CLI Signals Steady Economic Climate for Commercial Real Estate

Vancouver, BC – February 25, 2016.  The BCREA Commercial Leading Indicator (CLI) broke a string of two consecutive declines, eking out a 0.1 point increase to an index value of 120.0 in the fourth quarter of 2015. On a year-over-year basis, the CLI was 0.4 per cent higher than in 2014. 11

“Uncertainty in the global economy roiled financial and commodity markets in the second quarter,” said BCREA Economist Brendon Ogmundson. “However, BC’s nation leading economic growth should help to sustain commercial real estate activity through the end of the year.”

“Financial market jitters offset solid gains from a strong BC economy,” said BCREA economist Brendon Ogmundson. “We expect that the economic environment will remain supportive of steady growth in the commercial real estate market.”

The CLI was virtually flat to end the year, which in combination with a falling index through the spring and summer has produced a flattening of trend underlying the index. That trend suggests that growth in commercial real estate activity will neither accelerate nor decelerate over the next two to four quarters.

For more information, please contact: Gino Pezzani.

 

 

BC Budget 2016

The BC government introduced its 2016 budget today. The budget included a number of items intended to affect affordability and availability in the Lower Mainland’s housing market.

Here’s a summary:

Property Transfer Tax (PTT)

• a New Housing exemption will apply to newly built homes or newly subdivided units priced up to $750,000, saving buyers up to $13,000; and

• a partial exemption will apply on newly built homes priced $750,000 to $800,000.

• a new 3% PTT rate will apply to the portion of a home sale that exceeds $2 million. For homes that sell for below $2 million, the PTT will continue to apply at a rate of 1% on the first $200,000 and 2% on the balance.

These changes will take effect on February 17, 2016.

“While we applaud the government’s efforts to improve affordability for home buyers purchasing new housing, there’s more work to be done, including indexing PTT thresholds to keep pace with changes in home prices over time,” Darcy McLeod, Board president said.

Data collection

Starting this summer, individuals and corporations buying property must disclose if they are Canadian citizens or permanent residents of Canada and if neither, their home country. These changes will provide information on the volume of foreign investment in BC.

Your Board supports this change. We advocated for this initiative in a letter to the Finance Minister earlier this year.

Home Owner Grant

The Home Owner Grant threshold will increase to $1.2 million from $1.1 million for the 2016 tax year.

Affordable housing

The province will invest $355 million to help the BC Housing Management Commission support more than 2,000 affordable housing units for residents with low-to-moderate incomes.

For more information, please contact: Gino Pezzani.

Canadian Retail Sales and Consumer Price Inflation – February, 2016

Following a 1.7 per cent increase in November, Canadian retail sales disappointed in December, falling 2.2 per cent. Weakness in sales was widespread with 10 of 11 retail sub-sectors recording a decline in sales. Given disappointing consumer spending in the final month of 2015, we estimate that growth the Canadian economy was approximately zero in the fourth quarter. In BC, retail sales fell 1.9 cent on a monthly basis but were up 7.1 per cent compared to December 2014. For all of 2015, retail sales in the province rose 6.9 per cent.

The Consumer Price Index (CPI), which measures the rate of inflation in Canada, rose 2 per cent in the 12 months to January, up 0.4 points from the previous month. Gasoline prices rose on a year-over-year basis for the first time since October 2014 while food prices climbed 4 per cent. The Bank of Canada’s core measure of inflation, which excludes volatile components like food and gasoline increased 0.1 point to 2 per cent, right on the Bank’s target for inflation. In BC, provincial consumer price inflation was 2.3 per cent in the 12-months to January.

For more information, please contact: Gino Pezzani.

Canadian Manufacturing Sales – February, 2016

Some good news for the Canadian economy this morning as Statistics Canada reported manufacturing sales increased 1.2 per cent in December, the second consecutive monthly advance.  Sales were led higher by gains in the motor vehicle, wood product and chemical product industries. However, for all of 2015, manufacturing sales were down 1.5 per cent, posting the first annual decline since 2009, as a result of falling manufacturing output in the energy sector. 

In BC, where the manufacturing sector employs approximately 170,000 people, sales rose 0.7 per cent on a monthly basis but were down 3.2 per cent compared to December 2014.  For all of 2015, BC manufacturing sales rose 1.7 per cent

For more information, please contact:  Gino Pezzani.

Homes Sales Off to a Strong Start in 2016

Vancouver, BC – Februay 12, 2016. The British Columbia Real Estate Association (BCREA) reports that a total of 5,831 residential unit sales were recorded by the Multiple Listing Service® (MLS®) last month, up 33.2 per cent from January of last year. Total sales dollar volume was $4.39 billion in January, up 69.1 per cent compared to the previous year.supply
The average MLS® residential price in the province was up 26.9 per cent year-over-year, to $752,906.
“The BC housing market continues to build on momentum from a very strong 2015,” said Brendon Ogmundson, BCREA Economist. “Heightened demand is being met with the lowest level of supply in a decade, resulting in increased pressure on prices in much of the province.”
The housing market has seen a blistering start to 2016, with housing demand supported by low mortgage rates and rising employment and wage growth in the province. However, MLS® residential sales are forecast to edge lower this year. Total MLS® sales last year were the third highest on record at 102,517. A record 106,310 residential unit sales were recorded in 2005, while the only other year eclipsing 2016 were 2007 when 102,805 unit sales were recorded.

For more information, please contact: Gino Pezzani.