The BCREA Commercial Leading Indicator (CLI) broke a string of twoconsecutive declines, eking out a 0.1 point increase to an index value of 120.0 in the fourth quarter of 2015.

On a year-over-year basis, the CLI was 0.4 per cent higher than in 2014.

Although the trend in the CLI is currently pointing to a neutral economic and financial environment for commercial real estate, the overall BC economy remains strong, particularly in comparison to its neighboring provinces.

“Financial market jitters offset solid gains from a strong BC economy,” said BCREA economist Brendon Ogmundson. “We expect that the economic environment will remain supportive of steady growth in the commercial real estate market.”

The CLI was virtually flat to end the year, which in combination with a falling index through the spring and summer has produced a flattening of trend underlying the index. That trend suggests that growth in commercial real estate activity will neither accelerate nor decelerate over the next two to four quarters.

According to statistics released today by The Canadian Real Estate Association (CREA), national home sales rebounded in January 2016 compared to the previous month.

Highlights:
• National home sales edged up by 0.5% from December to January
• Actual (not seasonally adjusted) activity was up 8% compared to January 2015.
• The number of newly listed homes retreated by 4.9% from December to January.
• The Canadian housing market has tightened but remains balanced overall.
• The MLS® Home Price Index (HPI) rose 7.7% year-over-year in January.
• The national average sale price rose 17% on a year-over-year basis in January;however, excluding British Columbia and Ontario, it edged down 0.3

The number of homes trading hands via MLS® Systems of Canadian real estate Boards and Associations edged up by 0.5 percent in January 2016 compared to December of last year. The monthly increase lifted national sales activity to the highest level since late 2009.

The number of local housing markets was almost equally split between those where sales were up from the month before, and those where sales were down. Monthly sales increases in the Greater Toronto Area (GTA) and Lower Mainland of British Columbia fuelled the national sales increase and offset monthly sales declines in Calgary, Edmonton and the Okanagan Region.

“Single family home buyers in the GTA and Lower Mainland of British Columbia had been expected to bring forward their purchase decisions before tightened mortgage regulations take effect in February 2016,” said CREA President Pauline Aunger. “If listings in these and nearby markets were not in such short supply, January sales activity would likely have reached even greater heights. Meanwhile, other major urban housing markets have an ample supply of listings, particularly where some home buyers have become increasingly cautious amid an uncertain job market outlook. All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to in the future.”

“January 2016 picked up where 2015 left off, with single family homes in the GTA and Greater Vancouver in short supply amid strong demand standing in contrast to sidelined home buyers and ample supply in a number of Alberta housing markets,” said Gregory Klump, CREA’s Chief Economist. “Tighter mortgage regulations that take effect in February may shrink the pool of prospective home buyers who qualify for mortgage financing and cause national sales activity to ease in the months ahead.”

Actual (not seasonally adjusted) sales activity rose eight percent on a year-over-year basis in January 2016 and stood 2.6 percent above the 10-year average for the month of January. Activity was up compared to January 2015 among roughly two-thirds of all local markets. B.C.’s Lower Mainland and the GTA again contributed most to the national increase.

The number of newly listed homes fell by 4.9 percent in January compared to December which more than reversed monthly gains that were posted in the final two months of 2015. Canada’s largest urban housing markets contributed to the monthly decline in new listings, including the Lower Mainland of British Columbia, Calgary, Edmonton, the GTA, Hamilton-Burlington, Ottawa and Montreal.

The national sales-to-new listings ratio rose to 59.2 percent in January due to the drop in the new supply of listings, January's reading was the ratio's highest since November 2009. A salesto- new listings ratio between 40 and 60 percent is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was within this range in about 45 percent of all local housing markets in January. A little over one-third of all local housing markets recorded a ratio above 60 percent; as in recent months, virtually all these housing markets are located in British Columbia and Ontario. 

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity. 

There were 5.3 months of inventory on a national basis at the end of January 2016, down from 5.4 months at the end of last year and the lowest level in nearly six years. The national figure is being pulled lower by increasingly tighter housing markets in B.C. and Ontario. This is particularly true in the Lower Mainland of British Columbia, the GTA and Hamilton-Burlington, where months of inventory are currently sitting at or below two months.

The Aggregate Composite MLS® HPI rose by 7.73 percent on a year-over-year basis in January – the largest gain in more than five years. Year-over-year price growth accelerated for two-storey single family homes and apartment units.

Two-storey single family homes continue to post the biggest year-over-year price gains (+9.97 percent), followed by onestorey single family homes (+6.86 percent), townhouse/row units (+6.46 percent) and apartment units (+5.16 percent).

Year-over-year price growth continued to range widely among housing markets tracked by the index. Greater Vancouver (+20.56 percent) and the Fraser Valley (+16.94 percent) posted the largest gains, followed by Greater Toronto (+10.69 percent).

Home prices in Victoria posted a year-over-year gain of just over seven percent while Vancouver Island home prices rose by five-and-a-half percent.

By contrast, home prices retreated by about three percent on a year-over-year basis in Calgary, by about two percent in Saskatoon, and by less than one percent in Regina. While home prices have begun to decline in Calgary and Saskatoon only fairly recently, they have been trending lower in Regina since early 2014.

Prices crept higher on a year-over-year basis in Ottawa (+1.10 percent), rose modestly in Greater Montreal (+1.48 percent) and strengthened further in Greater Moncton (+6.57 percent).

The MLS® Home Price Index (MLS® HPI) provides a better gauge of price trends than is possible using averages because it is not affected by changes in the mix of sales activity the way that average price is.

The actual (not seasonally adjusted) national average price for homes sold in January 2016 was $470,297, up 17.0 percent on a year-over-year basis.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s most active and expensive housing markets. If these two housing markets are excluded from calculations, the average is a more modest $338,392 and the year-over-year gain is reduced to eight percent.

Even then, the gain reflects a tug of war between strong average price gains in housing markets around the GTA and the Lower Mainland of British Columbia versus flat or declining average prices elsewhere in Canada. If British Columbia and Ontario are excluded from calculations, the average price slips even lower to $286,911, representing small a decline of 0.3 percent year-over-year.

The British Columbia Real Estate Association (BCREA) welcomes the proposed changes to the Property Transfer Tax (PTT) and other measures in Budget 2016 to improve housing affordability in the province and collect better information about property transactions.

The PTT exemption for new homes up to $750,000 will help stimulate supply of new housing and provide more opportunities for home ownership across the province. This exemption is commendable, however with many new housing projects taking years to complete, it may not have the immediate impact desired by the government.

While the new three percent threshold for properties over $2 million is intended to pay for the new home exemption, the province has missed an opportunity to raise the existing threshold levels to provide broader PTT relief for those who cannot afford a newly constructed home and who are not first time homebuyers.

By not indexing the threshold levels, the province ensures that – in an environment of rising home prices – an increasing number of homes will fall within the new three percent threshold, resulting in a higher tax burden on more home buyers.

Collecting and analyzing information on real estate transactions will help the provincial government make fact-based policy decisions. BCREA welcomes this initiative and looks forward to having the data publicly available.

BCREA continues to call on the provincial government to:

o Increase the 1% PTT threshold from $200,000 to $525,000;
o Index the 1% PTT threshold using the MLS® Home Price Index, and make adjustments annually;
o Index the exemption threshold for the First-Time Home Buyers’ Program using the MLS® Home Price Index, and make adjustments annually.

The British Columbia Real Estate Association (BCREA) reports that a total of 5,831 residential unit sales were recorded by the Multiple Listing Service® (MLS®) last month, up 33.2 per cent from January of last year. Total sales dollar volume was $4.39 billion in January, up 69.1 per cent compared to the previous year.

The average MLS® residential price in the province was up 26.9 per cent year-over-year, to $752,906.

“The BC housing market continues to build on momentum from a very strong 2015,” said Brendon Ogmundson, BCREA Economist. “Heightened demand is being met with the lowest level of supply in a decade, resulting in increased pressure on prices in much of the province.”

The housing market has seen a blistering start to 2016, with housing demand supported by low mortgage rates and rising employment and wage growth in the province. However, MLS® residential sales are forecast to edge lower this year. Total MLS® sales last year were the third highest on record at 102,517. A record 106,310 residential unit sales were recorded in 2005, while the only other year eclipsing 2016 were 2007 when 102,805 unit sales were recorded.

The trend measure of housing starts in Canada was 199,169 units in January compared to 203,304 in December, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“Housing starts trended down across the country with the exception of Ontario,” said Bob Dugan, CMHC Chief Economist. “The overall decline is mostly attributable to a slowdown in the Prairies where the housing starts trend was at a 4-year low in January. The slowdown in new housing activity coincides with an unemployment rate that is at a 5-year high in Alberta”.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.

The standalone monthly SAAR was 165,861 units in January, down from 172,533 units in December. The SAAR of urban starts decreased by 3.0 per cent in January to 153,701 units. Multiple urban starts decreased by 5.3 per cent to 95,406 units in January and the singledetached urban starts increased by 1.0 per cent to 58,295 units.

In January, the seasonally adjusted annual rate of urban starts decreased in Québec, the Prairies and British Columbia, but increased in Ontario and Atlantic Canada.

Rural starts were estimated at a seasonally adjusted annual rate of 12,160 units.

Home buyer activity remains at near record levels across the Metro Vancouver housing market.

Residential property sales in Greater Vancouver totalled 2,519 in January 2016, an increase of 31.7 per cent from the 1,913 sales recorded in January 2015 and a 10.9 per cent decline compared to December 2015 when 2,827 home sales occurred.

Last month’s sales were 46 per cent above the 10-year sales average for the month and rank as the second highest January on record.

“Fundamental economics are driving today’s market. Home buyer demand is at near record heights and home seller supply is as low as we’ve seen in many years,” Darcy McLeod, REBGV president said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,442 in January 2016. This represents a 6.2 per cent decline compared to the 4,737 units listed in January 2015 and a 119.8 per cent increase compared to December 2015 when 2,021 properties were listed.

“The MLS® is the most powerful real estate marketing system in the country. If you’re thinking of selling, it’s important to talk with your REALTOR® about putting your home on the MLS® system to ensure your property gets maximum exposure,” McLeod said.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 6,635, a 38.6 per cent decline compared to January 2015 (10,811) and a 10.1 per cent increase compared to December 2015 (6,024).

The sales-to-active listings ratio for January 2016 is 38 per cent. This is indicative of a seller’s market.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark, while home prices often experience upward pressure when it reaches the 20 to 22 per cent range in a particular community for a sustained period of time.

Sales of detached properties in January 2016 reached 1,047, an increase of 34.1 per cent from the 781 detached sales recorded in January 2015. The benchmark price for detached properties increased 27.9 per cent from January 2015 to $1,293,700.

Sales of apartment properties reached 1,096 in January 2016, an increase of 35.5 per cent compared to the 809 sales in January 2015.The benchmark price of an apartment property increased 19.4 per cent from January 2015 to $456,600.

Attached property sales in January 2016 totalled 376, an increase of 16.4 per cent compared to the 323 sales in January 2015. The benchmark price of an attached unit increased 16.4 per cent from January 2015 to $563,700.