As the first signs of spring begin to appear, few sights are as welcome as the cheerful bloom of the daffodil. Known for its vibrant yellow color and distinctive trumpet-shaped flowers, the daffodil is more than just a pretty face; it's a symbol of rebirth and new beginnings.

Originating in the meadows of Europe and North Africa, the daffodil, or Narcissus, has a long history that intertwines with human culture.

Canadian employment rose by 41,000, or 0.2 per cent, to 20.403 million in February. The unemployment rate rose 0.1 percentage points to 5.8 per cent. Average hourly wages rose 5 per cent year-over-year to $34.82 last month, while total hours worked were up 1.3 per cent from February of last year.

Employment in BC rose 0.2 per cent to 2.841 million, while employment in Metro Vancouver rose 0.2 per cent to 1.615 million in February. The unemployment rate fell 0.2 points in BC to 5.2 per cent while falling in Metro Vancouver by 0.5 points to 5 per cent last month.

Link: https://mailchi.mp/bcrea/canadian-employment-february-2024-march-8th-2024

To view the latest Market Intelligence report PDF, click here.

Summary of Findings

• Flipping activity, by any definition, is an insignificant share of overall transactions in BC.

• We estimate that the flipping tax will lower sales in BC by 1.7 per cent, but will have minimal impact on home prices.

There is a significant risk that the tax will cause potential sellers to delay listing their homes, leading to lower resale housing supply and tighter market conditions.

The BC Government has announced its intention to implement a flipping tax in British Columbia. Specifically, the government is proposing to add an additional tax to the proceeds of the sale on the sale of a home sold within two years of purchasing.

We know that flipping activity can be harmful when markets become overheated, and rapid price appreciation attracts market participants who are purely short-term speculators. It is important to differentiate sellers who are merely trying to profit from short-term market conditions from those who invest their time, labour, and capital to improve the housing stock or provide additional rental units.

In this Market Intelligence, we will look at the potential impact of this policy on the BC housing market and draw out some of its potential consequences.

For more information, please contact: Gino Pezzani.

The Bank of Canada maintained its overnight rate at 5 per cent this morning. In the statement accompanying the decision, the Bank noted that economic growth is slow, wage pressures are easing, and the economy overall appears to be in a state of modest excess supply. On inflation, the Bank cited that shelter costs remain the largest contributor to inflation and that it expects headline CPI inflation to remain close to 3 per cent in the first half of this year before gradually falling back to its 2 per cent target.

This morning's decision was much more about what the Bank is signaling for future meetings than the decision itself.  All attention will now shift to April 10th, the Bank's next meeting and the first in which a rate cut is a real possibility. Although the economy flirted with recession in 2023, it has so far managed to avoid a lengthy contraction in output. However, economic growth does appear rather anemic and given substantial progress on bringing inflation toward 2 per cent, it is clearly time for the Bank of Canada to begin easing policy. We expect that the Bank will eventually lower its overight rate by 100 basis points this year, with the first rate cut happening in April or June.

Link: https://mailchi.mp/bcrea/bank-of-canada-interest-rate-announcement-82gywlsqrl

For more information, please contact: Gino Pezzani.

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

The BCREA Commercial Leading Indicator (CLI) rose 3.8 points to 149.5 in the fourth quarter of 2023, while the six-month moving average rose to 147.4. Compared to the same quarter in 2022, the index was up by 0.8 per cent. 

Fourth Quarter Highlights

• The economic activity index rose in Q4. Inflation-adjusted retail trade, wholesale trade, and manufacturing sales rose, pushing the economic component upwards.

• Office employment (financial, insurance, real estate, and professional services) fell by 0.6 per cent in the fourth quarter, but manufacturing employment more than offset the decline with a 4.2 per cent increase. On net, the employment component contributed positively to the index. 

The financial component of the index rose in the fourth quarter. Rising Real Estate Investment Trust  prices pushed the financial component upwards. In addition, falling interest rate spreads, which indicate higher borrowing costs for companies relative to the government, further contributed to the rise in the financial component.

For more information, please contact: Gino Pezzani.

Canadian real GDP was largely unchanged in December, declining by 0.02 per cent, following two months of growth. Goods-producing sectors contracted by 0.2 per cent, while services were essentially unchanged. Construction activity fell 0.6 per cent in December, with residential building declining by 1.6 per cent. Offices of real estate agents and brokers rose 9 per cent, following five consecutive monthly declines amid soft home sales. Preliminary estimates suggest that output in the Canadian economy rose 0.4 per cent in January, helped by the conclusion of strikes in Quebec. 

Real GDP rose 0.2 per cent in the fourth quarter, close to 1 per cent on an annualized basis, erasing a 0.1 per cent decline in the third quarter. Improved net exports, driven by the strong US economy and Albertan crude oil, pushed GDP upwards. However, business investment declined for the sixth time over the most recent seven quarters. Household spending rose 0.2 per cent in the fourth quarter, driven by vehicle imports, but strong population growth meant that per capita consumption declined for the third consecutive quarter. At 6.2 per cent, the household savings rate was down slightly from the third quarter, but remains higher than pre-pandemic levels. Housing investment was down for the year, with residential construction down 10.2 per cent and ownership transfer costs down 7.7 per cent. At 1.2 per cent growth, 2023 was the slowest year for real GDP growth since 2016, excluding 2020. 

Economic growth in Canada was soft in 2023, and although it flirted with recession it has so far managed to avoid one. The central bank has raised rates by 475 basis points over two years and, as of the most recent data, managed to bring inflation down to 2.9 per cent without causing a major increase in unemployment or a contraction in GDP. The "soft landing" that seemed unlikely two years ago is now visible. However, while aggregate real GDP has not contracted, per capita GDP has contracted for six consecutive quarters as economic growth has failed to keep pace with rapid population growth. Per capita, real GDP is comparable to the level of 2017. Financial markets continue to expect that rate cuts will begin in the late spring and accumulate into the summer. The next rate announcement is on next Wednesday, March 6th. 

Link: https://mailchi.mp/bcrea/canadian-economic-growth-real-gdp-q42023

For more information, please contact: Gino Pezzani.

March sure is galloping in this year with all its green and golden glory! The cheerful proliferation of green shamrocks printed all over the place are a constant reminder that St. Patrick’s Day is the event of the month, but did you know the real St. Patrick originally had light blue livery? It wasn’t until he started using shamrocks as a teaching tool that green came to be associated with this icon of Ireland.

Although that might be useful knowledge to have on hand for your next trivia night with friends, I’m also sharing that fact with you because I think it is important to remember we have the power to craft our own history.

I love the thought that we craft our own history, regardless of what others try to tell our story should be.

Each of us tells the world what we stand for, if not with a particular shade of blue or green, then with a particular response to the people around us. We can change our own standard and improve what we are best known for.

This month marks only one-quarter of the year already written for the history books, which leaves us with nine months remaining in this year’s journal. Starting now, you can decide what details to include and what is not worth bothering with. You can add in new plot twists, welcome new characters, and decisively edit out anything or anyone that doesn’t belong in your story.

Try this: picture what you want people to say about you in December, then write down nine things that would need to happen for that statement to be true. Just like that, you wrote your own history and now have a goal for each month ahead of you.

Since you already wrote the story as you want it to end, all that is left is for you to enjoy living out the details and enjoying the smaller developments along the way. Here’s hoping it is full of good luck and good times!

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 Dat

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

For more information, please contact: Gino Pezzani.

Canadian retail sales rose 0.9 per cent in December to $67.3 billion. Excluding volatile items, sales were up 0.5 per cent month-over-month. In volume terms, retail sales rose 0.8 per cent in December. Retail e-commerce trade fell by 3.6 per cent to $3.7 billion in December, amounting to 5.5 per cent of total retail sales. 

Sales in BC rose 1.5 per cent in December. BC retail sales are up 2.8 per cent from the same time last year. In the CMA of Vancouver, retail sales were up 1.5 per cent from last month and 5.4 per cent from December of 2022.

Link: https://mailchi.mp/bcrea/canadian-retail-sales-december-2023-february-23-2024

For more information, please contact: Gino Pezzani.

Finance Minister Katrine Conroy introduced the provincial government’s Budget 2024. The budget unveiled several new housing related measures, including the BC Home Flipping Tax and various property transfer tax exemptions.

While BCREA commends the provincial government’s renewed commitment and efforts to improve housing attainability for British Columbians, the budget’s introduction of a “flipping tax” is unlikely to have a meaningful impact on housing attainability.  

Flipping Tax 

The BC Home Flipping Tax is a 20 per cent tax on the gain from sale of a home within a one-year time horizon and a pro-rated tax on sales up to within a two-year period. The tax will apply to both properties and assignments of contracts and is in addition to any existing federal or provincial income taxes incurred from the sale of the property, including the federal anti-flipping tax. Exemptions will be available for certain life circumstances that might motivate the sale of a property within two years, including for added supply through the creation of rental accessory dwelling units. 

The BCREA Economics Department’s preliminary analysis estimates the flipping tax will decrease home sales by between 1-2 per cent over a three-year period. Given the relatively small impact, prices and housing attainability are essentially unchanged by the tax. This is unsurprising, given that short-term flipping represents a low share of sales activity (less than 2 per cent in both Vancouver and Victoria). 

However, because the government has now implemented a disincentive to sell within a two-year period after purchasing, there will be some potential sellers that are prompted to delay listing, resulting in a lower level of listings inventory than without the tax. As a result, home prices may increase with the flipping tax compared to a no-tax baseline. Ultimately, the only way to prevent harmful short-term speculation in the housing market is to ensure housing is abundant. Our team plans to continue to analyze the flipping tax and provide updates when available. 

Property Transfer Tax Exemptions 

In principle, BCREA supports reduced property transfer taxes for first-time home buyers and people purchasing newly constructed homes. However, while we're in favour of measures that increase first-time home buyers’ abilities to purchase properties, it's critically important that housing supply is increased so they aren’t caught in bidding wars to acquire those homes. More detail is needed on property transfer tax exemption for purpose-built rentals to understand its impact on housing attainability for British Columbians. 

BCREA will continue to advocate for more thoughtful and evidence-based policies that can genuinely move the needle on housing attainability and alleviate the housing crisis facing British Columbians. 

In early March, BCREA and delegates from real estate boards across the province will be taking part in our annual Government Liaison (GL) Days in Victoria. During this time, we will be meeting with MLA’s representing all parties and advocating for the establishment of a permanent housing roundtable where stakeholders such as BCREA can advise on housing policy prior to its introduction and implementation. Stay tuned to BCREA channels for more details about GL Days. 

If you have any questions or comments, please please contact: Gino Pezzani.