Canadian Monthly GDP Growth - January 31, 2013

BCREA ECONOMICS NOW

The Canadian economy grew 0.3 per cent in November, following 0.1 per cent growth in October. Production was higher in most industrial sectors with the main contributions to growth coming from manufacturing, oil and gas and mining.  

Our updated fourth quarter GDP estimate is currently reading just 1.1 per cent growth (at an annual rate), in-line with the Bank of Canada's most recent forecast. We anticipate that growth will continue to be modest through the first half of 2013 before accelerating in the second half of the year and into 2014. 

BC Home Sales to Trend Higher in 2013/2014

BCREA 2013 First Quarter Housing Forecast Update

Vancouver, BC – January 30, 2013.The British Columbia Real Estate Association (BCREA) released its 2013 First Quarter Housing Forecast Update today.

BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 5.6 per cent to 71,450 units this year, before increasing a further 6.1 per cent to 75,830 units in 2014. The five-year average is 74,600 unit sales, while the ten-year average is 86,800 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.

"2013 is shaping up to be a transition year in the BC housing market,” said Cameron Muir, BCREA Chief Economist. “The groundwork has already begun for stronger housing demand as a significant number of part-time jobs in BC were converted into full-time employment last year."  

"Residential values are expected to be on a more solid footing in 2013 as lower prices, both actual and inflation adjusted, have improved affordability. Many potential buyers that stayed on the sidelines in 2012 will likely enter the marketplace over the next year as the relatively strong financial condition of BC households precludes any deflationary spiral."

The average MLS® residential price in BC is forecast to edge down nearly 1 per cent to $510,400 this year and remain relatively unchanged in 2014, albeit up 0.6 per cent to $513,500.

US Q4 Real GDP - January 30, 2013

BCREA ECONOMICS 

US Q4 Real GDP - January 30, 2013

The US economy unexpectedly contracted by 0.1 per cent in the fourth quarter of 2012 as growth was pulled down by the largest decline in defense spending in four decades. The US economy expanded 2.2 per cent for all of 2012. 
While the modest decline in GDP is likely to spur use of the "R" word (recession) in the media, it is worth noting that today's release is the advanced estimate for real GDP and is subject to revisions which can be substantial. Moreover the contraction in output was almost entirely due to an unprecedented plunge in defense spending, which along with slower private inventory accumulation, pared 2.6 per cent from real GDP growth. In fact, the underlying details of the report were actually quite positive. Consumer spending accelerated on the largest personal income gains in four years while both business spending and residential construction investment grew at a double digit rate. These details, along with strong employment growth in recent months, suggests that US growth will pick-up in the first quarter of 2013.

Consumer Price Index - January 25, 2013

Consumer Price Index - January 25, 2013

Canadian consumer price inflation remained subdued in December with prices rising just 0.8 per cent, the same increase that was registered in November.  The Bank of Canada's core inflation index, which excludes the eight most volatile components of the CPI like energy and food, rose just 1.1 per cent year-over-year in December, a moderate deceleration from November.  Inflation in BC registered only 0.4 per cent year-over-year. 

Core inflation continues to trend well below the Bank of Canada's two per cent target rate which suggests that the Canadian economy is still operating with a substantial amount of excess supply. Very low inflation no doubt contributed to the Bank's easing of its rate tightening bias earlier this week, pushing a potential increase in interest rates from 2013 into 2014.

BCREA ECONOMICS

home purchase expenss

There are many costs that homebuyers incur,especially upon purchasing your first home that you should expect to pay. Some of the expenses related to buying a home are one-time costs, while others are continuing costs.

Your largest cost at the beginning is your down payment. As a first time buyer, this would likely represent only 5 - 10% of the purchase price. However, you should be prepared to pay for additional costs, such as:

• Legal Fees & Disbursements
• GST and PST (if applicable)
• Property or Land Transfer Tax
• Adjustments (reimbursed to the vendor)
• Interest
• Property Taxes
• Utility Payments
• Strata or Condominium Fees
• Estoppel certificate fee
• Survey Fee
• Home Inspection Fee
• Water quality and quantity certificate
• Appraisal Fee
• Mortgage broker's fee (if applicable)
• Mortgage Loan Insurance Premium (if less than 25% down)
• Mortgage Loan Insurance Application Fee (if less than 25% down)
• Moving Expenses
• Renovations and repairs
• Furniture, paint, carpeting, window coverings, etc.
• Service and Utility Hook-up Fees
• Property/Condominium Insurance
• Mortgage Application Fee
• Deed and/or Mortgage Registration Fee

Additionally, once you have purchased your home, you will incur regular expenses on a monthly, quarterly or yearly basis. Some of these costs include:

• Mortgage Payment
• Water and/or Sewer Payments
• Electricity and Gas Services
• Cable and Telephone Services
• Property Taxes
• Strata or Condo Fees
• Repair/Maintenance Expenses
• Homeowner's Insurance

Bank of Canada Interest Rate Announcement - January 23, 201

BCREA ECONOMICS NOW

Bank of Canada Interest Rate Announcement - January 23, 2013

It may be a new year but it is the same story this morning from the Bank of Canada which once again held its target for the overnight rate at 1 per cent. The statement released in support of the interest rate decision noted that the global economic outlook is weaker than the Bank previously projected, though risk of a severe external shock to the economy has diminished. As a result, the slowdown in the Canadian economy in the second half of 2012 was more pronounced than the Bank had anticipated. The Bank has revised its estimate for economic growth in 2012 lower, to 1.9 per cent, and now forecasts 2 per cent growth in 2013 before an acceleration to 2.7 per cent in 2014. Importantly, the Bank has also shifted its expectation that the economy will reach full capacity out to the second half of 2014. On inflation, the Bank expects growth in consumer prices to run significantly below its 2 per cent target for much of 2013 before gradually rising to target in 2014. 

Following two years of overly optimistic forecasts, the Bank has struck a slightly more dour tone in its outlook. The gloomier growth forecast and positive signs that households are reigning in household debt have prompted the Bank to revise its language on the gradual withdrawal of monetary stimulus.  In its concluding statement accompanying the rate decision, a key focus of monetary policy watchers over the past year,  the Bank continued to note that a withdrawal of stimulus would likely be required over time, but that the timing of any such withdrawal is less imminent than previously anticipated. This strongly suggests that interest rates will remain constant at 1 per cent for all of 2013.

Non-residential construction investment at four-year high

Construction

By Glen KorstromFri Jan 18, 2013 10:00am PST

Non-residential construction investment in Metro Vancouver rose for the fourth consecutive quarter to a level not seen since 2009's first quarter, according to the Vancouver Regional Construction Association's (VRCA) analysis of Statistics Canada's Investment in Non-Residential Building Construction report.

"While total non-residential construction investment spending for 2012 came in slightly below 2011 levels, due to less public-sector spending, gains in industrial spending and a strong upturn in commercial spending over the course of 2012 was impressive," said VRCA president Keith Sashaw.

Metro Vancouver's total non-residential building construction investment jumped 10.5% in 2012's fourth quarter to $832.4 million, seasonally adjusted, from $753.5 million in previous quarter.

Commercial building construction was up 12% to $560.5 million, industrial building construction was up 6.9% to $59.7 million and institutional-government rose 7.7% to $212.2 million, compared with the third quarter.

"First-quarter 2013 spending is expected to continue to climb and post gains in all three sectors," Sashaw said. "Metro Vancouver's economic recovery should continue through 2013, which bodes well for higher private sector investment, with the public sector contributing to a lesser extent."

Canadian Retail Sales - January 22, 2013

Canadian Retail Sales - January 22, 2013

Canadian retail sales increased a slight 0.2 per cent in November, the fifth consecutive monthly increase. However sales were higher in just 4 of 11 retail sub-sectors, representing only 32 per cent of all retail trade. In volume terms, retail sales were actually higher than in dollar terms, up 0.8 per cent, likely due to holiday sales discounts.

Retail sales in British Columbia were up 0.3 per cent in November but were 0.8 per cent lower year-over-year. BC consumers, perhaps feeling the weight of elevated household debt burdens, were not in the mood to spend in 2012. Through November, BC retail sales were up just 2.4 per cent, an even slower pace of sales than 2011's already weak 3 per cent growth. We anticipate that this weakness will continue into the first half of 2013 before growing employment and better overall economic conditions spur the economy in the second half of the year and into 2014.

 

By BCREA ECONOMICS

Canadian Manufacturing Sales - January 18, 2013

Canadian manufacturing sales increased 1.7 per cent in November, following a1.4 per cent decline in October.  Sales rose in 12 of 21 manufacturing industries. Adjusting for inflation, Canadian manufacturing sales were 1.6 per cent higher in November. With the release of November's manufacturing and trade data, we estimate that the Canadian economy grew approximately 1.7 per cent in the fourth quarter of 2012. 
Sales in the BC manufacturing sector rose 1.2 per cent in November, and were 4.3  per cent higher year-over-year. Primary and fabricated metal manufacturing, which accounts for 13 per cent of BC manufacturing, was up 4.5 per cent in November while forestry products (30 per cent of BC manufacturing sales) were up just under 1 per cent, and food manufacturing (17 per cent of BC manufacturing sales) was up 1 per cent.

BCREA ECONOMICS NOW

US Housing Starts - January 17, 2013

US housing starts continued to accelerate in December, surging 12.1 per cent to 954,000 units at a seasonally adjusted annual rate (SAAR), the fastest pace of new home construction since June 2008.  Building permit data, a proxy for future housing starts, edged higher as well to 903,000 (SAAR).Surging US housing starts suggest that residential investment provided a significant contribution to US economic growth for the first time since 2005. This trend, if sustained, bodes well for BC economic growth, and in particular BC lumber exports in 2013. 

BC Home Sales Decline in 2012

Vancouver, BC –January 14, 2013. The British Columbia Real Estate Association (BCREA) reports that a total of 67,637 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during 2012, a decline of 11.8 per cent compared to 2011. Total sales dollar volume declined 19.1 per cent to $34.8 billion over the same period. The annual average MLS® residential price in the province was $514,836 in 2012, down 8.3 per cent from 2011.

"A notable pullback in consumer demand in Vancouver and the Fraser Valley during 2012 was more than enough to offset increases in home sales in the Okanagan, Kootenays and BC Northern regions,” said Cameron Muir, BCREA Chief Economist.

“At least half of the 8 per cent decline in the BC average home price was the result of fewer luxury homes selling in Vancouver and fewer overall Vancouver home sales relative to the rest of the province in 2012.”

In December, BC residential sales dollar volume was down 28.6 per cent to $1.5 billion, compared to December 2011. Residential unit sales declined 26.4 per cent to 3,011 units, while the average MLS® residential price was down 3 per cent to $498,205 over the same period.

Canadian Building Permits - January 10, 2013

BCREA ECONOMICS

Canadian building permits rose fell 18 per cent in November, following a 16 per cent increase in October. The decline in permits was primarily due to weakness in both non-residential and residential construction intentions in Ontario.

In BC, permitting activity declined 6 per cent in November due to a slowing of non-residential permits which were down 34 per cent month-over-month and 12 per cent year-over-year. Residential permits rose 17 per cent over October, but were 14 per cent lower than November 2011. 

Permit activity in BC's four major metropolitan areas  was mixed in November. Following a surge in October, the Kelowna CMA saw permit volumes slow in November, falling 34 per cent month-over-month and 7 per cent year-over-year.  The Vancouver CMA saw total permits rise 21 per cent in November following weaker activity in October, but were down 17 per cent over November 2011. In the Abbotsford CMA, permits rose 46 per cent month-over-month and 28 per cent year-over-year. Finally,the Victoria CMA recorded an 8 per cent increase in November permits and a 24 per cent increase over November 2011. 

Canadian Housing Starts - January 9, 2013

Canadian housing starts registered 197,976 units at a seasonally adjusted annual rate (SAAR) in December, down slightly from 201,376 (SAAR) in November. Annual starts rose 11 per cent in 2012.

New home construction in BC urban centres also posted a modest decline, falling to 20,227 (SAAR) in December from 22,043 units (SAAR) in November. On a year-over-year basis, multiple unit starts in BC were unchanged from December 2011 while single family starts were 4 per cent lower. Overall, total BC housing starts were 2 per cent lower than in December 2011. New home construction in BC's urban areas finished the year at 25,477 units, an increase of 5 per cent over 2011. New home construction continued to shift toward multiples in 2012. That segment of the market saw a 9 per cent increase in 2012 to 18.763 starts while single-detached starts declined 5 per cent to just 6,714 units.

Looking at census metropolitan areas (CMA) in BC, Vancouver CMA starts fell 1 per cent year-over-year in December but were 6 per cent higher for all of 2012 at 19,027 total units. New home construction in the Abbotsford CMA was off 58 per cent compared to December 2011 and down 31 per cent for all of 2012 at just 371 total units. Housing starts in the Kelowna CMA rose 27 per cent year- over-year in December due to a jump in single-detached starts. For all of 2012, total housing starts in the Kelowna CMA were down 10% from 2011 at 836 units. Housing starts in Victoria were down 28 per cent year-over-year in December but were up 4 per cent for all of 2012 at 1,700 total starts.

By BCREA

Be prepared: 2013 BC Assessment Roll out

Canadian and US Employment - January 4, 2013

On the heels of a surge in employment in November, Canadian employment posted a strong increase again in December, growing by 40,000 jobs. December's increase in jobs was entirely due to gains in full-time employment. The Canadian economy added just shy of 100,000 new jobs in the final two months of 2012, which pushed the national unemployment rate to 7.1 per cent, its lowest level in 4 years.

Job growth in the BC economy was essentially flat as an increase of 4,300 in full-time employment was mostly offset by declining part-time employment. The BC unemployment rate fell 0.3 points to finish the year at 6.5 per cent.  Despite some softness towards the end of the year, the story of the BC labour market in 2012 was overwhelmingly positive.  BC employment grew 1.7 per cent in 2012, a marked improvement from just 0.8 per cent in 2011, while annual growth in full-time employment was 2.8 per cent in 2012 compared with just 0.5 per cent in 2011. The provincial unemployment rate averaged 6.8 per cent in 2012, the first time in 4 years that unemployment fell below 7 per cent.

Finally, the US economy continued its slow and steady recovery, adding 155,000 jobs in December following job growth of 161,000 in November. The US unemployment rate remained constant, finishing the year at 7.8 per cent.

Be prepared: 2013 BC Assessment Roll out

In partnership with BCREA, BC Assessment released its 2013 Assessment Roll yesterday.
In addition to handling their own interviews, BC Assessment is encouraging the media to contact spokespeople from local real estate associations for their expertise and comment. From our Board, President Scott Olson is on stand-by armed with Fraser Valley data relevant to news outlets.
As a REALTOR®, you may receive inquiries from your clients particularly if they don't understand or are dissatisfied with their assessment, which for this year's Roll may be the situation for some property owners because their assessed value (upon which their property taxes are based) could be higher than their home's current market value.
As you are aware, but many members of the public are not, assessed values are always an estimate of market value as of July 1 of the preceding year ( five months prior to the roll being released). Therefore, if the market has fluctuated either up or down in that time, it's possible that given current market conditions a home could be "over-valued" or "under-valued."
We can all empathize with the frustration or concern a homeowner could experience if they perceive that they're being over-charged taxes on an asset that has since depreciated in value. For example, a typical single family detached home in South Surrey/White Rock is valued at $850,000 today; however the 2012 assessed value is $897,000.
BC Assessment says REALTORS® can play an important role in educating the public. Here is key information for you to share:

• Assessed values in the Fraser Valley have been relatively stable from 2012 to 2013.
• Assessed values are an estimate of market value as of July 1 and from July 1, 2011, to July 1, 2012, the market in the valley was relatively stable.
• When the assessment notices are mailed in January the assessed value may be higher than the current market value because the market started to soften after July 1 (our valuation date).
• Property owners can check their assessments using "e-value BC" on BC Assessment's website by reviewing information about their property and comparing to properties that have sold.
• If they still have concerns about their assessment they should contact BC Assessment prior to January 31 to discuss their concerns or file a complaint to the Property Assessment Review Panel.

According to BC Assessment, most owners of single family detached homes in the Fraser Valley will see modest changes in their assessments "in the range of -5 per cent to + 10 per cent."
For more information, go to www.bcassessment.ca.

New home vs. resale home

New Home

Personalized choices. You may be able to upgrade or choose certain items such as siding, flooring, cabinets, plumbing and electrical fixtures. 

Up-to-date with the latest codes/standards. The latest building codes, electrical and energy-efficiency standards will be applied. 

Maintenance costs. Lower maintenance costs because everything is new and many items are covered by a warranty.

Builder warranty. A homebuilder's warranty is usually available in all provinces (except Nunavut and the Northwest Territories). This can be important if a major system such as plumbing or heating breaks down. This warranty does not apply if you build the home yourself. Neighbourhood amenities like schools, shopping malls and other services may not be complete for years. 

Taxes. Such as the Goods and Services Tax (GST) will apply. However, you may qualify for a rebate of part of the GST or HST on homes that cost less than $450,000. For more information about the GST New Housing Rebate program, visit the Canada Revenue Agency website at, http://www.cra-arc.gc.ca. 

Extra costs. You may have to pay extra if you want to add a fireplace, plant trees and sod, or pave your driveway. Make sure you know exactly what's included in the price of your home. 
 

Resale Home

Easy access to services. Probably established in a neighbourhood with schools, shopping malls and other services. 

Extras included. Landscaping...
Landscaping is usually done and fencing installed. Previously owned homes may have extras like fireplaces, finished basements or swimming pools. 

No GST/HST. You don't have to pay the GST/HST unless the house has been renovated substantially, and then the taxes are applied as if it were a new house. 

Possible redecorating and renovations. You may need to redecorate, renovate or do major repairs such as replacing the roof, windows and doors. 
 

Make An Offer

When you find the perfect home, buy it. After touring homes, you will probably instinctively know which one or two homes you would like to buy. 

Ask to see them again. You will see them with different eyes and notice elements that were overlooked the first go-around.At this point, your RE/MAX agent should call the listing agent to find out more about the sellers' motivation and to double-check that an offer hasn't come in, making sure these homes are still available to purchase.

Your RE/MAX agent will help you through the offer process. Be very specific in your offer about any improvements or repairs you want the seller to make before closing or about any appliances or other items you expect to be included.

Counteroffer. The seller may accept your initial offer, no questions asked, but often he or she will make a counteroffer, accepting some terms but making changes or raising the price. This process goes back and forth until you either agree or the deal collapses.

Contingencies. Acceptance of the sales contract can be made contingent on (that is, dependent on) certain circumstances. As a first-time home buyer, you should probably stipulate that the house passes any inspections you want performed and that financing is approved.

Home Buying - Money Saving Tips

Shop for a mortgage. That ½ percentage point may not seem like much but it will save you thousands over the life of a mortgage. Get quotes from a variety of banks or enlist a mortgage broker (the bank, not you, pays his or her fee). You can always go to your own bank to see if they will match the rate. 

Shop for a lawyer. Fees may vary greatly and you can often save a lot by using someone who specializes in real estate law, as they compete for this business. Costs are often less due to economies of scale, but ensure you get a full cost quote. 

Get a home inspection. Not only for piece of mind but there is nothing worse than discovering cost prohibitive problems after you have moved in. If your home inspector identifies deficiencies, you may be able to renegotiate the purchase price to cover required repairs. 

Decline mortgage insurance. You are farther ahead to increase your own term insurance for the amount of the mortgage. The premiums are often less and the payout greater. 

Buy a home that produces revenue. If you can rent out your basement or a self contained suite it will help you pay the mortgage or offset your home expenses. Your RE/MAX sales associate can offer advise when it comes to zoning requirements and public transportation access. 

Shop and get quotes on all of your major expenses including moving costs, renovations, home insurance etc. Ask lots of questions and get referrals. Your RE/MAX sales associate is a great resource. 

Don’t buy your furniture on time payment plans. Make do until you can afford it. Shop garage sales or used furniture outlets. 

Make a budget and stick to it. There are a number of costs that you need to take into account as we have illustrated. Put the money aside.

Remember, all of the above will save you money but the most important consideration is to buy a home you can afford to live in.