BC Home Sales Post Strongest March in Eight Years

The British Columbia Real Estate Association (BCREA) reports that a total of 9,101 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in March, up 37.6 per cent from the same month last year. Total sales dollar volume was $5.8 billion, an increase of 57.1 per cent compared to a year ago. The average MLS® residential price in the province rose to $641,799, up 14.1 per cent from the same month last year.

"BC home sales climbed significantly in March," said Cameron Muir, BCREA Chief Economist. "More homes traded hands last month than any March since 2007. On a seasonally adjusted basis, March posted the most home sales of any month since December of 2009."

"Rock bottom interest rates and rising consumer confidence have strengthened housing markets in most regions of the province, added Muir. "Many board areas are now exhibiting sellers' market conditions with home prices advancing well above the overall rate of inflation."

During the first quarter, BC residential sales dollar volume was up 33.2 per cent to $12.7 billion, compared to the same period last year. Residential unit sales were up 22.5 per cent to 20,139 units, while the average MLS® residential price was up 8.7 per cent at $630,435.

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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 temporary sector-specific factors as well as pass-through effects from a lower Canadian dollar to import-prices is keeping core inflation close to its 2 per cent target in spite of increasing slack in the economy. The Bank now expects the growth impact of low oil prices to be more front-loaded than assumed in January and for growth to rebound beginning in the second quarter with real GDP growth projected at 2.5 per cent on average through the middle of 2016.  Weak first quarter growth will translate to a widening of the Canadian output gap and downward pressure on projected inflation, but the Bank expects a higher rate of growth in the second half will push the economy back onto its previous trajectory, reaching full-capacity around the end of 2016. 

Since unveiling a surprise interest rate cut in January, each successive Bank of Canada announcement has brought heightened anticipation. However, stable oil prices, a low Canadian dollar and firm core inflation mean that the Bank is likely to take a wait and see approach as to the ultimate impact of low oil prices on the Canadian economy. Monetary policy generally operates with a four to six quarter lag, which is why the Bank opted to reduce its target rate in January to cushion the potential impact of low oil prices. Unless the Bank anticipates further shocks to the economy or a deepening impact on growth and employment arising from the oil sector, it may ultimately hold rates constant for the remainder of the year. 

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Canadian Employment

Canadian employment grew by 29,000 jobs in March while the national unemployment rate remained at 6.8 per cent. Total hours worked, which is strongly correlated with economic growth, rose just 0.1 per cent compared to March 2014.   First quarter job gains amounted to a fairly healthy 63,000 new jobs, though mostly concentrated in part-time work.

In BC, employment increased by 5,700 jobs in March, though all in part-time work. Full-time employment fell by approximately 5,700 while part-time employment was up 11,300. The provincial unemployment rate declined 0.2 points to 5.8 per cent.

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Canadian Building Permits

The value of Canadian building permits fell for a second consecutive month in February, dropping 0.9 per cent on a monthly basis.

In contrast, the total value of building permits issued in BC rose 17.4 per cent on a monthly basis. Non-residential permits increased 17 per cent while residential sectors increased 18.7 per cent in February. On a year-over year basis, total permits were up 15.9 per cent compared to last February.

Construction intentions were mixed in BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA fell 3.3 per cent on a monthly basis but were 20.8 per cent higher year-over-year. In the Kelowna CMA, permits declined 47.8 per cent from January and were 21.6 per cent lower year-over-year. In the Victoria CMA, permit activity was up 11.6per cent on a monthly basis and was 72 per cent higher year-over-year. In the Vancouver CMA, permits recovered from a weak January, jumping 50.9 per cent on a monthly basis and 16.6 per cent year-over-year

 

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Canadian Monthly GDP (January)

The Canadian economy contracted 0.1 per cent in January as weakness in the wholesale and retail trade sector offset surprising gains in oil and gas extraction.  While January's reading on GDP growth showed some softness in the economy, it was actually better than expected and certainly far from the "atrocious" start to the year expected by the Bank of Canada.  However, given available data for the remainder of the first quarter, the Canadian economy is tracking at only 0.5 per cent growth in real GDP, with risk of an outright contraction of the economy.  That could be enough to spur further monetary stimulus,  though financial markets have been recently betting that the Bank stays on hold for the remainder of the year. 

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Canadian inflation

The Consumer Price Index (CPI) rose 1 per cent in the 12-months to February, matching the increase from January. Lower gasoline prices were the largest contributor to the downward trend in consumer prices, falling 21.8 per cent compared to last year. The Bank of Canada's core CPI index, which excludes fuel, food and other volatile components, increased 2.1 per cent in February, following a 2.2 per cent increase in January.  In BC, inflation registered just 0.8 per cent.

Core inflation edged lower in February but remains slightly above the Bank of Canada (BoC) target of 2 per cent.  Since the Bank's March interest rate announcement, oil prices have weakened significantly and, as expected, incoming data has been soft and the Canadian dollar has lost some ground. Given recent data, the odds of the Bank of Canada lowering its target rate at its April meeting are probably about even.

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Dominion Lending Best Rate Mortgages

This edition of the Weekly Rate Minder has the latest, best rates for Canadian mortgages. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all — our service is free.* It's the selected lender that pays us and YOU get the best rate. *(O.A.C., E.&O.E.) • Our Best National Rates • Explore Mortgage Scenarios with Helpful Calculators on http://www.derekdiener.com

Terms Bank Rates Our Rates 6 Month 3.14% 3.10% 1 YEAR 2.99% 2.69% 2 YEARS 2.94% 2.24% 3 YEARS 3.44% 2.49% 4 YEARS 3.94% 2.59% 5 YEARS 4.79% 2.69% 7 YEARS 6.04% 3.39% 10 YEARS 6.50% 3.84% 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.

Canadian Manufacturing Sales

Canadian manufacturing sales fell 1.7 per cent in January, led by an 11.9 per cent decline in petroleum and coal products. However, the unit volume of manufacturing sales fell only 1 per cent, indicating that lower prices were a significant driver of falling dollar volume.  Although sales were down in 14 of 21 manufacturing sub-sectors, sales excluding petroleum and coal products fell just 0.5 per cent. 

In BC, where manufacturing employs close to 170,000 people,  manufacturing sales fell 2.7 cent on a monthly basis in January, but were 2.7 per cent higher year-over-year. BC's diverse range of non-energy exports should translate to its manufacturing and trade sector outperforming other provinces this year, particularly as demand from the US economy ramps up. 

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Housing Demand Remained Elevated in February

The British Columbia Real Estate Association (BCREA) reports that a total of 6,661 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in February, up 19.4 per cent from the same month last year. Total sales dollar volume was $4.3 billion, an increase of 24.8 per cent compared to a year ago. The average MLS® residential price in the province rose to $639,405, up 4.5 per cent from the same month last year.

"Consumer demand remained robust in February on the strength of rock bottom interest rates and improving economic conditions," said Cameron Muir, BCREA Chief Economist. "After several years of below-average activity, home sales are now trending above long-term levels."

Total active listings on the market were down 7.5 per cent from a year ago. Fewer homes for sale, combined with elevated consumer demand has the housing market firmly in balanced conditions.

Year-to-date, BC residential sales dollar volume was up 18 per cent to $6.9 billion, compared to the same period last year. Residential unit sales were up 12.4 per cent to 11,038 units, while the average MLS® residential price was up 5.0 per cent at $621,065.

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Canadian Employment

Canadian employment was unchanged in February while the national unemployment rate ticked 0.2 points higher to 6.8 per cent. Total hours worked, which is strongly correlated with economic growth, grew by a modest 0.2 per cent compared to February 2014.  Overall, today's jobs report was good enough that the Bank of Canada may hold off on further easing at its April meeting. As expected,  employment weakness occurred in oil producing provinces, particularly Alberta which lost 14,000 jobs, but other provinces saw significant gains.  Moreover, Weekly wage growth, a key indicator for inflation, held firm along its three month trend of about 2 per cent measured year-over-year. 

In BC, employment declined by 7,000 jobs, erasing the gains from January. Full-time employment fell by 16,500 after rising by 12,800 in January while part-time employment was up 9,600. The provincial unemployment rate rose for the second consecutive month, jumping 0.4 points to 6.0 per cent.

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