In its recent announcement, the Bank of Canada maintained its target for the overnight rate at 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. The Bank also affirmed its policy of quantitative tightening.
Picture source: Trading Economics
Global economic developments have been consistent with the outlook outlined in the January Monetary Policy Report (MPR). Although global growth continues to slow, inflation is decreasing due mainly to lower energy prices. In the United States and Europe, growth and inflation expectations are higher than anticipated in January, with labour markets remaining tight and elevated core inflation persisting. Meanwhile, China’s growth is rebounding in the first quarter, but Russia’s war in Ukraine and the strength of China’s recovery are both key sources of upside risk.
In Canada, economic growth was flat in the fourth quarter of 2022, lower than projected by the Bank. Restrictive monetary policy continues to weigh on household spending, and business investment has weakened alongside slowing domestic and foreign demand. However, the labour market remains tight, with employment growth surprising on the upside, the unemployment rate near historic lows, and job vacancies elevated.
Inflation declined to 5.9% in January, primarily due to lower price increases for energy, durable goods and some services. Food and shelter prices remain high, causing continued hardship for Canadians. With weak economic growth for the next few quarters, pressure in product and labour markets are expected to ease, moderating wage growth and increasing competitive pressures.
The Bank expects CPI inflation to decline to around 3% in the middle of this year. Governing Council will continue to evaluate economic developments and the impact of past interest rate increases, and is willing to increase the policy rate further if necessary to return inflation to the 2% target. The Bank remains committed to restoring price stability for Canadians.
The Bank will announce the next overnight rate target on April 12, 2023, along with the next full outlook for the economy and inflation, including risks to the projection in the Monetary Policy Report.
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February listing data show a continued reluctance among prospective home sellers to engage in Metro Vancouver’s housing market, leading to below-average sales activity. With sales remaining well-below historical norms, the number of available homes for sale in the region have continued inching upwards.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,808 in February 2023, a 47.2 per cent decrease from the 3,424 sales recorded in February 2022, and a 76.9 per cent increase from the 1,022 homes sold in January 2023.
Last month’s sales were 33 per cent below the 10-year February sales average.
“It’s hard to sell what you don’t have, and with new listing activity remaining among the lowest in recent history, sales are struggling to hit typical levels for this point in the year. On the plus side for prospective buyers, the below-average sales activity is allowing inventory to accumulate, which is keeping market conditions from straying too deeply into sellers’ market territory, particularly in the more affordably priced segments.”
Andrew Lis, REBGV Director, economics and data analytics
Source: REBGV
There were 3,467 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in February 2023. This represents a 36.6 per cent decrease compared to the 5,471 homes listed in February 2022 and a 5.2 per cent increase compared to January 2023 when 3,297 homes were listed.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 7,868, a 16.7 per cent increase compared to February 2022 (6,742) and a 5.2 per cent increase compared to January 2023 (7,478).
“While we continue to expect home price trends to show year-over-year declines for a few more months, current data and market activity suggest pricing is firming up. In fact, some leading indicators suggest we may see modest price increases this spring, particularly if sales activity increases and mortgage rates hold steady,” Lis said.
“In the somewhat unusual market environment we find ourselves in right now with higher mortgage rates, fewer sales, and inventory that is inching higher but remains far from abundant, working with a Realtor who understands your local market conditions and has experience navigating challenging markets is paramount.”
Source: REBGV
For all property types, the sales-to-active listings ratio for February 2023 is 23 per cent. By property type, the ratio is 16.8 per cent for detached homes, 30.1 per cent for townhomes, and 25.8 per cent for apartments.
Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,123,400. This represents a 9.3 per cent decrease over February 2022 and a 1.1 per cent increase compared to January 2023.
Sales of detached homes in February 2023 reached 514, a 49.1 per cent decrease from the 1,010 detached sales recorded in February 2022. The benchmark price for detached properties is $1,813,100. This represents a 12 per cent decrease from February 2022 and a 0.7 per cent increase compared to January 2023.
Sales of apartment homes reached 928 in February 2023, a 49.9 per cent decrease compared to the 1,854 sales in February 2022. The benchmark price of an apartment property is $732,200. This represents a three per cent decrease from February 2022 and a 1.6 per cent increase compared to January 2023.
Attached home sales in February 2023 totalled 366, a 34.6 per cent decrease compared to the 560 sales in February 2022. The benchmark price of an attached unit is $1,038,500. This represents a 6.3 per cent decrease from February 2022 and a 1.8 per cent increase compared to January 2023.
* Areas covered by the Real Estate Board of Greater Vancouver include: Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.
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