Friday, January 30, 2015

Canadian and US Economic Growth - January 30, 2015
The Canadian economy contracted 0.2 per cent in November. Falling energy prices resulted in declining output in the oil and gas sector, while manufacturing and mining production was also lower. Given available data, the Canadian economy likely expanded 1.9 per cent in the fourth quarter of 2014, and about 2.4 per cent for the year as a whole. While export growth will be helped this year by a significant fall in the loonie, we expect growth will decelerate slightly in 2015 to about 2.2 per cent as low oil prices drag investment and employment lower.  Uncertainty around the impact of the dramatic decline in oil has most market watchers expecting a further loosening of policy by the Bank of Canada, with a second rate cut coming in March.  Whether that comes to fruition likely depends on where the trend in oil is over the next month. If prices continue to fall, we expect the Bank will opt for more "insurance" by reducing its overnight rate to 0.5 per cent. However, if oil prices firm up and core inflation remains above 2 per cent, the Bank may opt to hold steady.

In the United States, real GDP grew at a healthy 2.6 per cent annual rate in the fourth quarter, following 5 per cent growth in the third quarter.  Growth was led higher by the strongest rate of consumer spending since 2006.  Note that today's report is the preliminary release and will be revised, perhaps substantially in coming months. Given that growth was actually tracking closer to 3.5 per cent for the quarter, we expect fourth quarter GDP will be revised higher with subsequent releases. 

Friday, January 23, 2015

Canadian Retail Sales - January 23, 2015
Canadian retail sales rose 0.4 per cent in November, with 5 of 11 retail sub-sectors reporting gains.   In BC, retail sales were up 1.9 per cent on a monthly basis, and were 7 per cent higher compared to one year ago. Through 11 months of the year, retail sales in BC are up a robust 5.8 per cent,  the fastest annual rate of sales growth since 2007. 

With the release of November retail sales data our tracking estimate puts Canadian real GDP growth for the fourth quarter of 2014 at 2.1 per cent, which would fall short of the Bank of Canada's most recent forecast of 2.5 per cent for the quarter. Growth in the BC economy is currently tracking at 2.4 per cent for 2014.

Thursday, January 22, 2015

Vancouver Real Estate: 5 Mistakes That Could Mess Up Your Closing

Sitting on paperwork- I realize many people find paperwork boring, but when your mortgage broker requests copies of your tax returns or pay stubs or extra documentation on that rental property you own, please make that a priority. If you're going to be away without phone or email, tell your broker in advance and get him or her all the requested paperwork before you go.
Instructions for funding are not sent to the solicitor until all the conditions are satisfied. Some lenders take about 48 hours each time you submit a new document and want all the conditions satisfied five to seven days prior to the completion date.
Charging big-ticket items for your new home- Sometimes first-time buyers get excited about decorating their new house or condo and they'll go on a spending spree picking out new appliances and furniture before they even close. If you're putting all these purchases on a credit card, that could be a problem, because it boosts your credit utilization ratio. Your lender approved you based on the utilization ratio you had previously, so charging up a storm could raise some eyebrows. Best to wait until after closing.
Switching jobs- If you're getting a promotion or a new job within the same company, that's one thing. But switching to a completely new company could make your lender nervous, because they like to see a history of steady employment with one employer. Even if you'll make more money in your new job and you're prepared to show a new employment letter and pay stubs, it's still a bit of an unknown for your lender. Leaving your job to become an entrepreneur could be even more anxiety-inducing for lenders, because you don't have a track record yet.
Applying for new credit lines- Lenders review your credit report as part of the underwriting process, and they may check it again just before closing, so try to maintain the status quo. Applying for new credit lines such as auto loans, credit cards, or personal loans will temporarily lower your score, so try to avoid this until after closing. 
Depleting your savings- Your lender approved you based on the assets you had when you originally applied for the mortgage, and if a lender is giving an exception on debt ratios based on liquid assets, they may want confirmation that you still have those assets.
The bottom line? Try to keep your job and finances consistent with what they were when you originally applied for the mortgage. Last-minute surprises or missing paperwork could turn your closing day from an existing milestone to a stressful one.

WHISTLER Confidence returns to Whistler real estate Sales value and volume highest in the last seven years

Whistler's real estate market in 2014 could be the comeback story of global recession and the long road to recovery in the mountain resort town.
While there may not have been any headline-grabbing deals in the double-digit multi-million dollar range in the past year, Whistler's real estate, always subject to worldwide whims and trends, has been hotter this year than the past seven years, dating back to the financial meltdown and recession.
Total sales in the resort in 2014, according to the Whistler Listing System, reached $535 million. That's up 15 per cent over the previous year and it's the highest it's been in seven years, up from a low of $309 million five years ago. The same is true of the number of units sold — also at a seven-year high.
"For something to happen like what happened in 2008/2009 that really shakes people's confidence," said Pat Kelly, owner of Whistler Real Estate.
"I think it says a lot about Whistler that essentially the activity levels have returned to where they were beforehand, which really shows the confidence buyers have in the Whistler community and what Whistler offers as a recreational resort.
"They could have just drifted off and gone somewhere else and they didn't. They all came back. It really shows me that what we have has good maturity and has lots of support."
The 2014 numbers contrast to the low in 2009 of $309 million and the high of 2007 of close to $770 million.
"That was a very active year," said Kelly, of the year before the global financial meltdown reared its head in the mountains. "That was really the high point of the previous decade."
It's been a slow climb up since then.
The recovery is now seen in most sectors of the market though condo and townhouse sales continue to dominate market activity, making up almost 70 per cent of all sales.
Kelly's stats show average sale prices for condos rose 20 per cent to $390,165, while townhouses saw a three per cent jump on average to $697,073.
The average sales price of detached properties increased by almost 12 per cent to $1.6 million.
"Single family homes still constitute the largest single category in terms of total dollar value transacted," said Kelly.
Buyers, however, are predominately looking for places in the $1 million or less range.
More than 78 per cent of all reported sales in 2014 were reported below this level.
Whistler's top realtor Maggi Thornhill, who has sold the most real estate by far again this year, a position she has dominated for the past decade, said the market is showing great signs of recovery this past year.
Throughout the Christmas period, too, she saw renewed interest in the higher-end market.
"That's the first time in a long time that we're starting to see that happen," she said of the interest in the $4-6 million range and above. "That area of the market was really, really slow."
Thornhill said the impact of the strong U.S. dollar would be felt in Whistler.
"The exchange rate is going to have a huge impact," she said, not just from U.S. buyers but from around the world too — Hong Kong, Singapore.
"It's far-reaching. It's not just the U.S.," she added.
Chief economist with the British Columbia Real Estate Association Cameron Muir said the weak Canadian dollar is one factor.
The U.S. economy as a whole is recovering.
"We've seen very strong job growth south of the border. We're also seeing the U.S. markets fair much better as well," said Muir. "So that adds to the component of Whistler buyers who are coming from the United States."
Added to that is the provincial market, which has grown at about 15 per cent in total unit sales in the last year. Most regions in the province fared better in 2014 than in 2013.
"The rising tide floats all boats, if you will," said Muir.
"B.C. experienced a significant increase in housing demand last year."

BOC rate cut could boost real estate if banks lower mortgage rates

With fears lower energy prices will hurt Canadian real estate values, a cut to the Bank of Canada’s key rate may be what keeps the market on track.
Calgary realtor John Mayberry said the drop may persuade some to buy.“For a while now we’ve been talking about rates going up, and that it’s inevitable for them to go up,” Mayberry told Global News. “I think a lot of people who were on the fence are going to say, ‘Why not take advantage of it?'”
Mortgage broker Croft Axsen has seen it all in his career, but he said the cut is a shock.
Lately, his business has seen a drop in new mortgages amid uncertainty over low oil prices.
Axsen said it could be good for business, and the economy, if the banks follow with lower mortgage rates.
“Are they going to adjust and give a little bit back to the consumer? We’ll have to see what happens with that. Once one lender drops, they tend to compete,” said Axsen.
CIBC economist Nick Exarhos say variable rate mortgages will see the effect first.
Fixed rates could drop by 0.2 per cent, keeping most mortgages below 3 per cent.
“So obviously that should spill over into savings that borrowers will be able to capitalize on going forward this year if they choose to refinance,” says Exarhos.
While that may be good news for buyers, the worry is that could push many Canadians, already swimming in debt, over the edge.
It’s a warning the Bank of Canada had been sounding for years, but now the price of oil seems to be its bigger concern.
“We’ve had low rates for such a long time, you get into the mentality you believe that rates are always going to be low,” said Axsen. “At some point they’re going to go up.”

Wednesday, January 21, 2015

Bank of Canada Interest Rate Decision - January 21, 2015
In a bombshell announcement this morning, the Bank of Canada announced that it is lowering its target overnight rate to 0.75 per cent. The surprise loosening of monetary policy is in response to the recent dramatic decline in oil prices and the consequent negative impact on Canadian growth and inflation. The Bank expects the Canadian economy to grow 2.1 per cent in 2015 and 2.4 per cent in 2016. Given the initial drag on growth from lower oil prices, it does not expect the Canadian output gap (the difference between actual GDP and GDP at full capacity) to close until the end of 2016. 

While we expected the sharp decline in oil prices and the uncertainty regarding when they might stabilize would keep the Bank of Canada from raising interest rates in 2015, the Bank has instead opted for a more aggressive approach.  How long the Bank intends to keep its overnight rate at 0.75 per cent is unclear, but given strong underlying growth pre-oil shock, if oil prices rise as expected in the second half of the year we could see this move reversed by the end of 2015.   For now, the BC housing market should continue to benefit from low and now likely lower mortgage rates

Tuesday, January 20, 2015

Canadian Manufacturing Sales - January 20, 2015
Canadian manufacturing sales declined for the third time in four months in November, falling 1.4 per cent to $51.5 billion. Lower sales reflected weakness in motor vehicle, chemicals and food manufacturing.

In BC, where manufacturing employs over 160,000 people,  manufacturing sales fell 1.2 cent on a monthly basis, but were 2.6 per cent higher year-over-year.  Through the first 11 months of the year, manufacturing sales are 6.5 per cent higher than 2013. 

Thursday, January 15, 2015

Detached bungalows lead price growth in 2014’s last quarter

The benchmark price for all home types rose year-over-year across Vancouver, with detached bungalows leading the way with growth of 7.5%.
The average price for a detached bungalow in Q4 2014 was $1,124,642, up from about $1,046,200 in the same period last year, according to the Royal LePage House Price Survey and Market Survey Forecast released January 14.The average price of two storey homes was also up, with a 7.1% rise to $1,233,182. Condos saw a price increase of 3.8% to $511,150.
Bill Binnie, broker and owner of Royal LePage North Shore and Royal LePage City Centre, said the price increases for two-story homes and bungalows were related to continuing supply shortages.
Condo prices, however, have remained relatively steady over the past five years.
“The condominium category showed more measured year-over-year growth as this segment is able to continually supply more units to keep up with changing demands and market dynamics,” Binnie said.
The average price increase in 2015 should be less pronounced but will continue to grow, the report said. Royal LePage forecasts an across-the-board increase of 2.8% for the year.“We expect single family homes to continue demanding premium prices while condominiums will see minor gains,” said Royal LePage Westside broker and owner Chris Simmons.
Across the country, home prices increased between 4.5%-6.7% year-over-year to Q4. Detached bungalows had an average price increase of 6.7% to $406,218. Two-story homes increased $6.0% to $443,379 and the price of condos rose 4.5% to $257,624.
A nationwide increase of 2.9% is forecast for the year.

Tuesday, January 13, 2015

Consumer Demand in 2014 Strongest in Five Years
Vancouver, BC – January 13, 2015. The British Columbia Real Estate Association (BCREA) reports that a total of 84,049 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in 2014, up 15.2 per cent from 2013. After lagging for several years, BC home sales eclipsed the ten-year average of 82,000 units and the 15-year average of 83,600 units. Total sales dollar volume was $47.8 billion, an increase of 21.9 per cent from 2013. The average MLS® residential price in the province rose to $568,405, up 5.8 per cent from the previous year.

“BC experienced a significant increase in housing demand last year,” said Cameron Muir, BCREA Chief Economist. “Not since the post-recession rebound of 2009 has the market posted such a turn around."
Prior to 2009, one would need to look back to the 2001-2002 period to find a stronger year-over-year percentage gain in BC home sales.
Home buyers were out in force in nearly every region of the province, with unit sales climbing 8 to 25 per cent in all BC real estate boards, except Kamloops where the number of transactions dipped nearly 5 per cent. “Stronger consumer demand not only pulled down the inventory of homes for sale, but also firmed market conditions throughout the province,” added Muir.
In December, BC residential sales dollar volume was up 18.2 per cent to $2.97 billion, compared to the same month last year. Residential unit sales were up 14.7 per cent to 4,426 units, while the average MLS® residential price was up 3 per cent at $585,718.

Monday, January 5, 2015

Home sale and listing activity reach historical norms in 2014

It was a typical year for the Metro Vancouver housing market in certain respects. The region’s home sale and listing totals for 2014 both rank fifth when compared against the past 10 years of activity, while home prices increased.

The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2014 reached 33,116, a 16.1 per cent increase from the 28,524 sales recorded in 2013, and a 32.3 per cent increase over the 25,032 residential sales in 2012.

The number of residential properties listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver increased 2.4 per cent in 2014 to 56,066 compared to the 54,742 properties listed in 2013. Looking back further, last year’s total represents a four per cent decline compared to the 58,379 residential properties listed for sale in 2012.

“While home buyer and seller activity created balanced market conditions within the region, we also experienced some upward pressure on home prices over the course of the year,” Ray Harris, REBGV president said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver ends the year at $638,500. This represents a 5.8 per cent increase compared to December 2013.

“Detached homes continue to be the most sought after property type in our market,” Harris, said. “Detached homes in Metro Vancouver have increased 8.1 per cent in value over the last 12 months while townhome and condominium properties have increased 4.5 and 3.5 per cent over the same period.”

December summary

Residential property sales in Greater Vancouver totalled 2,116 in December 2014, an increase of 8.3 per cent from the 1,953 sales recorded in December 2013 and a 15.9 per cent decline compared to November 2014 when 2,516 home sales occurred.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,888 in December 2014. This represents a 1.7 per cent increase compared to the 1,856 units listed in December 2013 and a 37.4 per cent decline compared to November 2014 when 3,016 properties were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 10,320, a 10.7 per cent decline compared to December 2013 and a 17.8 per cent decrease compared to November 2014.

Sales of detached properties in December 2014 reached 833, an increase of 9.3 per cent from the 762 detached sales recorded in December 2013. The benchmark price for detached properties increased 8.1 per cent from December 2013 to $1,002,200.

Sales of apartment properties reached 912 in December 2014, an increase of 7.3 per cent compared to the 850 sales in December 2013.The benchmark price of an apartment property increased 3.5 per cent from December 2013 to $380,700.

Attached property sales in December 2014 totalled 371, an increase of 8.8 per cent compared to the 341 sales in December 2013. The benchmark price of an attached unit increased 4.5 per cent between December 2013 and 2014 to $476,800.