The BCREA Commercial Leading Indicator (CLI) fell to 149 from 153 in the third quarter of 2022 while the six-month moving average retreated from a record high. Compared to the same time in 2021, the index was down by 0.8 per cent.

It is important to note that while the Canadian economy has enjoyed a strong recovery, the environment for commercial real estate remains highly abnormal and uncertain. Although the CLI is designed to interpret economic and office employment growth as positive indicators for commercial real estate demand, the recent strong growth of these indicators may not translate as readily into improved conditions in the commercial real estate market relative to the pre-pandemic period.


The CLI fell in the third quarter due to deteriorations in all three subcomponents of the index. The economic activity index was driven downwards by inflation-adjusted declines in wholesale trade, retail and manufacturing sales. Rapid appreciation in the consumer price index driven by supply chain obstacles and the war in Ukraine meant that rising nominal values in these economic areas were offset after adjusting for general price growth. The financial component of the index was negative as a result of falling REIT prices. Spreads between corporate and government borrowing costs also rose slightly from the prior quarter, contributing negatively to the financial component. The index’s employment component was also negative, with a rise in office employment (finance, insurance and real estate) insufficient to offset a larger decline in manufacturing employment.

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

For more information, please contact: Gino Pezzani.

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Canadian real GDP rose 0.1 per cent in September, up for the eighth consecutive month. Goods-producing sectors rose 0.3 per cent while services-producing industries were essentially flat. Canadian real GDP is now roughly 2.8 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy was unchanged in October.

Growth in the third quarter of 2022 registered 2.9 per cent at an annualized rate from the prior quarter, rising for the fifth consecutive quarter. Businesses continued to expand their inventories, while retail and wholesale trade sectors recorded higher stocks of motor vehicles. Housing investment fell 4.1 per cent on higher interest rates, as home renovations (-6.6 per cent) and resale activities (-13.8 per cent) were down for the second and third consecutive quarters respectively. In contrast, new construction (+2.4 per cent) and business investment in non-residential structures (+2.8 per cent) both rose. Exports were up 2.1 per cent on higher oil production while household spending edged down 0.3 per cent in the third quarter, the first decline since the second quarter of 2021. 

GDP growth in the third quarter, though beating the Bank of Canada's expectations, continues to show signs of slowing. The slowdown in GDP growth will likely continue into 2023 as the bank continues and then perhaps concludes its tightening cycle. The Bank is expected to raise its overnight rate again at its upcoming rate announcement on December 8th, but analysts expect the pace of hikes to slow following that meeting. Currently at 3.75 per cent, we expect the overnight rate to increase another 50 to 100 basis points. GDP growth will remain slow, particularly in interest rate sensitive sectors like housing, while the bank continues to increase rates. 

Link: https://mailchi.mp/bcrea/canadian-economic-growth-real-gdp-q32022

For more information, please contact: Gino Pezzani.

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Canadian seasonally-adjusted retail sales fell 0.5 per cent in September to $61.1 billion. Sales fell in 7 of 11 subsectors, but were led by lower sales at food and beverage stores (-1.3 per cent) and gas stations (-2.4 per cent). Core retail sales, which strips out gasoline and motor vehicle and parts dealers, fell 0.4 per cent in September. In volume terms, sales were down 0.1 per cent. 

In BC, seasonally-adjusted sales fell 2 per cent in September. Compared to the same month last year, retail sales were up 3.1 per cent in the province. In the Greater Vancouver region, sales fell 3.8 per cent month-over-month and were up 3.5 per cent year-over-year. 

In September, Canadian e-commerce sales fell 3.3 per cent to $3.4 billion, corresponding to 5.7 per cent of retail sales. This percentage remains elevated relative to pre-pandemic levels, but is lower than during core months of the pandemic in 2020 and 2021. 

Link: https://mailchi.mp/bcrea/canadian-retail-sales-september-2022-november-22-2022

For more information, please contact: Gino Pezzani.

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Canadian housing starts fell by 31.8k (-10.6 per cent) to 267.1k units in October at a seasonally-adjusted annual rate (SAAR). Comparing year-over-year, starts were up from October of 2021 (11.5 per cent). Single-detached housing starts fell 4 per cent to 72.8k, while multi-family and others fell 13 per cent to 194.3k (SAAR). 

In British Columbia, starts fell by 14 per cent in October to 46.6k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts fell 4 per cent m/m to 7.7k units while multi-family starts fell 17 per cent to 35k units. Starts in the province were 29.5 per cent above the levels from October 2021. Starts were down by 6.1k in Vancouver, 1.1k in Abbotsford, and 0.6k in Kelowna, but were up by 4.1k in Victoria. The 6-month moving average trend fell 2.3 per cent to 49.3k in BC in October. 

For more information, please contact: Gino Pezzani.

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

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Canadian prices, as measured by the Consumer Price Index (CPI), rose 6.9 per cent on a year-over-year basis in October, a rate of change equal to the prior month. After falling for the prior three months, a rise in gasoline prices in October kept the CPI steady year-over-year. Excluding energy, the CPI rose 6.2 per cent year over year in October, down from 6.3 per cent last month. Rising interest rates also contributed to an increase in mortgage interest costs, which was up 11.2 per cent year-over-year as Canadians renewed or initiated higher-rate mortgages. Slowing increases in food prices, meanwhile, dampened overall CPI growth. Month-over-month, on a seasonally-adjusted basis, prices were up 0.6 per cent in October. In BC, consumer prices rose 7.8 per cent year-over-year, up from 7.7 per cent last month. Average hourly wages grew 5.6 per cent year-over-year in October, indicating a decline in purchasing power. 

October's CPI numbers continued to suggest that inflation may be slowing. Despite higher gasoline prices, slowing increases in food prices kept the annual rate of change in the CPI stable. Core inflation, however, remains well above the Bank of Canada's 2 per cent target and will need to decline significantly over the next several months before the Bank rethinks its current tightening policy. 

Link: https://mailchi.mp/bcrea/canadian-inflation-october-2022

For more information, please contact: Gino Pezzani.

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Vancouver, BC – November, 2022. The British Columbia Real Estate Association (BCREA) reports that a total of 5,242 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in October 2022, a decrease of 45.5 per cent from October 2021. The average MLS® residential price in BC was $932,979, a 3.1 per cent decrease from $963,011 recorded in October 2021. Total sales dollar volume was $4.9 billion, a 47.2 per cent decline from the same time last year. 

“Sales activity remains slow across the province and inventories appear to be plateauing,” said BCREA Chief Economist Brendon Ogmundson. “While prices have fallen from peak levels reached in early 2022, average prices have recently leveled off.”
 
Year-to-date, BC residential sales dollar volume was down 26.3 per cent from the same period in 2021 to $73.3 billion. Residential unit sales were down 33 per cent to 72,824 units, while the average MLS® residential price was up 10 per cent to $1.01 million.


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

For more information, please contact: Gino Pezzani.

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BCREA 2022 Fourth Quarter Housing Forecast

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

Multiple Listing Service® (MLS®) residential sales in BC are forecast to decline 34.4 per cent from a record high 2021 to 82,345 units this year. In 2023, MLS® residential sales are forecast to fall an additional 11.4 per cent to 72,960 units.   

“The factors that drove unprecedented housing market activity over the past two years, including record low mortgage rates, buyer preference for extra space and the ability to work remotely, are now unwinding,” said BCREA Chief Economist Brendon Ogmundson. “As a result, there has been a significant shift in the housing market, which we anticipate will continue through 2023.”

With continued high-interest rates and what looks like a difficult 2023 ahead for the Canadian economy, we anticipate that market activity is going to fall below normal levels next year. On the supply side, slow sales activity has led to an increase in inventory, but from record lows. The rapid shift in market conditions has weighed on prices in the second half of this year, though active listings growth has slowed and is short of levels where we tend to see more substantial downward pressure on prices. However, price levels have fallen from their peak earlier this year, so even flat prices from current levels will translate to the provincial average price being down about 5 per cent in 2023.

To view the BCREA Housing Forecast PDF, click here.

For more information, please contact: Gino Pezzani.

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Canadian employment rose by 108,000 (0.6 per cent) to 19.656 million in October. The Canadian unemployment rate remained steady from last month at 5.2 per cent, hovering just above all-time lows. Average hourly wages were up 5.6 per cent from this time last year. Wage gains remain below the inflation rate, however, which hit 6.9 per cent year-over-year in the most-recent data. Total hours worked were up 2.2 per cent year-over-year. 

Employment in BC rose by 0.4 per cent to 2.762 million in October, while Metro Vancouver's employment rose by 0.3 per cent month over month. BC's unemployment rate fell in October to 4.2 per cent, just shy of the all-time low, while Metro Vancouver's rate fell to 4.4 per cent. Among the provinces, only Quebec currently has a lower unemployment rate. 

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-employment-october-2022-november-4-2022

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