To view the full Commercial Leading Indicator PDF, click here.

In the first quarter of 2023, the BCREA Commercial Leading Indicator (CLI) held steady at 148, while the six-month moving average continued its downward trajectory to 149. Compared to the same quarter in 2022, the index was down by 5 per cent.

It is important to note that the environment for commercial real estate remains highly abnormal and uncertain. The CLI is designed to interpret economic and office employment growth as positive indicators for commercial real estate demand. However, the recent strong growth in these indicators may not translate as readily into improved commercial real estate market conditions due to structural changes in the economy caused by the COVID-19 pandemic. 

The CLI held steady due to an improvement in the financial component, completely offsetting a decline in employment, while the economic component was essentially unchanged. Spreads between corporate and government borrowing costs declined in the first quarter while Real Estate Investment Trust (REIT) prices rose, strengthening the financial component of the index. In contrast, the employment component of the index fell due to declines in both office employment (finance, insurance, and real estate) as well as manufacturing employment. Finally, the economic component of the index was essentially unchanged as rising wholesale trade was entirely offset by declining inflation-adjusted retail sales and manufacturing sales. 

For more information, please contact: Gino Pezzani.

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Canadian real GDP was flat in March. Service-producing industries were unchanged from the prior month which goods producing industries edged down 0.1 per cent. Canadian real GDP is now roughly 3.6 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy rose 0.2 per cent in April.

GDP grew 0.8 per cent in the first quarter of 2023, following roughly zero growth in the previous quarter. Almost all of this growth was concentrated in the month of January. Goods-producing sectors rose 0.1 per cent while services-producing sectors rose 0.9 per cent. The public sector (educational services, health care and social assistance, and public administration) was the largest contributor to growth for the third consecutive quarter. Exports rose 2.4 per cent in the first quarter, while imports rose just 0.2 per cent, spurring growth. Higher household spending on goods (1.5 per cent) and services (1.3 per cent) also pushed GDP upwards. Higher borrowing costs, meanwhile, caused housing investment to fall 3.9 per cent in the first quarter, with new construction (-6.0 per cent), renovations (-2.1 per cent), and ownership transfer costs (-1.5 per cent) all declining. Compensation of employees rose 1.7 per cent from the prior quarter, but disposable income nevertheless fell 1 per cent largely as a result of lower government transfers compared to last quarter. 

Canadian GDP outpaced expectations in the first quarter, expanding 3.1 per cent on an annualized basis. Following over a year of rate hikes from the Bank of Canada, the economy remains robust in many areas. A burst of economic growth at the start of the year supported a high first quarter growth rate, but April's preliminary GDP estimate shows growth continuing into the second quarter. Although housing markets swooned in the immediate aftermath of rate hikes, in recent months they have shown signs of a solid recovery. At 5 per cent, the Canadian unemployment rate remains near record lows. Meanwhile, inflation remains hot, with the year-over-year rate increasing to 4.4 per cent in April from 4.3 per cent in March. These indicators will put some pressure on the central bank to potentially change course following its 'conditional pause' on further rate hikes as of January. The Bank's rate decision next Wednesday will need to balance persistently hot numbers with the risk of overtightening given the long lags of monetary policy. 

Link: https://mailchi.mp/bcrea/canadian-economic-growth-real-gdp-q12023

For more information, please contact: Gino Pezzani.

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About BCREA’s Housing Monitor Dashboard

The BCREA Economics team has created the Housing Monitor Dashboard to help REALTORS® monitor BC’s housing market. This dashboard, which is updated monthly, provides up-to-date data on key variables for public education and use. Focuses include: 

  • Resale Home Market

  • Construction

  • Rental Market

  • Borrowing Costs

  • Other BCREA Data

In the dashboard, the image and data are available for download under each chart, where possible. 

For more information, please contact: Gino Pezzani.

 
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Canadian seasonally adjusted retail sales fell 1.4 per cent in March to $65.3 billion. Sales fell in 5 of 9 subsectors, but the decrease was led by lower sales at gasoline stations and fuel vendors (-3.9 per cent) and motor vehicle and parts dealers (-4.4 per cent). Core retail sales, which strips out gasoline and motor vehicle and parts dealers, rose 0.3 per cent. In volume terms, sales fell 1 per cent in March. 

In BC, seasonally adjusted sales rose 0.9 per cent in March. Compared to the same month last year, retail sales were up 0.3 per cent in the province. In the Greater Vancouver region, sales were up 2 per cent month-over-month and down 0.5 per cent year-over-year. 

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-retail-sales-march-2023-may-19-2023

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Canadian prices, as measured by the Consumer Price Index (CPI), rose 4.4 per cent on a year-over-year basis in April, a slight increase from the 4.3 per cent rate in March. Month over month, CPI rose 0.7 per cent, in large part due to higher gasoline prices, which jumped 6.3 per cent from last month. Shelter costs were up 4.9 per cent year over year, driven by much higher mortgage interest costs (up 28.5 per cent from last year) along with higher rents (up 6.1 per cent from April 2022). The homeowner's replacement cost, which tracks home prices, was up just 0.2 per cent year over year. Grocery prices were up 9.1 per cent year over year, down from 9.7 per cent last month. In BC, consumer prices rose 4.3 per cent year-over-year.

After rapid success in bringing down inflation since last fall, month-over-month CPI figures came in hotter than expected in April. Even after stripping out the large jump in gasoline prices, CPI rose 0.5 per cent from March, corresponding to a 6 per cent annualized rate, while food and shelter costs continue to rise faster than a 6 percent annualized rate. The Bank of Canada's measures of core inflation, which strip out volatile components, each fell on a year-over-year basis while rising month-over-month. Markets continue to expect the bank to hold its overnight rate steady at 4.5 per cent at their upcoming meeting on June 7th. However, in the context of a still strong labour market and the early signs of a rebound in the housing market, these CPI figures suggest that the Bank of Canada is still not entirely out of the woods on inflation.

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

For more information, please contact: Gino Pezzani.

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Canadian housing starts rose 22 per cent to 261,559 units in April at a seasonally-adjusted annual rate (SAAR). Starts were up 0.5 per cent from April of 2022. Single-detached housing starts fell 4 per cent to 53,843 units, while multi-family and others rose 32 per cent to 207,715 (SAAR). 

In British Columbia, starts rose by 18 per cent in April to 60,633 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 14 per cent m/m to 5,676 units while multi-family starts rose 21 per cent to 52,420 units. Starts in the province were 13 per cent above the levels from April 2022. Starts were up by 13k in Vancouver, while declining by 2.9k in Victoria and 1.8k in Kelowna. Starts in Abbotsford were flat month over month. The 6-month moving average trend rose 5.3 per cent to 51.2k in BC in November. 

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

For more information, please contact: Gino Pezzani.

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

Vancouver, BC – May, 2023. The British Columbia Real Estate Association (BCREA) reports that a total of 7,427 residential unit sales were recorded in Multiple Listing Service® (MLS®) systems in April 2023, a decrease of 17.7 per cent from April 2022. The average MLS® residential price in BC was 995,506 down 5.6 per cent compared to the average price of close to $1.1 million in April 2022. The total sales dollar volume was $7.4 billion, representing a 22.5 per cent decrease from the same time last year. 

“BC home sales have now risen for three consecutive months, but that recovery in sales has not been matched by listings which continue to fall well below normal levels,” said BCREA Chief Economist Brendon Ogmundson. “As a result, average prices across the province are once again rising, recovering much of the decline since prices peaked early last year.”

Average home prices, while still down year-over-year, are rising on a monthly basis in most markets. The average price in BC has now risen for three consecutive months and is up over 9 per cent since the start of 2023.
 
Year-to-date, BC residential sales dollar volume was down 44.1 per cent to $21.4 billion, compared with the same period in 2022. Residential unit sales were down 37.1 per cent to 22,417 units, while the average MLS® residential price was down 11.2 per cent to $954,984. 


For more information, please contact: Gino Pezzani.

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Canadian employment rose slightly to 20.13 million in April, up by 41,400 (0.2 per cent). The Canadian unemployment rate held steady at 5 per cent, unchanged since December. Employment gains were concentrated in wholesale and retail trade (+24,000); transportation and warehousing (+17,000); and information, culture and recreation (+16,000). Average hourly wages were up 5.2 per cent from April of last year.

Employment in BC was little changed in April, rising 0.1 per cent to 2.78 million, while declining by 0.1 per cent in Metro Vancouver to 1.564 million. The unemployment rate rose to 5 per cent in BC and to 5.4 per cent in Metro Vancouver. The rise was driven both by a rise in labour force participation, but also an increase in the number of unemployed workers. 

Link: https://mailchi.mp/bcrea/canadian-employment-april-2023-may-5th-2023

For more information, please contact: Gino Pezzani.

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Canadian prices, as measured by the Consumer Price Index (CPI), rose 4.3 per cent on a year-over-year basis in March, a decrease from the 5.2 per cent rate in February. This large drop was mostly due to base year effects; the CPI was rising quickly this month last year and fuel prices in particular are substantially down from a year ago. Grocery prices continue to rise quickly, up 9.7 per cent from last year, following seven consecutive months of double-digit increases. Mortgage interest costs were up 26.4 per cent year-over-year, the fastest pace on record, as Canadians renewed or initiated higher-rate mortgages. In contrast, the Homeowner's Replacement Cost, which tracks home prices, continued to slow, increasing 1.7 per cent year-over-year in March, down from 3.3 per cent in February. Month-over-month, on a seasonally-adjusted basis, prices were up 0.1 per cent in March. In BC, consumer prices rose 4.7 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 and mortgage interest costs continue to rise quickly, most other categories in the index are trending back toward normal price trends. Indeed, excluding mortgage costs, the year-over-year change in CPI was just 3.6 per cent. The Bank of Canada's measures of core inflation, which strip out volatile components, each ticked downwards for a fourth 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 2.1 per cent in March. Still, although year-over-year price appreciation may be moderating, at 4.3 per cent it is still well above the Bank of Canada's 2 per cent target. While the Bank of Canada held the overnight rate steady at 4.5 per cent for a second consecutive meeting in April, the Bank could change course if inflation does not continue to cool or if the economy dips toward recession. 





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

For more information, please contact: Gino Pezzani.

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