The strong upswing in Lower Mainland Multiple Listing Service home sales ended abruptly in January following a near uninterrupted recovery since March.
We calculate a near 12% seasonally adjusted decline in sales from December. Year-over-year sales growth slowed to 35% from a 74% gain in December. While the gain still looks stellar, 2019 marked the fewest January sales since the 2009 financial crisis.
Various factors abnormally affected January activity, including a blast of severe wintry weather, an earlier-than-normal Lunar New Year period and intensification of the novel coronavirus, which may have hurt consumer confidence. Significant declines in new and active listings also point to slower real estate activity during the month.
Sales-to-active-listings ratios (SALR) moderated slightly in favour of sellers, particularly in the apartment and townhomes sectors. SALRs in the multi-family market are near 30% as competition among buyers has heated up for more affordable units. Buyers have adapted to a mortgage-stress-test environment, while a low-interest-rate environment, tight labour market, population growth and low rental vacancy rates support housing demand.
Average home values slipped to $897,012 from December but year-over-year growth accelerated to 4.5%.
B.C. exports ended 2019 on a slightly more positive note to cap off an otherwise sour 2019. Dollar-volume exports to international markets bounced higher by 11% to $3.67 billion in December from November. A 27% surge in monthly energy exports drove the increase, alongside a rebound in metallic and non-metallic minerals.
Nevertheless, the broad picture remains downbeat. Full-year sales fell 6.4% to $43.3 billion from 2018 levels. This was a resource-driven downturn as forestry products (down 19.6%) and metallic and non-metallic mineral products (down 24%) accounted for the entire decline. Low market prices, restricted availability of timber and high input costs have hammered the forestry sector. A soft global economy has also weighed on commodity prices. That said, other products were broadly higher, suggesting rising external demand for food products and manufactured goods, supported by a low Canadian dollar.
The export outlook remains mixed. Global trade uncertainty has been lowered by the U.S.-China Phase 1 trade deal and ratification of the Canada-United States-Mexico Agreement, which will likely support exports and investments. The impact of the coronavirus on the economy is not yet quantifiable, but is undoubtedly negative for supply chains, global demand and commodity prices. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
