The Bank of Canada's decision to leave its interest rate unchanged Wednesday could be just a brief pause that comes as it carefully follows the unpredictable twists in the country's trade talks with the United States.

The central bank kept its benchmark at 1.5 per cent, but many experts predict another increase could arrive as early as next month.

In a statement Wednesday, the Bank of Canada said more hikes should be expected thanks to encouraging numbers for business investment, exports and evidence that households are adjusting to pricier borrowing costs.

The bank, however, also made a point of saying it's closely watching the renegotiation of the North American Free Trade Agreement and other trade policy developments, which could have negative impacts on the Canadian economy. It's particularly concerned with the potential implications for inflation.

Last week, U.S. President Donald Trump announced he had reached a bilateral trade agreement with Mexico that would replace the three-country NAFTA. He put pressure on Canada to join the U.S.-Mexico deal, but after fresh talks restarted last week Ottawa and Washington have so far been unable to reach an agreement.

Trump notified Congress last Friday of his intention to sign a trade agreement in 90 days with Mexico _ and Canada, if Ottawa decides to join them. If a deal can't be reached, the president has also repeatedly threatened to impose punishing tariffs on Canadian auto imports.

Frances Donald, senior economist for Manulife Asset Management, said the Bank of Canada's explicit mention of NAFTA in Wednesday's statement suggests the negotiations have become even more important around the governing council's table.

``They're sending a message that everything looks as planned... What that says to me is that an October rate hike is still certainly in play,'' Donald said about the

However, she said the NAFTA reference gives the Bank of Canada options to possibly stay on hold next month, particularly if trade talks _ and the outlooks for the economy and inflation _ deteriorate.

Governor Stephen Poloz, she added, has been ``fairly agnostic'' on the outlook for NAFTA. She said he's pointed to potential negatives as well as positives, while the stressing everything is hypothetical until something is decided.

Benjamin Reitzes of BMO Capital Markets wrote in a note to clients that Wednesday's statement makes it clear the NAFTA talks are biggest issue for markets and the Bank of Canada at the moment.

``There's big time risk here, but most are still expecting a deal to get done,'' Reitzes wrote as he referenced the apparent month-end deadline for NAFTA negotiations.

``Assuming all goes well with NAFTA (perhaps a big assumption) and the data over the next seven weeks, an October rate hike still looks like a reasonable expectation.''

Poloz has raised the rate four times since mid-2017 and his most-recent quarter-point increase came in July. The next rate announcement is scheduled for Oct. 24.

The Bank of Canada said Wednesday that the economy has seen improvements in business investment and exports despite persistent uncertainty about NAFTA and other trade policy developments.

``Recent data reinforce governing council's assessment that higher interest rates will be warranted to achieve the inflation target,'' the bank said as it explained the factors around its rate decision.

``We will continue to take a gradual approach, guided by incoming data. In particular, the bank continues to gauge the economy's reaction to higher interest rates.''

The statement also pointed to other encouraging signs in Canada, including evidence the real estate market has begun to stabilize as households adjust to higher interest rates and new housing policies. Credit growth has moderated, the household debt-to-income ratio has started to move down and improvements in the job market and wages have helped support consumption, it said.

The bank can raise its overnight rate as a way to keep inflation from running too hot. Its target range for inflation is between one and three per cent.

Heading into Wednesday's rate decision, analysts widely expected Poloz to hold off on moving the rate _ at least for now.

Last month, Poloz stressed the need to take a gradual approach to rate increases in times of uncertainty. He made the remarks during a panel appearance at the annual meeting of central bankers, academics and economists in Jackson Hole, Wyo.

Provided by: Andy Blatchford for The Canadian Press

The Metro Vancouver* housing market continues to experience reduced demand across all housing types.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,929 in August 2018, a 36.6 per cent decrease from the 3,043 sales recorded in August 2017, and a 6.8 per cent decline compared to July 2018 when 2,070 homes sold.

Last month’s sales were 25.2 per cent below the 10-year August sales average.

“Home buyers have been less active in recent months and we’re beginning to see prices edge down for all housing types as a result,” Phil Moore, REBGV president said. “Buyers today have more listings to choose from and face less competition than we’ve seen in our market in recent years.”

There were 3,881 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in August 2018. This represents an 8.6 per cent decrease compared to the 4,245 homes listed in August 2017 and an 18.6 per cent decrease compared to July 2018 when 4,770 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 11,824, a 34.3 per cent increase compared to August 2017 (8,807) and a 2.6 per cent decrease compared to July 2018 (12,137).

The sales-to-active listings ratio for August 2018 is 16.3 per cent. By housing type, the ratio is 9.2 per cent for detached homes, 19.4 per cent for townhomes, and 26.6 per cent for apartments. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“With fewer buyers active in the market, benchmark prices across all three housing categories have declined for two consecutive months across the region,” Moore said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,083,400. This represents a 4.1 per cent increase over August 2017 and a 1.9 per cent decrease since May 2018.

Sales of detached properties in August 2018 reached 567, a 37.1 per cent decrease from the 901 detached sales recorded in August 2017. The benchmark price for detached properties is $1,561,000. This represents a 3.1 per cent decrease from August 2017 and a 2.8 per cent decrease since May 2018.

Sales of apartment properties reached 1,025 in August 2018, 36.5 per cent decrease compared to the 1,613 sales in August 2017. The benchmark price of an apartment property is $695,500. This represents a 10.3 per cent increase from August 2017 and a 1.6 per cent decrease since May 2018.

Attached property sales in August 2018 totalled 337, a 36.3 per cent decrease compared to the 529 sales in August 2017. The benchmark price of an attached unit is $846,100. This represents a 7.9 per cent increase from August 2017 and a 0.8 per cent decrease since May 2018.

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Provided by: REBGV

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Tides have turned for Greater Vancouver and Fraser Valley, finds study 

Once Canada’s most fiercely competitive real estate market and famed for its bidding wars, Greater Vancouver is now the second-least competitive housing market in the country, according to a new study by real estate website Zoocasa.

In its analysis of nationwide listings and sales data, Zoocasa found that, of the major real estate markets, only Newfoundland and Labrador was in a true buyer’s market, followed by Greater Vancouver and the Fraser Valley.

The website used sales-to-new-listings ratios to determine the state of the new market (as opposed to sales-to-active-listings ratios that are reported monthly by real estate boards). With this measure, a buyer’s market is indicated by anything under 40 per cent of new homes listed being sold that same month. Between 40 and 60 per cent it is a balanced market, and above 60 per cent it’s a seller’s market.

The study found that Greater Vancouver was at 43 per cent in July 2018, second-lowest only to Newfoundland and Labrador’s 35 per cent. The Fraser Valley was at 45 per cent.

The report said of these markets, “Those looking to ascend the property ladder in these cities will encounter fewer competitive hurdles such as bidding wars, as the sales are too few to outweigh new inventory.”

The regions in the strongest seller’s markets were London and St. Thomas at 78 per cent, Montreal at 73 per cent, and Ottawa and Trois Rivieres in joint third, both at 72 per cent.

The study also looked at the areas with the greatest year-over-year decreases in their sales-to-new-listings ratios. B.C. dominated the declines, with Fraser Valley seeing an annual decline of 15 percentage points, Greater Vancouver down 13 percentage points and Victoria dropping 12 percentage points (although still high at 62 per cent).

Zoocasa’s report said, “The last couple of years have been tumultuous in real estate markets across Canada, as a new mortgage stress test has further crimped affordability for borrowers of new mortgages. British Columbia, in particular, has weathered considerable challenges, as tougher mortgage hurdles compound with foreign buyer and speculation taxes, making steep affordability even more acute, and dampening home buyer demand. [These markets] have seen the greatest year-over-year declines in their sales-to-new-listings ratios, indicating faster rates of cooling competition.”

However, the study doesn’t account for differences between varying property types. The region’s latest board stats suggest that while Greater Vancouver is indeed in a balanced market overall, that breaks out as a buyer’s market for detached homes, a seller’s/balanced cusp market for attached units, and a seller’s market for condos.

Check out the infographic below for the nationwide study results.

Statistics released today by The Canadian Real Estate Association (CREA) show national home sales were up from June to July 2018.

Highlights:

• National home sales rose 1.9% from June to July.
• Actual (not seasonally adjusted) activity was down 1.3% from July 2017.
• The number of newly listed homes edged down 1.2% from June to July.
• The MLS® Home Price Index (HPI) in July was up 2.1% year-over-year (y-o-y).
• The national average sale price edged up 1% y-o-y.

National home sales via Canadian MLS® Systems rose 1.9% in July 2018, building on increases in each of the two previous months but still running below levels recorded from mid-2013 to the end of last year (Chart A). Led by the Greater Toronto Area (GTA), more than half of all local housing markets reported an increase sales activity from June to July.

Actual (not seasonally adjusted) activity was down 1.3% y-o-y. The result reflects fewer sales in major urban centres in British Columbia and an offsetting improvement in activity in the GTA.

“This year’s new stress-test on mortgage applicants continues to weigh on home sales but its effect may be starting to fade slightly in Toronto and nearby markets,” said CREA President Barb Sukkau. “The degree to which the stress-test continues to sideline home buyers varies depending on location, housing type and price range. 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,” said Sukkau.

“Improving national home sales activity in recent months obscures significant differences in regional trends for home sales and prices,” said Gregory Klump, CREA’s Chief Economist. “Regardless, rising interest rates and this year’s stress test on mortgage applicants will likely prove to be difficult hurdles to overcome for many would-be first time and move-up homebuyers, heading into the second half of the year and beyond.”

The number of newly listed homes retreated 1.2% in July and stood below monthly levels recorded over most of the past eight years. New listings were down in more than half of all local markets, led by Calgary, Edmonton and Greater Vancouver (GVA). Fewer new listings in these markets more than offset an increase in new supply in the GTA.

With sales up and new listings down, the national sales-to-new listings ratio tightened further to reach 55.9% in July. This reading nonetheless remains within short reach of the long-term average of 53.4% for this measure of market balance.

Considering the degree and duration to which market balance readings are above or below their long-term average is a useful way of gauging whether local housing market conditions favour buyers or sellers. As a rule of thumb, measures of market balance that are within one standard deviation of their long-term average are generally consistent with balanced market conditions.

Based on a comparison of the sales-to-new listings ratio with the long-term average, about two-thirds of all local markets were in balanced market territory in July 2018.

The number of months of inventory is another important measure for the balance between housing supply and demand. It represents how long it would take to 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 July 2018, down from 5.4 months in June and near the long-term average of 5.2 months.

The Aggregate Composite MLS® Home Price Index (MLS® HPI) was up 2.1% y-o-y in July 2018. This represents the first acceleration in y-o-y home price growth since April 2017. It also suggests that the dip in home prices last summer and their subsequent rebound in and around the GTA may contribute to further y-o-y gains in the months ahead.

Apartment units posted the largest y-o-y price gains in July (+10.1%), followed by townhouse/row units (+4.7%). By contrast, one-storey and two-storey single family home prices were again down from year-ago levels in July (-0.7% and -1.5% respectively) but the declines were noticeably smaller than in recent months.

Trends continue to vary widely among the 15 housing markets tracked by the MLS® HPI, with home prices up from year-ago levels in eight of them, little changed in two of them and down in the remainder.

Home price gains are diminishing on a y-o-y basis in the Lower Mainland of British Columbia (GVA: +6.7%; Fraser Valley: +13.8%), Victoria (+8.2%) and elsewhere on Vancouver Island (+13.7%).

Among Golden Horseshoe housing markets tracked by the index, home prices remained above year-ago levels in Guelph (+4.1%) and stabilized in Oakville-Milton (+0.1%). By contrast, home prices remained down on a y-o-y basis in the GTA (-0.6%) and Barrie and District (-3%).

In the Prairies, benchmark home prices remained down on a y-o-y basis in Calgary (-1.7%), Edmonton (-1.3%), Regina (-4.8%) and Saskatoon (-2.1%).

Meanwhile, benchmark home prices rose by 7.2% y-o-y in Ottawa (led by an 8.3% increase in two-storey single family home prices), by 5.7% in Greater Montreal (led by a 7% increase in townhouse/row unit prices) and by 5% in Greater Moncton (led by a 9.9% increase in apartment unit prices). (Table 1)

MLS® HPI provides the best way of gauging price trends because average price trends are strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in July 2018 was just under $481,500, up 1% from the same month last year. This was the first year-over-year increase since January.

The national average price is heavily skewed by sales in the GVA and GTA, two of Canada’s most active and expensive markets. Excluding these two markets from calculations cuts close to $100,000 from the national average price, trimming it to just under $383,000.

Provided by: CREA

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The British Columbia Real Estate Association (BCREA) reports that a total of 7,055 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in July, a 23.9 per cent decrease from the same month last year. The average MLS® residential price in BC was $695,990, down 0.4 per cent from July 2017. Total sales dollar volume was $4.9 billion, a 24.2 per cent decline from July 2017.

“The BC housing market continues to grapple with the sharp decline in affordability caused by tough new mortgage qualification rules,” said Cameron Muir, BCREA Chief Economist. “However, less frenetic housing demand has created more balanced market conditions in many regions, leading to fewer multiple offers and more choice for consumers.”

Year-to-date, BC residential sales dollar volume was down 18.9 per cent to $37 billion, compared with the same period in 2017. Residential unit sales decreased 20.6 per cent to 50,926 units, while the average MLS® residential price was up 2.1 per cent to $725,639.

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Provided by: BCREA