5 Ways the Labour Market is tied to the Housing Market 26 Sep 2023, 5:50 pm

You may have seen headlines like Canada added 60,000 new jobs to the market in June. Or Unemployment inched up to 5.5% in July.  You may be wondering, what does this mean? And how does it affect the Real Estate market?

A large increase in new jobs, added to the labour market, often leads to more economic growth because employers now must compete to fill positions by offering higher wages.  Higher wages then lead to rising inflation because businesses need to charge more to you, the consumer, for goods and services in order make-up for increased salaries.

More jobs in the market = higher salaries = higher inflation.  This rise in inflation will instigate the Bank of Canada to take control measures, by raising interest rates to slow consumer and business spending, which helps to cool inflation.

Conversely, less jobs in the labor market and higher rates of unemployment often go hand in hand with lower consumer and business spending.  More people without jobs = less spending.  When spending and borrowing are low, the bank of Canada may stimulate the economy by decreasing rates to encourage people to spend and borrow.

Contrary to popular belief, this is also how higher immigration helps to cool inflation – more people to fill the jobs, means businesses have to compete less to fill positions, means wages decrease and the costs of goods and services decrease.  

So, what does this have to do with the real estate market?

1.  During periods of high inflation, the elevated costs of borrowing discourage many home buyers from taking out a new mortgage to buy a home as it affects affordability and purchasing power.
2. When the UNEMPLOYMENT rate is HIGH, often home inventory, or the number of active listings on the MLS, increases as homeowners may need to sell their home because they can no longer comfortably afford their payments. it’s important to note: We are not seeing this quite yet because unemployment is still relatively low. Which is one factor contributing to the historically low levels of housing inventory we see today.
3. Homeowners who have locked in for 5 years at low low interest rates don’t want to sell or move right now because the increased cost of borrowing would likely cause financial stress. Another contributor to low inventory issues.
4. Low inventory also deters homeowners from selling because they feel there is ‘no where to go’ or nothing to buy – more low inventory.
5. Increased interest rates usually mean decreased housing prices, while lower rates drive prices up. However, even with the rate increases over the last year ( a hefty 500 basis points) we have not seen a significant decrease in home values, while initially home values did correct approximately 17%, we have recently seen a rebound in values over the past few months, mostly due to: you guessed it, the lack of inventory.   

How do we get more inventory?

1. Inflation to decrease and stabilize for a period, so rates can soften, encouraging sellers to list their homes and move again.
2. Unemployment rates rise, forcing homeowners to sell as they can not afford payments as we discussed earlier.
3. A recession which could be signaled by negative economic growth, less spending and investment, prices dropping, companies downsizing and layoffs – leading to higher unemployment rates, again forcing homeowners to sell.   OR
4. Inflation continues to rise as a result rates also continue to rise causing significant financial strain on households, forcing homeowners to sell their  homes due to lack of affordability.

What do you think is the most likely scenario?  Find us on Instagram to leave your predictions in the comments!

Written by Jennifer Morgan

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NEW DEVELOPMENTS: ROYAL OAK/CASCADE HEIGHTS/EDMONDS 25 Jul 2023, 6:28 pm

Burnaby is home to some major Town Centers, Metrotown was first and is B.C’s largest Shopping Centre (Canada’s 5th largest).  In the last 10 Years. Brentwood was re-developed into The Amazing Brentwood: A Live/Work/Play Hub!  And the City of Lougheed an area lying between the boundaries of Burnaby and Coquitlam, coined Burquitlam, boasting “Everything in One Place.” is well underway.

Most recently the City of Burnaby finalized plans for two Master Planned communities: The Bainbridge and Lochdale Villages which will bridge the gap between Metrotown and Brentwood.

So, what’s on the Horizon?  It’s Royal Oak.

The City of Burnaby is working on an Official Community Plan for Royal Oak.  It’s central location and current landscape consisting mostly of single story commercial, will likely interest keen developers.

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Bank of Canada, Rate Announcement 12 Jul 2023, 9:18 pm

Today, the Bank of Canada raise the policy interest rate by 25 basis points to 5%.

Read the following Statement from the Bank of Canada…

We have made considerable progress in the fight against inflation. Consumer price index (CPI) inflation has fallen from a peak of 8.1% last summer to 3.4% in May. But even as headline inflation has come down largely as we forecast, underlying inflationary pressures are proving more persistent than we expected. Higher interest rates are needed to slow the growth of demand in the economy and relieve price pressures.

Second, we are trying to balance the risks of under- and over-tightening monetary policy. If we don’t do enough now, we will likely have to do even more later. If we do too much, we risk making economic conditions unnecessarily painful for everybody.

We’ve come a long way, and we don’t want to squander the progress we’ve made. We need to stay the course to restore price stability for Canadians.

Let me expand on these considerations and highlight a few key points in the Governing Council’s deliberations.

Since the beginning of the year, global growth has been stronger than expected. Lower energy prices and smaller price increases for goods have helped ease global inflation. But we’re seeing persistent inflationary pressures in services, driven by robust demand and tight labour markets. The Bank estimates global economic growth will be stronger this year than we expected in January and April.

It is a similar story in Canada. Growth has been surprisingly strong, and the economy remains in excess demand. Consumer spending on services remains robust. And while spending on many goods that are typically sensitive to interest rates has slowed, it has not slowed by as much as we expected. The housing market has also seen some pickup in activity.

Several factors appear to be supporting household spending.

The labour market remains tight, even if there are some signs of easing. The unemployment rate has increased slightly but remains historically low, and wage growth has been between 4% and 5%, higher than is consistent with price stability.

Many households have also accumulated savings since the beginning of the COVID-19 pandemic. Some households have cut back on spending because inflation and higher rates have eaten into their budgets, and some are being severely squeezed. But for many, larger savings may be acting as a buffer and supporting consumer spending.

Rapid population growth is contributing to both supply and demand in the economy. Newcomers to Canada are entering the labour force, easing the labour shortage. But at the same time, they add to consumer spending and demand for housing.

Turning to inflation, while CPI inflation has fallen relatively quickly, much of the downward momentum has come from lower energy prices and base-year effects as the large price increases we saw last year fall out of annual inflation. We are still seeing large price increases in a wide range of goods and services. Our measures of core inflation—which we use to gauge underlying inflationary pressures—have come down but not by as much as we expected. Three-month rates of core inflation have been around 3½% to 4% since last September, suggesting little downward momentum in inflation. Consumer and business expectations for near-term inflation are moderating, but they are still high. And businesses are saying they are still increasing their prices more frequently than they did before the pandemic.

Looking ahead, we continue to expect economic growth to moderate and inflation to ease, but this will take longer than we forecast in January and April. As the global economy slows and higher interest rates work their way through the Canadian economy, we expect economic growth to average about 1% through the second half of this year and the first half of next year. This means the economy moves into modest excess supply in early 2024, and this should relieve price pressures. CPI inflation is forecast to remain about 3% for the next year, before declining gradually to the 2% target in the middle of 2025. This is about six months later than we expected in April.

Our decision to raise the policy rate reflected the persistence in both excess demand and underlying inflationary pressures, combined with our outlook for economic activity and inflation. The consensus among Governing Council was that monetary policy needed to be more restrictive to bring inflation back to the 2% target.

These decisions are difficult, and we did discuss the possibility of holding rates unchanged and gathering more information to confirm the need to raise the policy rate. On balance, our assessment was that the cost of delaying action was larger than the benefit of waiting.

Elevated inflation is a burden on Canadians, especially for the most vulnerable. We are also acutely aware that higher rates are making life more difficult for many Canadians. And we know many Canadians are asking: Is the Bank done raising interest rates, or will rates need to go higher still to relieve price pressures? The short answer is we will be taking each decision based on the information available at the time.

What we can say is that monetary policy is working, and we know it will take more time for the full effects of past interest rate increases to work their way through the economy. With the increases in our policy rate in June and July, our outlook has inflation going gradually back to the 2% target. But several things need to happen for inflation to continue easing. And we are particularly concerned about two upside risks to the outlook.

First, we have been surprised by the persistence of excess demand and underlying inflation in Canada and globally. We know that higher rates are having an impact, but how big their impact will be is uncertain. Second, with the downward momentum in inflation waning and our forecast suggesting inflation will be around 3% for the next year, we are concerned that the progress to price stability could stall, and inflation could even rise again if there are upside surprises.

As I said, we are trying to balance the risks of over- and under-tightening. If new information suggests we need to do more, we are prepared to increase our policy rate further. But we don’t want to do more than we have to.

These decisions will be guided by our assessment of incoming data and the outlook for inflation. We need to see demand growth slow, wage pressures moderate and corporate pricing behaviour normalize. We will also need to see near-term inflation expectations and measures of core inflation come down further.

Let me conclude. The substantial drop in inflation over the past year is welcome news for all Canadians. But monetary policy still has work to do—our job is not done until inflation is centered on our 2% target. That is the level that helps the economy grow sustainably, restores competitive forces in the economy and gives Canadians the price stability they need to budget and invest with confidence.

Taken from the Bank of Canada Website:

https://www.bankofcanada.ca/2023/07/opening-statement-2023-07-12/?utm_source=alert&utm_medium=email&utm_campaign=FADMPR230712

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New Listing Video: 1502 305 Morrissey Rd, Port Moody 8 Jul 2023, 1:52 am

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JUST SOLD – 5216 Smith Avenue, Burnaby 4 Mar 2021, 10:01 pm

On the Vancouver border! – Owner managed for almost 40 years! – no strata fees- located in popular duplex area within 10 min walk of Skytrain, Metro town Swangard Stadium and Telus building, BCIT, parks and schools. – easy communte to Van – 2 suites (one 3 bedrm and one 2 bedrm) are both occupied by long term tenants – Upstairs has 3 bedrooms with spacious Living room and Kitchen area and downstairs is a cozy a 2 bedrm suite-large storage area for the tenants and shared laundry-Fully fenced lot and transit close by! Original condition but roof, furnace/hot water tank appliances have been replaced recently. Call today for more details- Showings Sun 1:00- 4:00PM – call or touchbase – Covid requirements in effect! – Great opportunity for investment of first timers!

Click here for more…

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February 2021 Stats 4 Mar 2021, 12:56 am

Competition amongst home buyers is putting upward pressure on home prices across Metro Vancouver’s* housing market. The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,727 in February 2021, a 73.3 per cent increase from the 2,150 sales recorded in February 2020, and a 56 per cent increase from the 2,389 homes sold in January 2021. Last month’s sales were 42.8 per cent above the 10-year February sales average. “Metro Vancouver’s housing market is experiencing seller’s market conditions. The supply of listings for sale isn’t keeping up with the demand we’re seeing,” Colette Gerber, REBGV Chair said. “Competition amongst home buyers is causing multiple offer situations and upward pressure on prices.

Click here for the full report…

Provided by: REBGV

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JUST LISTED – Family Home 3 Mar 2021, 11:20 pm

BONUS!! RD ZONED RESIDENTAL DUPLEX WITH LANE ACCESS – Minutes to schools, shopping and Mary Hill Bypass! – Hurry on this fantastic home with 2 large bedrooms up and a one of two-bedroom helper down – Many renovations over the last few years includes kitchen, bathrooms and roof –64.5 x 122 lot with Lane access (7,869 sq ft) with massive garage (26×30) with power, heat, and bathroom. Seller uses for workshop and use of heavy equipment – Great opportunity here also – Fully fenced lot with covered sundeck leading to rear yard and great outdoor space. 13 x 13 covered sundeck, quiet street. Hold, rent out and great home for your family to grow in to – Measurements are approximate. Buyer to verify if important. Tenanted – First showings by appt.

Click here for more…

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Just SOLD – 105 12460 191st – Pitt Meadows 25 Feb 2021, 8:13 pm

ORION- Pitt Meadows Newest building! This 2 bed 2 bath Corner unit is Bright, Almost brand new, clean and move in ready! It features 9′ ceilings, functional U-shaped kitchen with stainless steel appliances, dbl door fridge, quartz counter tops and all modern finishes. Master bedroom features floor to ceiling windows, desk bump out, walk in closet & private 4 pcs ensuite. Corner unit with only one shared wall, Large Balcony, Pet friendly 2 Cats or Dogs allowed, rentals allowed 1 parking. Prime Pitt Meadows location on the North side of the tracks, Steps to Meadowvale shopping centre, close to Schools, Foamers folly, and miles of walking and biking trails. PITT MEADOWS – The Natural Place.

Click here for more….

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JUST SOLD – 12 21015 118th Ave., – Southwest Maple Ridge 25 Feb 2021, 8:02 pm

Amara Place! – Boutique complex of only 18 homes. – Immaculate cared for and ready to move in! You’ll fall in love with this one – Large private rear yard, single car garage plus one designated extra. 3 good sized bedrms up with kitchen/nook or family room plus dining room and formal living spaces – Large windows overlooking large fenced yard for the ultimate lighting and design!. – Self and well managed complex and very diligent in all aspects. New roof levy paid full in full. – This West Maple Ridge location is just minutes away to start your commute, and only minutes to shopping, restaurants and recreation. Don’t miss out on this one – Viewings by appt only. Sat Feb 6th 1 pm to 4 pm – offers if any Monday 4 pm – Call L.S for details and documents – shows amazing!!!

Click here for more…

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Fantastic Investment Opportunity 25 Feb 2021, 7:25 pm

On the Vancouver border! – Owner managed for almost 40 years! – no strata fees- located in popular duplex area within 10 min walk of Skytrain, Metro town Swangard Stadium and Telus building, BCIT, parks and schools. – easy communte to Van – 2 suites (one 3 bedrm and one 2 bedrm) are both occupied by long term tenants – Upstairs has 3 bedrooms with spacious Living room and Kitchen area and downstairs is a cozy a 2 bedrm suite-large storage area for the tenants and shared laundry-Fully fenced lot and transit close by! Original condition but roof, furnace/hot water tank appliances have been replaced recently. Call today for more details- Showings Sun 1:00- 4:00PM.  Covid requirements in effect! – Great opportunity for investment of first timers! offer by 4 pm Mon March 1.

Click here for more details…

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