interest-rate-announcement-9k8aczm5zv

For more information, please contact: Gino Pezzani.