Canadian Building Permits

Canadian building permits rose 8.6 per cent in March to $6.5 billion, the third consecutive monthly advance. Much of the increase was a result of large increases in the Ontario and Alberta non-residential sector which pushed non-residential permits 19 per cent higher while residential permits posted a 1.7 per cent increase.

After a significant decline in February, BC building permits increases a modest 1.7 per cent in March, with balanced contributions to growth from the residential and non-residential sectors. However, on a year-over-year basis, total building permits were close to 7 per cent lower.

Looking at permit activity in BC's four major census metropolitan areas (CMA),  permits rose 43 per cent in the Kelowna CMA from February, but were 14 per cent lower year-over-year. In the Abbotsford-Mission CMA, permits jumped 70 per cent on a monthly basis but were 21 per cent lower than March 2012. In the Vancouver CMA, permits fell 12 per cent on both a monthly basis and year-over-year. Finally, in the Victoria CMA, permits more than doubled compared to February and were 9 per cent higher than March 2012. 

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US Unemployment

The US economy added a better than expected 165,000 jobs in April while the unemployment rate ticked lower from 7.6 to 7.5 per cent.  Moreover, jobs numbers were revised significantly higher for both February and March by a combined 144,000 jobs.

So far in 2013, US job growth have averaged 196,000 per month and the unemployment rate has fallen 0.3 percentage points.  We anticipate some degree of slowing over the next two quarters as the result of legislated declines in government spending, but the US economy is clearly on a persistent recovery path that should gain strength over the coming year. 

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Finance Minister Announces Stephen Poloz as New Governor of the Bank of Canada

In somewhat of a surprise move, Finance Minister Jim Flaherty passed over presumptive favourite Senior Deputy Governor Tiff Macklem in naming Stephen Poloz as the new governor of the Bank of Canada. 

Mr. Poloz spent 14 years with the Bank of Canada in numerous roles including Chief of the Bank's Research Department before moving on to Export Development Canada (EDC) where he served as the Chief Economist and, since 2011,  as the EDC's CEO and President. 

While Mr. Poloz has been outside of monetary policy-making for some time and his views are relatively unknown, we do not expect the Bank's approach to change in a material way in the near future. The Bank will still operate under a flexible inflation targeting regime with a focus on medium-run inflation of 2 per cent and our view remains that interest rates will remain on hold over the next year while the Bank's forward guidance on rates will remain neutral.

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3 Home Buying Tips

If you’re thinking of buying your first home or upgrading to a new one, the inventory of homes on the market every Spring is definitely plentiful – providing for a great selection of homes to serve your unique needs.

Still, there are also generally more people out looking at homes in the Spring as well. And while some homebuyers feel anxious about securing their dream home as soon as possible, it’s important to take the time to be patient and make sure the home is a good fit for you and your family.

After all, home-buying is likely the largest investment you’ll ever make, and doing your due diligence when determining which house to buy ensures that fewer surprises arise after your moving day.

Following are three top considerations to keep in mind when looking for your new home:

1. Get preapproved for a mortgage. Not only will this step help you compete against other buyers who have not been preapproved, but it will also ensure you only look at home’s within your price range – saving you the trouble of falling in love with a home you can’t afford. Your mortgage broker or lender will be able to get you preapproved before you start browsing homes.

2. Think about what you need. Jotting down specifics regarding what you “need” in a home – as opposed to what you “want” – will help determine the types of homes you should be viewing. It’s rarely possible, however, to find a perfect home for your needs, tastes and budget. While it’s important to weigh your priorities before you start your home search, it’s equally important to be flexible and willing to change your mind once you see what your true options are – viewing properties can shift your priorities. And remember that if you can only find places that require too many compromises, it’s okay to keep looking – new homes come on the market daily!

3. Look past the staging. Many sellers enlist staging professionals to help sell their homes faster and at a higher price. While this often makes listings more visually appealing to buyers, some major flaws may be covered up through staging. And while minor cosmetic issues can often be overcome with a simple fix such as a coat of paint, larger, more costly issues can arise with a home if you don’t notice poor conditions before you buy. Some things to look for include: leaks around plumbing fixtures and ceilings (thanks to upper floor bathrooms); stains on walls or ceilings; evidence of mould; poor workmanship on flooring, moulding, windows and doors; or aging and worn seals around windows and doors.

Owning a Home During a Seperation

We all know that marriage isn't always forever. And when a separation occurs, a home is often involved. Since most couples have a joint mortgage – one where both names are on the mortgage and title of the home – when separation or divorce proceedings occur, many wonder what will happen with the home.

When the marriage comes to an end, there are two obvious options concerning the home: 1) sell the property and split the proceeds according to your agreement and go your separate ways; or 2) one person buys the other party out of the mortgage and the title of the property.

The first option is a straight-forward transaction where you put the house up for sale, sell and split the proceeds. The second option, however, is slightly more complicated.

The decision between the options is a personal one borne out of the specific circumstances of the parties involved. Perhaps there are young kids involved that need to stay in the house, the market is down and there will be a loss on the property that neither party can afford, one party can afford to buy the other party out, etc.

Once the decision is made, how do you go about buying the other person out of a mortgage?  Well, essentially, you’re refinancing your mortgage using a single income (the person who is buying the other party out of the house) and qualification, versus the original purchase, which was based on joint income and qualification. 

If you’re the one buying your partner out, the first step is to ensure that you can afford the mortgage payments. This is imperative because the lender will ask for proof that you’re capable of covering the mortgage in order for you to apply on your own. In addition to covering the mortgage amount, you’ll have to come up with whatever dollar amount you have agreed on to buy the other partner out. This may come out of the equity in your home if it’s sufficient.

In essence, if you can afford the mortgage on your own, the most common means of buying out your partner post-separation and transferring title out of the joint name and into your name, is to refinance.

If you’re not in a financial position to buy your ex-partner out of the house, and you agree to both stay on title and have payment arrangements, there is one warning to be taken very seriously. Just because one person is responsible for the payments (even with a court order), if the mortgage goes into default, both parties on the mortgage will be affected.

The most important piece of advice when dealing with a mortgage during a separation is to become informed. Know your options, talk to professionals about your options, and make an informed decision regarding your home and mortgage.  

Canadian Monthly GDP Growth

The Canadian economy grew 0.3 per cent in February, building off of a similar gain in January.  At the industry level, economic growth was led by natural resource extraction activities but also received a boost from construction, forestry, and manufacturing. 

Economic growth has been stronger than expected over the first two months of the first quarter. As a result., we have revised our first quarter GDP growth estimate upward from 1.5 per cent to between 1.5 and 2 per cent. 

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US Q1 Real GDP Growth

The US economy grew 2.5 per cent in the first quarter of 2013, falling short of consensus expectations of 3 per cent. Most of the shortfall in growth was the result of an 11.5 per cent drop in defense spending, which led US government spending lower for the tenth time in the past eleven quarters.  On the positive side, consumer spending posted its largest increase in two years, expanding 3.2 per cent.   

It is worth noting that today's release is a preliminary estimate and will be revised in subsequent months. The recent trend has been upward revisions and so it is likely that the US economy actually grew at a slightly faster pace than initially estimated. That said, we do expect some weakness in the second and third quarter of this year due to further declines in government spending. However, that weakness should give way to stronger growth later in 2013 and into 2014 when we forecast the US economy will grow at a rate of above 3 per cent. 

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Canadian Retail Sales

Canadian retail sales rose for the second consecutive month, advancing 0.8 per cent in February. Higher sales were reported in 7 of the 11 retail sub-sectors. However, inflation adjusted sales were flat. Even with a relatively strong start to the year for the retail sector, we are still tracking first quarter real GDP growth in the Canadian economy at around 1.5 per cent

Retail sales in BC diverged from the national trend, falling 0.3 per cent on a monthly basis and declining 1 per cent year-over-year. We anticipate that BC retail sales will post below average growth in 2013, perhaps around 3 per cent but with some risk to the downside. 

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Consumer Price Inflation

Canadian consumer prices rose just 1 per cent in the 12 months to March, a slight deceleration from 1.2 per cent in February. The dip in inflation was primarily the result of lower gasoline prices, though inflation was broadly weak across all CPI components. Core inflation, which strips out the most volatile components of the CPI, such as food and energy prices, increased 1.4 per cent in March. Inflation in BC was also muted with consumer prices rising just 0.5 per cent on an annual basis. 
Inflation continues to trend well below the Bank of Canada's 2 per cent target rate, a trend we expect to continue through 2013 due to sluggish economic growth and muted inflationary pressure from wages. This low rate of inflation will keep the Bank of Canada sidelined through  at least the remainder of 2013 and likely for much of 2014. 

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Multi-Stakeholder Workshop Generates Action Plan for Floodplain Mapping

The British Columbia Real Estate Association (BCREA) today published its Floodplain Maps Action Plan following its March 8, 2013 multi-stakeholder workshop on floodplain maps. With 69 per cent of existing floodplain maps available online from the provincial government being 20 to 25 years old, outdated floodplain maps compromise the ability of decision makers to effectively assess and manage flood risks, putting BC communities in jeopardy.

Flooding poses catastrophic risks to BC’s economic vitality, safety, environment, property owners and communities, so flood protection is an important issue for the Association,” said BCREA Chief Executive Officer Robert Laing. “By working with other stakeholders, we wanted to generate consensus around key actions to update existing floodplain maps and keep them current.”

Nearly 70 decision makers and practitioners involved with flood management, land use and emergency management attended the March 8 workshop in Vancouver. Attendees expressed their shared concerns for BC communities and discussed technical, financial and political perspectives in terms of challenges and opportunities.

The floodplain maps workshop fits right into our fresh water sustainability grant focus area,” said Kelly Lerigny, Chair of the Real Estate Foundation of British Columbia, which financially supported the event. “Coupled with the fact that there was such a wide range of stakeholders involved, we were excited to fund the workshop and help make the Action Plan possible.”

The event was also supported by Simon Fraser University's ACT (Adaptation to Climate Change Team). "Up-to-date information is essential if we are to adequately plan and prepare for the impacts of climate change," said ACT Executive Director Deborah Harford. "BC needs current floodplain maps that incorporate climate change projections to ensure the well-being of our citizens and our economy."

A floodplain map is a tool that shows areas that are subject to high flood hazard, and they help form the foundation on which many decisions are made about how and where communities grow. There are currently 87 existing floodplain maps available through the BC Ministry of Environment website. Experts recommend that floodplain maps should be updated every ten years.

If we don’t know what the risks are, we can’t adapt to changes in the environment. Climate change is one thing, but since the plans were last updated, we’ve also seen dramatic population growth, and changes to the actual contours of rivers,” said Anna Warwick Sears, Executive Director of the Okanagan Basin Water Board. “If we act now, BC communities can protect homes and businesses, and save a tremendous amount of future heartbreak and expense.”

Key points in the Action Plan include creating a Working Group to move the actions in the plan forward; assessing the capacity of local governments to update floodplain maps; recommending that the provincial government take back responsibility for floodplain mapping, with maps being updated every ten years; expand the scope of the Flood Protection Program to include technical studies and leverage funds to create a province-wide plan to complete floodplain mapping.

The Floodplain Maps Action Plan can be found here: www.bcrea.bc.ca/docs/floodplainmaps_action_plan.

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