when not-so-good news might be good news Both our housing market and our labour market are showing signs of being impacted by the virtually unprecedented upward march of interest rates that began at the beginning of 2022. These changes will bring some challenges, but they may also usher in a period of moderating borrowing costs.
health of the job market are showing some weakness: employment growth is slowing, the unemployment rate is rising (from an all-time low), the number of job vacancies continues to shrink, and the job-change rate—historically high during the so-called “Great Resignation” of late- 2021/early-2022—has fallen to half of its longer-term average. While on the surface this doesn’t obviously present as good news, the knock-on effect of these labour market changes could be a positive one: to the extent that they are reflective of our higher interest rate environment, they will tend to be disinflationary—and to the extent that they weigh on inflation, then they move us closer to the time when the Bank of Canada can begin bringing borrowing costs back towards recent (pre-pandemic) historical norms. Whether you’re already a homeowner with a mortgage or you’re contemplating purchasing your first home, this is—unambiguously—good news.
In last month’s rennie review, we ran out of room to discuss important changes that have been occurring within Canada’s job market—changes that both reflect the monetary policy environment of the past 18 months and have implications for it going forward. But first, a quick update on how the housing market fared in August here in the Vancouver Region. Fewer sales and steady supply means lower prices. There were 3,502 MLS sales in the region in August, marking the 3rd straight month of slowing sales and representing only 85% of the typical transaction count for the month. At the same time—and indeed, partly as a consequence of slower sales—total inventory was steady between July and August at between 14,735 and 14,770 listings, with the 0.2% month- over-month decline paling in comparison to the more typical 3% drop during these summer months.
Notably, this lessening tension between supply and demand in Vancouver’s resale market yielded price declines in August for the first time in 2023: compared to July, benchmark condo prices fell 0.3% and those for townhomes dipped 0.2% (detached home values were unchanged). To be sure, these are not gargantuan price shifts, but both their recent change in direction (again, against the backdrop of 6 straight months of increases) and the softening of the job market point to the likelihood of softer market conditions in the coming months. Canada’s labour market is labouring. Over the past 4 months, almost all signs point to the labour market responding as one would expect to what has been an unprecedented tightening of monetary policy by the Bank of Canada. With the exception of annual wage gains remaining north of 5%, all other barometers of the
Copyright © 2023 rennie group of companies. All rights reserved. This material may not be reproduced or distributed, in whole or in part, without the prior written permission of the rennie group of companies. Current as of september 5, 2023. All data from Real Estate Board of Greater Vancouver and Fraser Valley & Rennie. While the information and data contained herein has been obtained from sources deemed reliable, accuracy cannot be guaranteed. rennie group of companies does not assume responsibility or liability for any inaccuracies. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information contained within this report should not be used as an opinion of value, such opinions should and can be obtained from a rennie and associates advisor. All information is subject to change and any property may be withdrawn from the market at any time without notice or obligation to the recipient from rennie group of companies. E.&O.E. 3
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