Kootenay Connector Real Estate Blog

Monday, March 9, 2015

Canadian housing starts

New home construction in Canada declined 16.4 per cent in February to 156,276 units at a seasonally adjusted annual rate (SAAR). The six-month trend in Canadian housing starts of 182,137 units SAAR fell for a sixth consecutive month.

Housing starts in BC urban centers fell 11.1 per cent on a monthly basis to 22,273 units SAAR. On a year-over-year basis, housing starts were 5 per cent higher compared to February 2014. Single-detached starts were 11 per cent higher year-over-year while multiple units were up 1 per cent compared to this time last year.

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were down 11 per cent year-over-year due to a 22 per cent decline in multiple starts. Single-detached starts in Vancouver were 24 per cent higher. In the Victoria CMA, new home construction jumped 162 per cent year-over-year due to a surge in multiple unit starts. Total housing starts in the Kelowna CMA were up 7 per cent year-over-year in February, led by growth of multiple unit starts. Housing starts in the Abbotsford-Mission CMA are rebounding from a poor showing in 2014. Total starts were over 4 times higher year-over-year in February, also led by a jump in multiple unit starts.

Friday, March 6, 2015

Canadian Building Permits

The value of Canadian building fell 12.9 per cent in January, largely as a result of lower non-residential construction intentions in Alberta, BC and Ontario.

In BC, lower building permits were registered in both the non-residential and residential sectors. The total value of building permits fell 24.2 per cent to $768 million from over $1 billion in permits in December. Total permits were also down 15.5 per cent year-over-year. Both non-residential and residential permits were lower in January, but most of the decline was a result of a steep decline in non-residential construction intentions.

Construction intentions were mostly lower in BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA fell 33.4 per cent on a monthly basis and 40.5 per cent year-over-year.The Kelowna CMA was the only BC CMA that posted higher permit values in January, with permit values growing 19.9 per cent from December and 58.6 per cent over January 2013. In the Victoria CMA, permit activity declined 27.4 per cent on a monthly basis and was 25.9 per cent lower year-over-year. In the Vancouver CMA, permits were down 32.7 per cent on a monthly basis and were 25.9 per cent lower year-over-year.

Thursday, March 5, 2015

Bank of Canada Interest Rate Announcement

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 0.75 per cent. In the press release accompanying the decision, the Bank noted that total CPI inflation has fallen as expected given the significant drop in oil prices, but core inflation has been temporarily boosted by a lower Canadian dollar. Regarding economic growth, the Bank expects the negative impact of lower oil prices to appear in the first half of 2015 before the economy recovers in the second half of the year. Overall, the Bank judges risks to its inflation outlook as balanced and considers the current degree of monetary policy stimulus appropriate.

Stable oil prices and core inflation still trending above the Bank's 2 per cent target seems to have persuaded policymakers that the "insurance" purchased with January's surprise interest rate cut is enough for now. That said, the ultimate impact of lower oil prices has yet to be fully realized and we expect monetary policy to be highly data dependent in coming months. If the Canadian economy experiences significant labour weakness or core inflation starts to trend lower, the Bank may opt to reduce rates at its next meeting in April or possibly early in summer.

Canadian Economic Growth (Q4)

The Canadian economy grew 2.4 per cent in the fourth quarter of 2014, led by growth in consumer spending and inventory accumulation. Both exports and business investment, two key pillars of the Bank of Canada's hoped for rotation of away from consumption led growth, declined. For all of 2014, Canadian economic growth registered 2.5 per cent, following just 2 per cent growth in 2013.

We expect growth will decelerate slightly in 2015 to about 2.2 per cent, with the first half of the year seeing sub-2 per cent growth, as low oil prices drag investment and employment lower in oil and gas producing provinces. That outlook includes a further reduction of the Bank of Canada's overnight rate to 0.5 per cent occurring either at the Bank's April meeting or later in the summer. However, better than anticipated GDP or employment growth and firmer than expected core inflation could keep the Bank from moving on rates any further this year.

Strong Growth Expected for Commercial Real Estate Sector in 2015

The BCREA Commercial Leading Indicator (CLI) rose 0.8 index points to 119.8, the fourth consecutive quarterly increase. The continued advance in the CLI trend points to optimism surrounding the economic environment underlying the commercial real estate market.

“Rising consumer confidence combined with a lower value of the loonie and a strengthening US economy helped to push the economic activity component of the CLI higher in the fourth quarter,” said BCREA Economist Brendon Ogmundson. “A stronger provincial economy in 2015 will support increased commercial real estate activity this year.”

The rising trend in the CLI generally points to growth in investment, leasing and other commercial real estate activity two to four quarters ahead. Therefore, the positive increase in the trend component of the CLI for the fourth quarter of 2014 signals positive growth for much of 2015.

Consumer Price Index February 2015

The Consumer Price Index (CPI)inched higher in January as a result of lower fuel costs. Over the past twelve months the CPI increased just 1 per cent. The Core CPI, which excludes fuel, food and other volatile components, increased 2.4 per cent over the same period. While core inflation was slightly above the Bank of Canada (BoC) target of 2 per cent, inflationary pressures in Canada appear modest at best. In our opinion, the BoC will likely stay in a neutral position regarding interest rates and not change its trend-setting rate at its March 4 announcement.

Copyright BCREA - reprinted with permission

Friday, February 13, 2015

Canadian Manufacturing Sales

Canadian manufacturing sales rose 1.7 per cent in December in spite of a 9.3 per cent fall in sales of petroleum products. Sales were higher in 17 of 21 manufacturing sub-sectors.

In BC, where manufacturing employs close to 170,000 people, manufacturing sales rose 2.9 cent on a monthly basis in December, and were 8.6 per cent higher year-over-year. For all of 2014, BC manufacturing sales grew at a robust rate of 6.7 per cent, the fastest rate of growth since 2011. A continued upswing in manufacturing sales should help spur employment and household income growth in 2015, which would be strongly supportive of housing demand.

BC Home Sales Start 2015 in Positive Territory

The British Columbia Real Estate Association (BCREA) reports that a total of 4,377 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in January, up 3.1 per cent from the same month last year. Total sales dollar volume was $2.6 billion, an increase of 8.3 per cent compared to a year ago. The average MLS® residential price in the province rose to $593,155, up 5.0 per cent from the same month last year.

“Last month was the strongest January for BC home sales in five years,” said Cameron Muir, BCREA Chief Economist. “However, consumer demand did edge down from December on a seasonally adjusted basis."

Low mortgage interest rates, strong population growth and improving labour market conditions are underpinning housing demand in the province. However, weakening economic conditions in Alberta are limiting home sales in the Okanagan, Kootenay and BC Northern market areas.

MLS® residential sales in British Columbia are forecast to rise 2.4 per cent to 86,050 units this year and a further 3.9 per cent to 89,400 units in 2016. The ten-year average is 82,100 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.

Wednesday, February 11, 2015

Best rate mortgages from Dominion Lending.

Terms	Bank Rates	Our Rates
6 Month	3.14%	3.10%
1 YEAR	2.99%	2.69%
2 YEARS	2.94%	2.39%
3 YEARS	3.44%	2.54%
4 YEARS	3.94%	2.64%
5 YEARS	4.79%	2.74%
7 YEARS	6.04%	3.79%
10 YEARS	6.50%	4.39%
Rates are subject to change without notice. *OAC E&OE

Prime Rate is 2.85%

Variable rate mortgages from as low as Prime minus 0.65%

Please note that rates shown above are subject to change without notice. The rates shown are posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.” Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

*O.A.C., E.& O.E.

BCREA 2015 First Quarter Housing Forecast

BC Home Sales Forecast to Rise Through 2016

The British Columbia Real Estate Association (BCREA) released its 2015 First Quarter Housing Forecast Update today.

"Stronger economic conditions both at home and abroad combined with favourable interest rates and population growth are expected to bolster housing demand over the next two years,” said Cameron Muir, BCREA Chief Economist. “After a year in which housing demand ratcheted higher across the province, the retrenchment of oil prices is expected to attenuate housing demand in some regions while bolstering it in others."

Multiple Listing Service® (MLS®) residential sales in British Columbia are forecast to rise 2.4 per cent to 86,050 units this year and a further 3.9 per cent to 89,400 units in 2016. The ten-year average is 82,100 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.

The average MLS® residential sales price is forecast to rise 4.5 per cent to $594,000 this year, with most of the upward pressure being exhibited on the South Coast. Elevated consumer demand is expected to be partially offset by resale inventories and additions to the housing stock in 2016. As a result, the average MLS® residential sales price is forecast to increase by 2.4 per cent to $608,500 next year.