Canadian housing starts registered 197,976 units at a seasonally adjusted annual rate (SAAR) in December, down slightly from 201,376 (SAAR) in November.  Annual starts rose 11 per cent in 2012. 

New home construction in BC urban centres also posted a modest decline, falling to 20,227 (SAAR) in December from 22,043 units (SAAR) in November.  On a year-over-year basis, multiple unit starts in BC were unchanged from December 2011 while single family starts were 4 per cent lower. Overall,  total BC housing starts were 2 per cent lower than in December 2011. New home construction in BC's urban areas finished the year at 25,477 units, an increase of 5 per cent over 2011. New home construction continued to shift toward multiples in 2012. That segment of the market saw a 9 per cent increase in 2012 to 18.763 starts while single-detached starts declined 5 per cent to just 6,714 units.

Looking at census metropolitan areas (CMA) in BC, Vancouver CMA starts fell 1 per cent year-over-year in December but were 6 per cent higher for all of 2012 at 19,027 total units.  New home construction in the Abbotsford CMA was off 58 per cent compared to December 2011 and down 31 per cent for all of 2012 at just 371 total units.  Housing starts in the Kelowna CMA rose 27 per cent year- over-year in December due to a jump in single-detached starts. For all of 2012, total housing starts in the Kelowna CMA were down 10% from 2011 at 836 units.  Housing starts in Victoria were down 28 per cent year-over-year in December but were up 4 per cent for all of 2012 at 1,700 total starts.

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After a pause in October, Canadian employment surged in November, rising by 59,000.  The increase in jobs was primarily in full-time employment, which grew by 55,200. The Canadian unemployment rate declined 0.2 points to 7.2 per cent.

The BC economy lost jobs for the second consecutive month as payrolls declined by 4,700. Job losses were concentrated in the services sector and particularly in the healthcare and government sectors. The BC unemployment rate edged 0.1 points higher to 6.8 per cent. In spite of recent declines, employment in BC has still grown 1.7 per cent over 2011, a significant improvement in job growth from last year's 0.8 per cent. 

The US economy added 146,000 jobs in November while its unemployment rate fell to 7.7 per cent. However, the November jobs report was particularly noisy due to disruption from Hurricane Sandy.

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Canadian building permits rose 15 per cent in October, offsetting a 13 per cent decline in September . The increase in permits was largely a result of surging non-residential construction intentions in Quebec and Ontario. In BC, permitting activity sagged 18 per cent with declines in both residential (-17 per cent) and non-residential (-19 per cent) permit volume. However, this follows an outstanding September that saw permit volumes over $1 billion. Averaging over the last three months, total BC building permits were trending over $920 million per month. On a year-over-year basis, total BC permit volume was 20 per cent higher than October 2011.

Permit activity in BC's four major metropolitan areas moderated in October, with the exception of the Kelowna CMA which saw permit volumes spring forward following previous months of slower activity. Kelowna CMA permits more than doubled in October and were 53 per cent higher year-over-year.  The Vancouver CMA saw total permits fall 40 per cent month-over-month but were up 11 per cent year-over-year in October. In the Abbotsford CMA, permits tumbled following a very strong September. Likewise, the Victoria CMA saw permit volumes fall 31 per cent month-over-month in October,  but were 17 per cent higher than October 2011.

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Following the surprise announcement that Mark Carney will be departing to helm the Bank of England, it was back to business as usual at the Bank of Canada as interest rates were once again held constant at 1 per cent. The statement released this morning in support of the interest rate decision noted that while the global economy appears to have stabilized, it still remains vulnerable to major shocks from the US or Europe. The Canadian economy is growing at a slightly softer pace than the Bank expected, but is forecast to pick up in 2013.   On inflation, the Bank sees core inflation returning to its 2 per cent target over the next 12 months.

The Bank once again noted that a gradual withdrawal of monetary stimulus would likely be required, though the timing of such withdrawal would be weighed against global and domestic developments including the evolution of household imbalances. We continue to forecast a 25 basis point increase in the Bank's overnight target rate occurring in mid-to-late 2013.

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The Bank of Canada once again opted to hold its target for the overnight rate at 1 per cent this morning. Interest rates have been held constant for over two years, the longest such period since the 1950s.  The Bank somewhat tempered its bias for higher future interest rates, including a softer statement regarding the appropriateness of a gradual withdrawal of monetary stimulus as excess supply in the economy is absorbed. In a bit of a surprise, the Bank actually raised its forecast for the growth in the Canadian economy this year to 2.2 per cent, but kept its 2013 forecast at 2.3 per cent growth. The Bank judges that at that pace of growth, the Canadian economy will return to full capacity by the end of 2013.

It is our view that monetary policy at the Bank of Canada will continue to be constrained by external events in the global economy and household debt growth at home. While the Bank's preference for tighter policy is clear, it is difficult to make a case for higher interest rates when core inflation is below the Bank's 2 per cent target and already slow economic growth is threatened by global uncertainty. Therefore, we are forecasting that the Bank of Canada will hold its target overnight rate at 1 per cent until mid-to-late 2013 when, conditioned on an improved global economic outlook,  it may test the water with a 25 basis point rate increase.

Information provided by www.bcrea.bc.ca

Canadian housing starts remained robust in September at 220,215 units at a seasonally adjusted annual rate (SAAR), down slightly from August's 225,328 (SAAR).  New home construction in BC urban centres was essentially flat in September at 27,199 units (SAAR) compared to 28,233 in August.  On a year-over-year basis, multiple units starts in BC were 4 per cent higher while single family starts were 16 per cent lower. Overall,  BC housing starts were 2 per cent lower than September 2011. Year-to-date, BC starts are 9 per cent higher than 2011.

Looking at major metropolitan areas in BC, Vancouver starts fell 4 per cent year over year in September, lead by a 15 per cent decline in single family starts, while multi-family starts fell 1 per cent. Total Vancouver housing starts are 12 per cent higher through the third quarter compared to last year. New home construction in Abbotsford was off 10 per cent compared to September 2011, and 16 per cent year-to-date, with broad weakness in both single and multiple starts. Housing starts in Kelowna jumped 105 per cent year over year due to a rise in new multi-family starts and a particularly weak September 2011 in that sector. Total starts are 16 per cent lower year-to-date than in 2011.   Housing starts in Victoria were up again in September, rising 7 per cent on continued strength in multiple starts.  As of the third quarter of 2012, total starts in Victoria are 1 per cent higher than last year.

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In a widely anticipated move, the US Federal Reserve announced today that it will conduct a third round of quantitative easing (QE).  The primary difference between QE3 and the Fed’s previous two quantitative easing programs is that QE3 asset purchases (which will amount to $85 billion per month, including $45 billion in mortgage debt) are open-ended and, most importantly, will continue until there is a substantial improvement in US labour market conditions.  That is, the Fed has tied the duration of its latest program of asset purchases to an explicit macroeconomic objective. The Fed also extended its commitment to keep its target Federal Funds rate at near zero levels through at least mid-2015.

The theory underlying quantitative easing is that asset purchases will stimulate the economy by lowering long-term interest rates, including interest rates on mortgage debt, thus encouraging investment while giving a much needed jolt to the US housing market.  While the evidence for the impact on growth and employment from past QE programs is mixed, pairing open-ended asset purchases and a commitment to keep interest rates low for an extended period with a specific objective has much support in academic literature.

The implications of the Fed’s announcement for Canadian interest rates are two-fold. One, the commitment by the Fed to keep interest rates at near zero levels until mid-2015 further constrains the Bank of Canada’s ability to raise interest rates over the same period. Particularly as Canadian exports have already softened under the weight of an appreciating loonie. Second, already low long-term bond-yields will likely price-in a continuation of very low short-term rates and will therefore likely remain at historically low levels for an extended period which should keep Canadian mortgage rates well-anchored to current historically low levels.

Information provided by www.bcrea.ca.ca 

No surprises from the Bank of Canada this morning. The Bank left its overnight rate at 1 per cent, where it has been since September 2010.  The statement released this morning in support of the interest rate decision noted that while global economic headwinds continue to restrain economic activity, the Canadian economy is growing roughly in line with its production potential.  On inflation, the Bank sees core inflation returning to its 2 per cent target over the next 12 months.

The Bank once again made clear that a gradual withdrawal of monetary stimulus may be become appropriate as excess supply in the Canadian economy is absorbed, but that such withdrawals would need to be weighed against domestic and global economic developments. Given ongoing uncertainty in the Euro-zone and the unresolved "fiscal cliff" in the United States, that caveat means that the Bank will likely hold off on raising rates until early 2013. We expect monetary tightening to proceed very cautiously, with perhaps a 25 to 50 basis points increase over 2013, bringing the Bank’s overnight rate to between 1.25 and 1.5 per cent by the end of next year.

Information provided by www.bcrea.bc.ca

The Canadian economy expanded 0.1 per cent in May, after increasing 0.3 per cent in April.  At the industry level, economic growth was driven by a 0.7 per cent increase in retail trade and a 0.5 per cent bounce in finance and insurance output. Real GDP growth was also given a boost by increased mining and oil and gas extraction.  Lagging industries included manufacturing (down 0.5 per cent) and construction (down 0.2 per cent).  The output of real estate agents and brokers fell 4.8 per cent at the national level following three consecutive months of increasing activity.

Canadian real GDP is on track to grow 1.5 to 2.0 per cent in the second quarter of the year, close to the 1.8 per cent forecast by the Bank of Canada and in line with BCREA's own forecast.  The second half of the year holds a number of risks for the Canadian economy, including further Euro uncertainty and a slowdown in the US economy.  We forecast that the Canadian economy will generate modest growth in 2012 of around 2.1 per cent.

Information provided by www.bcrea.bc.ca  

The Bank of Canada has once again decided to keep its overnight rate at 1 per cent. The statement released this morning in support of the interest rate decision noted that global growth prospects have cooled since the Bank's April Monetary Policy Report and this cooling will restrain Canadian economic activity. However, the bank also noted that domestic factors, and in particular consumption and business investment, will help support moderate growth.  As we expected, the Bank lowered its forecast for economic growth in 2012 from 2.4 per cent to 2.1 per cent and to 2.3 per cent in 2013, which matches BCREA's forecast.  Despite slower growth, the Bank still expects the economy to reach full capacity by the second half of 2013, while inflation will remain at or very close to 2 per cent over the Bank's projection horizon.

Most notable in the Bank's statement accompanying the interest rate decision was that the Bank continues to include language suggesting a modest withdrawal of monetary stimulus (ie. rate increases) as excess slack in the economy is absorbed. This suggests that the Bank's timeline for tightening monetary policy has not been materially changed by ongoing global economic uncertainty or recent changes to Canadian mortgage rules. Absent any serious shocks to the economy we expect the Bank to begin tightening in the first quarter of 2013.

Information provided by www.bcrea.bc.ca

Canadian housing starts rose 2.4 per cent in June to a seasonally adjusted annual rate of 222,700 starts.  New home construction in BC urban centres showed strong growth for the second straight month, registering a robust 34,100 starts (SAAR) in June, a gain of 31 per cent over May.  On a year-over-year basis, BC housing starts were 60 per cent higher than June 2011. BC Housing starts are 13 per cent higher through the first half of 2012, the result of an 18 per cent increase in multi-family starts while single-family construction has been flat.

BC's strong new home construction was led by a jump in multi-family construction in Vancouver which rose close to 70 per cent year-over-year in June, including a near doubling of multi-family units compared to June 2011. Single family starts, however, continue to moderate, falling 7 per cent year-over-year. Abbotsford new home construction fell 21 per cent year-over-year in June due to a 26 per cent dip in single-family starts and a 9 per cent decline in multi-family starts. Housing starts in Victoria rebounded from a weak May as total starts rose 30 per cent year-over-year on balanced growth between single and multi-family starts. Finally, new home construction in Kelowna fell 15 per cent, largely due to weak multi-family starts. 

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Canadian employment held steady for the second consecutive month in June while the National unemployment rate ticked down by 0.1 points to 7.2 per cent.  Year-over-year, Canadian employment was 1 per cent higher than June 2011.  The BC economy added 3,200 jobs last month, including 2,400 full-time positions. Higher payrolls combined with a large drop in the labour force to push the BC unemployment rate down 0.8 points to 6.6 per cent. However, the provincial unemployment rate has been unusually volatile in recent months and we expect that June's big decline is mostly temporary.  June employment numbers were 2.3 per cent higher compared with 2011.

South of the border disappointing jobs creation continued with just 80,000 new jobs added in June, falling well short of already diminished expectations of 100,000 new jobs. The US unemployment rate held steady at 8.2 per cent.

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