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LATEST TRENDS IN VICTORIA AND B.C. REAL ESTATE, HOUSING STARTS, INTEREST RATES, INFLATION AND RELATED ECONOMIC TOPICS (BY BCREA ECONOMICS NOW)

LATEST TRENDS IN VICTORIA AND B.C. REAL ESTATE, HOUSING STARTS, INTEREST RATES, INFLATION AND RELATED ECONOMIC TOPICS

(BY BCREA ECONOMICS NOW)

Average Performance for Housing Market in 2012


BCREA 2012 First Quarter Housing Forecast Update

Vancouver, BC January 27, 2012. The British Columbia Real Estate Association (BCREA) released its 2012 First Quarter Housing Forecast Update today.

Modest economic growth at home and abroad is expected to limit growth in consumer demand both this year and in 2013, said Cameron Muir, BCREA Chief Economist.

BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 2.1 per cent from 76,817 units in 2011 to 78,400 units this year, increasing a further 2.7 per cent to 80,500 units in 2013. The 15-year average is 79,000 unit sales. A record 106,310 MLS® residential sales were recorded in 2005.  

"While European sovereign debt concerns and a sluggish US economy will continue to impact consumer confidence, strong demand in the bond market is expected to keep mortgage interest rates at or near record lows for most of 2012, added Muir.

Home prices in most BC markets are forecast to experience little change over the next 24 months as the supply of homes for sale more closely matches consumer demand. The average MLS® residential price in the province is forecast to edge down 2.2 per cent to $548,500 this year and remain relatively unchanged in 2013, albeit increasing 0.8 per cent to $553,000.

Canadian Housing Starts - January 10, 2012

Canadian housing starts rose almost 8 per cent month over month in December, to a seasonally adjusted annual rate (SAAR) of 200,200 starts. New home construction in BC urban centres fell 20 per cent from November, at 21,000 starts (SAAR) and were down 26 per cent year over year in December. The year 2011 ended with housing starts 3 per cent higher than 2010 at 24,235 units, driven by a 20 per cent increase in multi-family starts.

Bank of Canada Interest Rate Decision - January 17, 2012

For the 11th consecutive meeting, the Bank of Canada opted to hold its target overnight rate at 1 per cent. In the statement accompanying the decision, the Bank noted that the global economic outlook is deteriorating, largely due to an expected deep and prolonged recession in Europe. While the Bank expects the Euro-crisis to be contained, it will impact the Canadian economy this year, and the Bank is forecasting GDP growth of just 2 per cent in 2012. On inflation, the Bank anticipates that both total and core inflation will moderate this year before rising to 2 per cent by the third quarter of 2013. 

Our view of the economy is largely in-line with the Bank of Canada, indeed our forecast for economic growth is almost identical. The Canadian economy is likely to face a number of headwinds in 2012, both externally from the Euro-debt saga and an uncertain US economy, and internally as traditional sources of growth begin to fade. Indeed, it is difficult to see where economic growth will come from in 2012 if, as expected, Canadian consumption slows , Governments begin address fiscal gaps and residential construction moderates. This leaves private business investment to drive the economy, but given a murky demand outlook, it is far from certain that businesses will be in the mood to take on significant new projects.   Given the extent of downside risks to the Canadian economy, it is unlikely that the Bank of Canada will move on interest rates in 2012. Moreover, long-term rates will remain at historically low levels until confidence is restored in the sovereign debt of Europe. 

Canadian Inflation - January 20, 2012

Canadian CPI inflation registered 2.3 per cent (year-over-year) in December, a 0.6 point decline from November. The drop in inflation last month was largely due to slow growth in prices for gasoline, food products, and automobiles.  The Bank of Canada's core inflation measure, which excludes food and energy prices, rose at a rate of 1.9 per cent in December from 2.1 per cent in November. Consumer prices in BC were just 1.7 per cent in December (year-over-year).
 
Slack in the Canadian economy and moderating global commodity prices are likely to ensure that both core and total CPI inflation remain close to or below the Bank of Canada's 2 per cent inflation target over the next 12 months. Without any serious inflationary pressure, the Bank of Canada will opt to keep the current considerable level of monetary stimulus in place for the foreseeable future.

Canadian Retail Sales - January 24, 2012

Canadian retail sales rose for the fourth consecutive month in November, posting an increase of 0.3 per cent. The increase in sales was broad based with 7 out of 11 sectors reporting higher sales.  In volume terms, retail sales rose 0.5 per cent, higher than the increase in nominal sales due to price discounts and incentives offered by retailers in the holiday shopping season. Today's retail sales report puts our tracking estimate of fourth quarter Canadian GDP growth at about 2 per cent.

BC retail sales grew at 0.3 per cent monthly pace in November, and 2.8 per cent compared to November 2010.  Despite the last two months of relatively strong growth, retail sales in BC  significantly underperformed in 2011, growing at just a 2 per cent pace due to weak labour market conditions and highly indebted households.

Canadian Monthly GDP Growth - January 31, 2012

The Canadian economy unexpectedly contracted 0.1 per cent in November following no growth in October. Economic growth was driven lower by a declining in output in the energy sector, partially due to maintenance shutdowns in the production of crude oil, but also on lower extraction volumes of natural gas. On a year-over-year basis, real GDP growth was 2 per cent in November.

Through the first two months of the fourth quarter the Canadian economy grew at about a 1.5 per cent rate, a significant deceleration from a third quarter that saw the economy grow by 3.5 per cent. We anticipate that the Canadian economy will  continue to grow at about a 1.5 to 2.0 per cent rate for the first half of 2012 and that slower than potential economic growth will put moderate downward pressure on inflation and keep the Bank of Canada in a holding pattern.

US Federal Reserve Interest Rate Announcement - January 25, 2012

The US Federal Reserve ushered in a new era of transparency today. Gone are the days of Fed-watchers carefully parsing press-release language for hints on the direction of interest rates. Instead, the Fed’s new communications strategy outlines not only the FOMC’s views on the economy, but also its forecasts of the future path of the federal funds rate. In its first release under the new communications regime, the Fed left the federal funds rate unchanged at 0 - 0.25 per cent and projected the need to keep rates "exceptionally low" until 2014, a move beyond the previous conditional commitment of mid-2013. 

The Fed’s transition to enhanced transparency can theoretically provide additional stimulus to the economy by influencing expectations of long-term interest rates. Indeed, long-term rates in the US and Canada were lower following the announcement. However, long-term yields are already so low that the impact on the economy will likely be minimal. The Fed’s commitment may further influence Canadian rates by constraining the ability of the Bank of Canada to raise interest rates without risking a pernicious rise in the Canadian dollar.  We therefore continue to expect a very low interest rate environment for the foreseeable future.

US Real GDP Growth - January 27, 2012

The US economy posted slightly weaker than expected growth to end 2011, registering real GDP growth of 2.8 per cent versus consensus expectations of 3 per cent. Despite falling short of expectations last quarter, GDP growth was still the strongest it has been in over a year.  However, the main source of growth was through additions to inventory which is unlikely to be sustained. Real GDP Growth for the year 2011 was a dismal 1.7 per cent.

While the US economy gained momentum in both output and employment growth in the fourth quarter of the year, it is uncertain that it will maintain that momentum in early 2012 in the face of strong headwinds from Europe and anticipated fiscal contraction resulting from political gridlock. Indeed, we foresee another year of relatively slow growth in the United States in 2012, perhaps just under 2 per cent annually. Slow growth in the US will continue to act as a governor on the Canadian and BC economy by weighing down export growth and constraining business confidence.

Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.

Posted by Joseph Martin Wednesday Feb 01, 2012 17:39
Categories: Dream Homes, Finding a Home, Healthy Living, Home Buying, Home Selling, Life Value Real Estate, Quality of Living Real Estate, Real Estae in Canada, Real Estate, Real Estate - Anthropology, Real Estate History, Real Estate in Canada, Real Estate Victoria BC, Recession, Downturn | Tags: bc commercial real estate, bc realty, buy house, buying home, downturn, economy, finding a home, lifestyle, profits, quality of life real estate, quotes by the great, quotes for life, real estate, real estate in bc, real estate market, real estate psychology, real estate report, real estate satisfaction, real estate victoria bc, realtors bc, recession, sell house, selling home, stock portfolio, victoria bc realtor

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