The Greater Vancouver housing market continues to see 10 year lows in sales due to increased municipal and provincial regulation, as well as more stringent mortgage stress tests and rising interest rates. This downturn is contributing to the Bank of Canada prediction for negative growth for residential real estate investment in Canada in 2019. On the political front, the NDP held onto power in the January 30, 2019 by-election in Nanaimo, avoiding a potential fall of their coalition government with the Green Party.
IN THE NEWS
The number of homes sales in Metro Vancouver in January 2019 fell by 39.3 per cent from the same month in 2018 and were 36.3 per cent below the 10-year sales average for January. These numbers indicate the lowest January sales recorded since 2009. The Vancouver real estate board attributes the decline to federal governments’ mortgage stress test that tightened home buying in 2018.
The Bank of Canada anticipates that economic growth in Canada from residential real estate investments will go negative in 2019. Weaker than expected consumer spending and housing investment as housing markets adjust to municipal and provincial measures, changes to mortgage guidelines and higher interest rates are cited as reasons. In BC, the provincial government increased the foreign buyer tax to 20% and added a speculation and vacant home tax. According to Sherry Cooper, chief economist with Dominion Lending Centres, these measures, combined with rising interest rates “have dampened sales, especially for more expensive single-family homes.”
While BC’s metro markets of Vancouver, Abbottsford-Mission, Kelowna and Victoria are seeing decreases in home sales of up to 40% compared to the same time last year, positive housing market outlooks are predicted on Vancouver Island and in Northern BC. Demand will remain strong in retiree-driven markets on the Island and prices will grow due to the LNG project and associated pipelines in Northern BC.
The minority NDP government won the provincial by-election in Nanaimo on January 30, 2019. With this win, the NDP maintains 41 seats in the legislature, which, when combined with the Green Party’s 3 seats, allows the NDP to stay in power. The NDP has won the last 14 of 16 elections in the Nanaimo riding and increased its share of the popular vote. Some have speculated this could lead to discontent among representatives within the Green Party and put the current arrangement with the NDP at risk.
BC UNEMPLOYMENT RATES
||Rate from January 2019 to February 2019
||Rate from December 2018 to January 2019
Table source: http://srv129.services.gc.ca/ei_regions/eng/rates_cur.aspx
REAL ESTATE ACTIVITY BY REGION
- Units sold: 39.3% decrease from Jan. 2018
- Active listings: 55.6% increase from Jan. 2018
- New listings: 27.7% decrease from Jan. 2018
- Benchmark price: $1,019,600 (4.5% decrease from Jan. 2018)*
- Units sold: 23.7% decrease from Jan. 2018
- Active listings: 38% increase from Jan. 2018
- Benchmark price: $847,800 (0.9% increase from Jan. 2018 for detached homes)*
- Units sold: 35.2% decrease from Jan. 2018
- Active listings: 51.3% increase from Jan. 2018
- New listings: 24.7% increase from Jan. 2018
- Benchmark price: $954,100 (3.3% decrease from Jan. 2018 for detached homes)*
- Units sold: 31% decrease from Jan. 2018
- Active listings: 33.3% increase from Jan. 2018
- New listings: 19% increase from Jan. 2018
- Average residential price: $482,749 (8% decrease from Jan. 2018)
- Units sold: 10.4% decrease from Jan. 2018
- Active listings: 7.6% decrease from Jan. 2018
- New listings: 0.5% decrease from Jan. 2018
- Average residential price: $268,731 (8.6% increase from Jan. 2018)
*Benchmark based on the MLS HPI® benchmark for single family detached homes.