BCREA ECONOMICS NOW
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Retail sales in BC posted their strongest month since March, growing 1.3 per cent from May and 2.7 per cent year-over-year. However, for the first six months of the year, sales have grown just 0.3 per cent.
Thursday, August 22, 2013
Canadian Retail Sales - August 22, 2013
BCREA ECONOMICS NOW
Retail sales in BC posted their strongest month since March, growing 1.3 per cent from May and 2.7 per cent year-over-year. However, for the first six months of the year, sales have grown just 0.3 per cent.
BCREA 2013 Third Quarter Housing Forecast Update
Housing Market Picking Up Steam
Vancouver, BC – August 22, 2013. The British Columbia Real
Estate Association (BCREA) released its 2013 Third Quarter Housing Forecast Update today.
BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 3.9 per cent to 70,300 units this year, before increasing a further 6.1 per cent to 74,600 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.
"After a marked pull back of consumer demand in 2012, the housing market is now transitioning to more elevated home buying activity,” said Cameron Muir, BCREA Chief Economist. “However, the effect of sluggish employment growth this year is expected to spill over into 2014, limiting housing demand to a 6 per cent increase, with total home sales matching the 5 year average."
"The average MLS® residential price in the province has been revised from remaining unchanged to increasing 3.3 per cent to $531,700 this year. A stronger than expected decline in the inventory of homes for sale has created balanced market conditions in the Lower Mainland, causing home prices to align more closely with overall consumer price inflation,” added Muir. The average MLS® residential price in BC is forecast to increase 2.2 per cent to 543,400 in 2014.
Vancouver, BC – August 22, 2013. The British Columbia Real
BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 3.9 per cent to 70,300 units this year, before increasing a further 6.1 per cent to 74,600 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.
"After a marked pull back of consumer demand in 2012, the housing market is now transitioning to more elevated home buying activity,” said Cameron Muir, BCREA Chief Economist. “However, the effect of sluggish employment growth this year is expected to spill over into 2014, limiting housing demand to a 6 per cent increase, with total home sales matching the 5 year average."
"The average MLS® residential price in the province has been revised from remaining unchanged to increasing 3.3 per cent to $531,700 this year. A stronger than expected decline in the inventory of homes for sale has created balanced market conditions in the Lower Mainland, causing home prices to align more closely with overall consumer price inflation,” added Muir. The average MLS® residential price in BC is forecast to increase 2.2 per cent to 543,400 in 2014.
Friday, August 16, 2013
Canadian Manufacturing Sales - August 16, 2013
BCREA ECONOMICS NOW
Canadian manufacturing sales declined 0.5 per cent in June, the
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fourth decrease in the past six months. Weaker sales were recorded across the manufacturing sector as 16 of 21 manufacturing subsectors saw sales decline.
In BC, manufacturing sales fell 4.5 per cent as sales were pushed lower by an 11 per cent decline in BC wood products, the second decline in that sector in the past two months following a remarkably strong start to the year. However, in spite of recent weakness, wood product sales remain 35 per cent higher through the first half of 2013 compared to the first half of 2012. Overall manufacturing sales in BC are 2 per cent higher through the first 6 months of the year.
Canadian manufacturing sales declined 0.5 per cent in June, the
In BC, manufacturing sales fell 4.5 per cent as sales were pushed lower by an 11 per cent decline in BC wood products, the second decline in that sector in the past two months following a remarkably strong start to the year. However, in spite of recent weakness, wood product sales remain 35 per cent higher through the first half of 2013 compared to the first half of 2012. Overall manufacturing sales in BC are 2 per cent higher through the first 6 months of the year.
Thursday, August 15, 2013
Wednesday, August 14, 2013
July Home Sales Highest Since 2007
Vancouver, BC – August 14, 2013.
The British Columbia Real Estate Association (BCREA) reports that a total of 7,650 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC for July, up 18 per cent from July of 2012. Total sales dollar volume was 32.8 per cent higher than a year ago at $4.09 billion. The average MLS® residential price in the province was $534,360, up 12.5 per cent from July 2012.
"Home sales in the province posted their strongest July since 2007,” said Cameron Muir, BCREA Chief Economist. “After six consecutive months of rising consumer demand, it’s now clear that BC housing markets are recovering from tighter lending regulations introduced last year,” added Muir.
"Rising home sales are unlikely to put any significant upward pressure on home prices,” cautioned Muir, “as the inventory of homes for sale is expected to keep pace with demand.” Many potential home sellers that have been holding off for improved market conditions are expected to put their homes on the market to meet the swelling ranks of home buyers.
Year-to-date, BC residential sales dollar volume was down 2.8 per cent to $22.9 billion, compared to the same period last year. Residential unit sales were down 4 per cent to 42,986 units, while the average MLS® residential price was up 1.3 per cent at $531,928.
The British Columbia Real Estate Association (BCREA) reports that a total of 7,650 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC for July, up 18 per cent from July of 2012. Total sales dollar volume was 32.8 per cent higher than a year ago at $4.09 billion. The average MLS® residential price in the province was $534,360, up 12.5 per cent from July 2012."Home sales in the province posted their strongest July since 2007,” said Cameron Muir, BCREA Chief Economist. “After six consecutive months of rising consumer demand, it’s now clear that BC housing markets are recovering from tighter lending regulations introduced last year,” added Muir.
"Rising home sales are unlikely to put any significant upward pressure on home prices,” cautioned Muir, “as the inventory of homes for sale is expected to keep pace with demand.” Many potential home sellers that have been holding off for improved market conditions are expected to put their homes on the market to meet the swelling ranks of home buyers.
Year-to-date, BC residential sales dollar volume was down 2.8 per cent to $22.9 billion, compared to the same period last year. Residential unit sales were down 4 per cent to 42,986 units, while the average MLS® residential price was up 1.3 per cent at $531,928.
Friday, August 9, 2013
Canadian Employment and Housing Starts - August 9, 2013
BCREA ECONOMICS NOW
Employment
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Canadian employment dropped by 39,000 in July, pushing the national unemployment rate higher by 0.1 points to 7.2 per cent. Employment growth has averaged 11,000 per month over the past six months.
BC gave back the nearly 9,000 jobs gained in June as employment fell by 12,000 in July. The provincial unemployment rate rose 0.4 points to 6.7 per cent. In the twelve months to July, employment has grown just 0.1 per cent in BC. The decline in employment was led by a decline in part-time work of nearly 18,000 while full-time payrolls expanded by 6,100.
Housing Starts
Canadian housing starts were relatively unchanged in July at a seasonally adjusted annual rate (SAAR) of 192,853 units, but were 9 per cent lower than July 2012. Year-to-date, Canadian housing starts on trending at a rate of 187,400 units annually.
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New home construction in BC urban centres built on momentum in June, rising 4.9 per cent to 30,832 SAAR. On a year-over-year basis, total starts were 28 per cent higher than July 2012. Single-detached starts fell 9 per cent last month compared to July 2012 while multiple units rose 47 per cent.
Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were 40 per cent higher compared to last year with multiple starts jumping 51 per cent while single-detached starts were up 2 per cent. New home construction in the Abbotsford CMA fell 4 per cent in July as continued strong growth in multiples was offset by weaker single-detached starts. Housing starts in the Victoria CMA were lower once again, falling 37 per cent compared with June 2012. Housing starts in the Kelowna CMA were up sharply in July, rising 48 per cent year-over-year as a result of a 244 per cent year-over-year increase in the construction of multiples.
Employment
BC gave back the nearly 9,000 jobs gained in June as employment fell by 12,000 in July. The provincial unemployment rate rose 0.4 points to 6.7 per cent. In the twelve months to July, employment has grown just 0.1 per cent in BC. The decline in employment was led by a decline in part-time work of nearly 18,000 while full-time payrolls expanded by 6,100.
Housing Starts
Canadian housing starts were relatively unchanged in July at a seasonally adjusted annual rate (SAAR) of 192,853 units, but were 9 per cent lower than July 2012. Year-to-date, Canadian housing starts on trending at a rate of 187,400 units annually.
New home construction in BC urban centres built on momentum in June, rising 4.9 per cent to 30,832 SAAR. On a year-over-year basis, total starts were 28 per cent higher than July 2012. Single-detached starts fell 9 per cent last month compared to July 2012 while multiple units rose 47 per cent.
Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were 40 per cent higher compared to last year with multiple starts jumping 51 per cent while single-detached starts were up 2 per cent. New home construction in the Abbotsford CMA fell 4 per cent in July as continued strong growth in multiples was offset by weaker single-detached starts. Housing starts in the Victoria CMA were lower once again, falling 37 per cent compared with June 2012. Housing starts in the Kelowna CMA were up sharply in July, rising 48 per cent year-over-year as a result of a 244 per cent year-over-year increase in the construction of multiples.
Wednesday, August 7, 2013
Impact of Limits to CMHC MBS - August 7, 2013
BCREA ECONOMICS NOW
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Most Canadian mortgage lenders fund some portion of their mortgage lending using CMHC’s National Housing Act Mortgage Backed Securities (NHA MBS). That is, cash flows from mortgages are aggregated into investment securities and then sold to investors through a process called securitization. Payments from these mortgage backed securities are guaranteed by the CMHC, and therefore backed by the federal government, which allows banks to fund their mortgage business more cheaply than would be possible through other sources of funds such as deposits or uninsured mortgage securitization.
At the beginning of each year, the Department of Finance and the CMHC set out a maximum volume of mortgages that can be securitized through its NHA MBS. That number for 2013 was $85 billion. It is important to note that the limit on NHA MBS has not changed. However, by the end of July lenders had already issued $66 billion or 78% of this year’s MBS limit. To ensure that the 2013 MBS limit is not reached before the end of the year, and that access to the program is fairly allocated, the CMHC announced yesterday that it has capped each lenders MBS issuance for this month at $350 million until it can formalize a new process to allocate the remaining amount of the 2013 NHA MBS limit. That means that some lenders may need to fund new mortgage issuance through alternatives to NHA MBS and will therefore likely experience higher mortgage funding costs. These higher costs would likely be passed through to mortgage rates. Preliminary estimates put the potential impact on mortgage rates in a range of 20 to 65 basis points (0.25% to 0.65%).
The market impact of an increase in mortgage rates in the short-term is uncertain. Preliminary modelling by TD Economics suggests that a 1 per cent increase in mortgage rates leads to an initial 6 per cent increase in sales as buyers rush to lock-in existing rate holds, but that those gains are reversed in subsequent months, leading to an ultimate 1% decline in sales. Therefore, the impact of a 20 to 65 basis point increase would, all else equal, likely lead to a minimal decline in overall sales activity.
At the beginning of each year, the Department of Finance and the CMHC set out a maximum volume of mortgages that can be securitized through its NHA MBS. That number for 2013 was $85 billion. It is important to note that the limit on NHA MBS has not changed. However, by the end of July lenders had already issued $66 billion or 78% of this year’s MBS limit. To ensure that the 2013 MBS limit is not reached before the end of the year, and that access to the program is fairly allocated, the CMHC announced yesterday that it has capped each lenders MBS issuance for this month at $350 million until it can formalize a new process to allocate the remaining amount of the 2013 NHA MBS limit. That means that some lenders may need to fund new mortgage issuance through alternatives to NHA MBS and will therefore likely experience higher mortgage funding costs. These higher costs would likely be passed through to mortgage rates. Preliminary estimates put the potential impact on mortgage rates in a range of 20 to 65 basis points (0.25% to 0.65%).
The market impact of an increase in mortgage rates in the short-term is uncertain. Preliminary modelling by TD Economics suggests that a 1 per cent increase in mortgage rates leads to an initial 6 per cent increase in sales as buyers rush to lock-in existing rate holds, but that those gains are reversed in subsequent months, leading to an ultimate 1% decline in sales. Therefore, the impact of a 20 to 65 basis point increase would, all else equal, likely lead to a minimal decline in overall sales activity.
Canadian Building Permits - August 7, 2013
BCREA ECONOMICS NOW
BC building permits rose 10 per cent in June, helping to offset last month's 15 per cent decline. Residential building permits were flat, albeit down 0.1 per cent on a monthly basis and were 10 per cent lower year-over-year. Non-residential construction intentions jumped 36 on a monthly basis and were up 24 per cent year-over-year.
Permitting activity in BC's four major census metropolitan areas (CMA) was mixed. In the Vancouver CMA, permits rose 13 per cent on a monthly basis but were 2 per cent lower year-over-year. Construction intentions in the Victoria CMA were up sharply in June, rising 85 per cent on a monthly basis and 18 per cent year over year. in the Kelowna CMA, permits fell 16 per cent from May and were 14 per cent lower than June 2012. Finally, in the Abbotsford-Mission CMA, building permits declined 29 per cent month-over-month and 25.5 per cent year-over-year.
Friday, August 2, 2013
US Non-Farm Payrolls - August 2, 2013
BCREA ECONOMICS NOW
US employment growth continued its run of good but not great results in July with US firms adding 162,000 new jobs to payrolls, similar to the underlying trend growth of 150,000 to 175,000 jobs per month. The US unemployment rate fell 0.2 points to a four-year low of 7.4 per cent. On the negative side, total hours worked fell slightly and average earnings dipped. Overall, a fairly lacklustre jobs report that may delay any potential 'tapering' of bond purchases by the Federal Reserve, which should in-turn help to halt the rise in long-term interest rates. Indeed, the Canadian 5-year bond yield (the benchmark rate for mortgage rate setting) was off 6 basis points following today's US jobs report.
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