BC Home Sales May Be Turning A Corner
August Canadian Real Estate Association data suggest sales in the Greater Vancouver area are stabilizing, though activity remains well below year-ago levels. This is occurring just as Labour Force Survey data show employment in BC at a possible inflection point following job losses earlier this year.
While risks remain, solid full-time job creation and a recovery in multiple sectors with falling employment to date should support BC housing demand and economic growth this year and next. An upswing in new construction should limit further erosion of housing affordability.
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THE DRIVERS OF BC’S RECENT EXPANSION
Housing—comprising home building and real estate intermediation—was a key contributor to BC’s recent economic growth. Sectoral output gains averaged nearly 5% during 2013–17 and accounted for over 21% of real GDP in every year over that period, both more than any other province (chart 1). Household incomes and spending also supported the torrid four-year expansion. BC led the provinces in retail sales growth in every year from 2015 to 2017, anchored by strong full-time job creation averaging 2.8% annually over the same period. As housing activity and household incomes via employment growth pushed each other higher, BC real GDP advanced by an average of 3.6% annually over 2013–17, the strongest provincial gains by over a percentage point.
VANCOUVER SALES MAY BE STABILIZING
Vancouver MLS residential unit sales fell substantially over the February to June period, but have picked up somewhat since the June low. Sales are down 27.4% ytd (nsa y/y) through August with weakness across unit types, but a 2.9% rise in August—following declines in the 0.5%–2.5% range from April to July (figures sa m/m)—suggests the market may be at an inflection point. By contrast, Toronto home purchases rose (nsa y/y) in each of the last three months, in part reflecting sales weakness last summer that followed the introduction of the 15% foreign buyers’ tax in Ontario’s Greater Golden Horseshoe in April 2017 (chart 2). New listings have been fairly steady in Vancouver since the second month of 2018 on a seasonally adjusted m/m basis. Consequently, the city’s sales-to-newlistings ratio has sat below 50% (sa) in seven consecutive months, a streak not seen since 2012–13. The rise mirrors an 11% ytd y/y upswing in units under construction in Vancouver, with completed and unsold units climbing 10% ytd y/y (both figures nsa through July).