US Economic Growth (Q3) - October 30, 2014

BCREA ECONOMICS NOW

US real GDP grew at a very healthy 3.5 per cent annual rate in the third quarter, following even more

robust growth of 4.6 per cent in the second quarter.  Growth was led higher by strong consumer spending, exports, fixed investment and government spending.

Growth in the US economy has been sharply higher over the past six months, averaging over 4 per cent at an annual rate.  While inflation remains muted, the US labour market is picking-up and job growth has been trending higher. The US Federal Reserve announced the end of its quantitative easing program yesterday, and while it noted that interest rates would not rise for a considerable time, a continuation of strong growth likely means the Fed will act on rates as early as mid-2015. If so, long-term rates in both the US and Canada should rise from current lows, bringing mortgage rates with them.

Follow the money ... for U.S. hotspots

Chinese investors are increasingly in the know come time to select the next best real estate market, with a new report on their preferred U.S. locations offering Canadian investors a roadmap.

The report, published by property consultancy Cushman & Wakefield, shows that, between 2008 and 2014, institutional Chinese real estate investors in the U.S. have focused on New York, with $6.7 billion invested.

The other American states making the list are California ($1.6 billion), Illinois (362 million), Texas (305 million), Maryland (150 million), New Jersey (140 million), Arizona (133 million), Florida (95 million), Washington (44 million) and Delaware ($42 million).

Canadian investors are expected to turn to the U.S. market in a big way with the decline of the loonie against the dollar, which comes after a period of currency parity that eroded snowbird interest in U.S. properties.

While their traditional haunts have long been California, Florida and Arizona, Canadian investors should perhaps follow the in-the-know Chinese investors in embracing other hot spots in the U.S. market.

Written by  Jennifer Paterson

Vancouver site breaks record for condo development land… Housing bubble talk shifts to autos… US housing market continues to grow; but it’s still early days…

Vancouver site breaks record for condo development land

A plot of land in Vancouver is believed to have broken records for the most expensive condo

development site. The 8,250 square foot (766 square metre) land at Cold Harbour has sold for $13.1 million, or $1,587 per square foot. A spokesman for Colliers International says that makes it a staggering five times the previous record. The density that has been approved for the land will still make for a profitable development though; a 14 storey tower with 25 condos and 3,500 square feet of office space. The condos will be on sale for the top end of Vancouver’s market; not at all unusual for Cold Harbour. Read the full story.

Housing bubble talk shifts to autos

Credit ratings agency Moody’s is warning of a bubble in Canada, but it’s not home loans this time. The firm’s report raises concern over auto loans suggesting that it could become a big issue for consumers and banks. Moody’s says that the total value of car loans was 4 times higher last year than in 2007, worth a whopping $64 billion. The report notes that at 20 per cent growth it’s more than double the growth in mortgages in that same period. With easier-to-get auto loans, Canadians have been buying more expensive vehicles but Moody’s warns that defaults are already higher and a rise in unemployment or home loan rates could push more into problems. Read the full story.

US housing market continues to grow; but it’s still early days

The latest figures show that new single-family home sales south of the border have seen growth in September; hitting a 6 year high. However there is still concern after the figures for August were revised downwards. The seasonally adjusted annual rate hit 467,000 units in September but the August figures were revised down to 466,000 from 504,000 units. September’s sales were 17 per cent greater than the same month last year. Economists expect the US market to see steady but gradual growth in the coming year.

Bank of Canada Interest Rate Decision - October 22, 2014

BCREA ECONOMICS NOW

The Bank of Canada once again chose to maintain it's target for the overnight rate at 1 per cent this

morning. In the statement accompanying the decision, the Bank noted that core inflation, which excludes volatile prices such as energy and food, has risen more rapidly than expected due to unexpected sector-specific factors while CPI inflation has evolved largely as expected.

While the Bank’s preferred measure of core inflation has trended above its 2 per cent target in recent  months, financial market volatility and fresh concerns over stagnant European economic growth provide some cover to maintain the status quo. Our forecast for the Canadian economy matches that of the Bank for economic growth to average 2.5 per cent for the second half of 2014 and for all of 2015. That rate of growth should eliminate much of the estimated slack in the Canadian economy by the middle of 2016. That forecast, and traditional lags in how monetary policy impacts inflation, suggests the Bank will embark on tightening monetary policy sometime toward the end of next year.

Canadian Consumer Price Inflation - October 17 ,2014

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Canadian consumer prices rose 2 per cent in the 12 months to September, a modest 0.1 point decline

from August. The Bank of Canada's core measure of inflation, which excludes volatile prices such as energy and food products, registered 2.1 per cent. Consumer prices in BC rose 1.2 per cent.

CPI inflation continues to trend near the Bank of Canada's 2 per cent target, but should moderate substantially in coming months due to collapsing energy prices. Although core inflation is slightly above the Bank of Canada's target, we do not expect the Bank to alter its course unless inflation moves outside of its 1-3 per per cent control range.

Canadian Manufacturing Sales - October 16, 2014

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Canadian manufacturing sales fell 3.3 per cent in August to $52.1 billion following a record setting

dollar volume of sales in July.  The dip in sales was the first monthly decline of 2014 and was largely the result of lower sales of motor vehicles and vehicle parts, though sales were lower in 16 of 21 manufacturing sub-sectors.

In BC, where manufacturing is one of the largest employers, manufacturing sales were up 0.6 cent on a monthly basis, and were 9.4 per cent higher year-over-year.  Through the first eight months of the year, manufacturing sales are 6.6 per cent higher than last year.  

Vancouver, BC – October 15, 2014 Home Sales

Home Sales Continue on Upward Trend in September

The British Columbia Real Estate Association (BCREA) reports that a total of 7,636 residential sales

were recorded by the Multiple Listing Service® (MLS®) in September, up 17.5 per cent from September 2013. Total sales dollar volume was $4.4 billion, an increase of 25.8 per cent compared to a year ago. The average MLS® residential price in the province rose to $574,641, up 7.1 per cent from the same month last year.

“Consumer demand remains robust in most BC regions,” said Cameron Muir, BCREA Chief Economist. “More homes traded hands last month in BC than any September since 2009, while the Okanagan had its most robust September in nine years."

“Population growth, low interest rates and strengthening economic conditions continue to be supportive of housing demand,” added Muir.

Year-to-date, BC residential sales dollar volume was up 23.2 per cent to $37 billion, compared to the same period last year. Residential unit sales were up 16 per cent to 65,353 units, while the average MLS® residential price was up 6.2 per cent at $565,655.

BCREA Housing Market Update (October 2014)

Canadian Employment - October 10, 2014

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The Canadian labour market broke out of its summer slumber, adding 74,000 jobs in September,  nearly all of which were in full-time employment. Total hours worked, which is closely associated with economic growth, rose 0.3 per cent and the national unemployment rate fell 0.2 points to a 6 year low of 6.8 per cent.

The BC economy saw employment grow by 9,600 jobs in September. Moreover, recent losses in full-time work were overturned as full-time employment grew by 20,600 while part-time employment declined by 11,000. The provincial unemployment rate remained unchanged at 6.1 per cent. Year-to-date, employment in BC is up just 0.6 per cent.

Canadian Housing Starts - October 8, 2014

BCREA ECONOMICS NOW

New home construction in Canada held relatively steady in September, rising a slight 0.5 per cent to 197,343 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts of 197,747 units SAAR sits slightly in excess of Canadian household growth.

Housing starts in BC urban centers moderated from a high mark in August, falling 19 per cent to 27,570 units SAAR in September.  On a year-over-year basis, housing starts were down 7 per cent compared to September 2013. Single-detached starts,  were up 14 per cent while multiple units were down 14 per cent compared to this time last year. Year-to-date, total BC housing starts are 6 per cent higher than 2013.

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA fell 5 per cent in September as an 11 per cent decline in multiple starts offset a 16 per cent rise in singles. Year-to-date, Vancouver housing starts are up 5 per cent. In the Victoria CMA, new home construction fell 32 per cent year-over-year due to low levels of construction in the multiples sector. Year-to-date, housing starts in Victoria are down 19 per cent. New home construction in the Kelowna CMA continued its robust pace in September, rising 46 per cent year-over-year. Year-to-date, housing starts in the Kelowna CMA are up 45 per cent . Housing starts in the Abbotsford-Mission CMA tumbled 62 per cent on a year-over-year basis due to the relative absence of new multiple unit developments in September.  Year-to-date, new home construction in the Abbotsford-Mission CMA is down 29 per cent.

Canadian Building Permits - October 7, 2014

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The value of Canadian building permits fell 27.3 per cent in August. Prior to Augusts's decline, building permits had posted double-digit increases for three straight months.  Lower construction intentions were primarily the result of declines in Quebec and Ontario.

New building permits in BC tumbled almost 28 per cent on a monthly basis and 11.1 per cent year-over-year. Both non-residential and residential permits were lower in August. On a unit basis, permits fell 22.6 per cent but were above the monthly average for 2014. The outsized monthly decline in August reflects a moderation of activity following robust construction intentions in July.

Building permit activity was mixed in BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA fell 30.3 per cent on a monthly basis, but were 33.8 per cent higher than August 2013.  Construction intentions in the Kelowna CMA jumped 38 per cent from July but were 37.2 per cent below August 2013 levels.  In the Victoria CMA, permit activity increased 3.1 per cent on a monthly basis and was up 6.2 per cent year-over-year. Finally, in the Vancouver CMA, permits were down 32.9 per cent on a monthly basis and were 16.9 per cent lower year-over-year.