This week's podcast has us looking into a number of pretty big changes taking place in our economy this month, along with a close examination of both the November Real Estate Stats for Vancouver and the impact of the decision by the BOC, to further hold rates.
With the BoC having maintained interest rates at 5%, in line with expectations due to a slowing economy and decreasing inflation rates, marks the third consecutive hold, reminiscent of the pattern observed in 2020 when rates remained at 0.25% for almost two years! The current stability hints at a potentially stabilizing economic landscape, with attention shifting to the possibility of rate cuts in the new year.
The decision to hold rates is influenced by a softer-than-expected October inflation reading at 3.1% y/y. Gasoline price declines, contributing to a 0.1% m/m drop in the headline index, were a key factor. Core inflation, which the BOC monitors, decelerated from 4.0% to 3.8%. The combination of falling inflation, a weakening labor market, and subdued economic growth indicates a further holding in rate hikes, with expectations of rate cuts as early as April next year.
Arrears rates have increased slightly to 0.16%, with Saskatchewan having the highest rate at 0.58%. The podcast discusses the government's response to potential challenges in mortgage renewals through the "Canadian Mortgage Charter." However, it's noted that the charter lacks legal backing, presenting it more as a symbolic gesture than a concrete policy shift.
The GDP fell by an annualized rate of 1.1% in Q3, below the BOC's expected 0.8% growth. Real GDP per capita has declined for a fifth consecutive quarter, indicating a weakening economy. Meanwhile, recent cooling in the bond market is anticipated to result in savings for those seeking fixed-rate mortgage products in the latter half of 2025 or 2026.
Predictions about rate cuts are prevalent now, with markets pricing in 3 to 4 quarter-point cuts by the end of next year. While this may benefit some mortgage holders, there's also the potential negative impact on the economy, especially considering factors like job losses and negative GDP continue to get worse.
Local November sales statistics for Vancouver didn't change much, noting a 4.7% sales volume increase from November 2022 but a significant drop in sales volume of 17% m/m. Inventory remains a central theme and a sales-to-active ratio officially indicating Vancouver is in a balanced market. Prices have seen a 1% decrease from October 2023, marking the fourth consecutive month of declines but still reflecting a 4.9% increase over November 2022.
Tune in and get the full story on our ever-changing Vancouver real estate landscape.
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Dan Wurtele, PREC, REIA
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Ryan Dash PREC
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ryan@thevancouverlife.com