The Consumer Price Index (CPI) rose 2.9% year-over-year in January, down sharply from December's 3.4% reading. The most significant contributor to the deceleration was a 4% decline in y/y gasoline prices, compared to a 1.4% rise the month before (see chart below). Excluding gasoline, headline CPI slowed to 3.2% y/y, down from 3.5% in December.
Headline inflation of 2.9% marks the first time since June that inflation has moved into the Bank of Canada 1%-to-3% target band and only the second time to breach that band since March 2021.
Grocery price inflation also decelerated broadly in January to 3.4% y/y, down from 4.7% in December. Lower prices for airfares and travel tours also contributed to the headline deceleration. Prices for clothing and footwear were 1.3% lower than levels from a year ago, potentially reflecting the discounting of winter clothing after a milder-than-usual winter in much of the country.
The shelter component of inflation remains by far the largest contributor to annual inflation. The effect of past central bank rate hikes feeds into the CPI with a lag. The y/y growth in mortgage interest costs edged lower in January but still posted a 27.4% rise and accounted for about a quarter of the total annual inflation. Inflation, excluding mortgage costs, is now at 2.0%. Home rent prices continue to rise, but another component under shelter – homeowners’ replacement costs inched lower on slower house price growth.
On a monthly basis, the CPI was unchanged in January, following a 0.3% decline in December. On a seasonally adjusted monthly basis, the CPI fell 0.1% in January, the first decline since May 2020.
If you are about to Buy a House in Victoria, BC, the time may be upon us very soon. Find houses at https://realestatevictoriabc.org/ Find a mortgage from Tony Rossander (the author of this article) and read the rest of this article on his website at https://tonyrossander.ca/
]]>Real estate investments can provide a steady income stream through rental income, and the value of the property may appreciate over time, providing a potential return on investment. However, real estate investments can also require a significant amount of upfront capital and ongoing maintenance costs. Real estate in and around Victoria, BC has a distinct advantage over cities such as Edmonton and Calgary however. Southern Vancouver Island is surrounded by water which means the supply of new real estate in the Victoria market is limited. Cities in areas where outlying lands can be claimed for development have different potential for supply vs. demand rations which ultimately drives up prices.
Stock market investments offer potential for high returns, but also come with a higher level of risk due to market volatility. Stocks can also provide diversification opportunities, as you can invest in a variety of companies across different industries.
It's important to carefully evaluate the potential risks and rewards of each investment option, and to consider your own financial situation and goals before making a decision. Additionally, it's worth noting that many investors choose to diversify their portfolio by investing in both real estate and stocks.
If you are contemplating either an investment into Victoria, BC Real Estate or the Stock Market, it is very important to reach out to a trained and licensed professional to seek proper advice.
]]>Appreciation: Over time, real estate typically increases in value, which means that an investment made today can be worth more in the future.
Rent: Properties can generate rental income, providing a steady stream of passive income for the investor.
Diversification: Real estate can be a good way to diversify an investment portfolio, reducing the overall risk.
Inflation Hedge: Real estate is often considered a hedge against inflation because as the cost of living increases, so does the value of real estate and the rents it generates.
Tangible Asset: Unlike stocks or bonds, real estate is a tangible asset that can be seen, touched and lived in. This makes it a more concrete investment.
It is important to note that while real estate can be a good long-term investment, it also carries some risks and requires careful consideration and research before making a purchase. One of the most important aspects is to understand the geographical location. Victoria, BC real estate has some specific advantages in that it has a rather limited supply (the island is not getting any larger) and the Southern tip of the island has reached an ideal saturation point.
Contact us today to find out more.
]]>Lifestyle: Victoria is known for its mild climate, stunning natural beauty, and vibrant culture, making it an attractive place to live.
Affordability: Compared to other major cities in Canada, Victoria's housing market is relatively affordable, making it a good option for first-time home buyers.
Strong Economy: Victoria has a stable and growing economy, with a diverse range of industries, including tourism, technology, and government services.
Growing Population: Victoria's population is growing, which is driving demand for housing and providing potential for real estate investment.
Quality of Life: Victoria is consistently ranked as one of the best places to live in Canada, with a high standard of living, excellent schools, and a strong community.
While these are some of the reasons to consider Victoria real estate, it is important to research and carefully consider all factors, such as your personal financial situation, before making any investment decisions. Contact us today to hear the other reasons. https://realestatevictoriabc.org/contact-us-about-real-estate.php
]]>Expertise: Real estate agents have extensive knowledge of the local market and can provide valuable insights into the buying process.
Network: Agents have connections with other industry professionals, such as home inspectors, mortgage brokers, and lawyers, who can assist with various aspects of the home-buying process.
Negotiations: Real estate agents are experienced negotiators and can help first-time buyers get the best deal on a home.
Time-saving: Searching for a home can be time-consuming and overwhelming. An agent can help streamline the process by identifying properties that meet the buyer's needs and budget.
Access to MLS Listings: Real estate agents have access to the Multiple Listing Service (MLS), which is a comprehensive database of properties for sale. This database is not available to the general public, making it more difficult for home buyers to find the right property.
By consulting with a professional real estate agent, first-time home buyers can make the home-buying process smoother, more efficient, and less stressful.
If you have not yet done so, please visit us at https://www.listingsvictoria.ca/ to start your journey now.
]]>The overall effect of a reduction in the year-over-year inflation rate to 8.5% from a four-decade high of 9.1% will likely have an effect on the housing market and especially in the greater Victoria area real estate market. The US Fed will potentially keep interest rates level if this key trend continues. While many US commodity prices fell, it should be noted that food prices did rise. The lag in the decline of energy to produce, transport and store food may still be in the works. Watch for next months numbers to see if this stagnation in inflation continues.
For first time home buyers, this presents an almost perfect storm of opportunity. While there have been rising levels of inventory, most home sellers do not want to move in winter months. If the inventory cools off the market prices and interest rates remain flat or go down in the fourth quarter of 2022, they may be good buying opportunities.
Sign up for our free newsletter at https://www.listingsvictoria.ca and search the complete MLS listings for the entire region of Vancouver Island.
]]>According to this CBC Article, Canada's overall housing market is in retreat the frantic pace in May, 2022. The recent decline on a federal average is showing the average Canadian house price now selling for just $711,000, a decline of more than $100,000 in the last quarter. Victoria BC Real Estate has seen a similar decline. According to the local real estate board, a total of 761 properties sold in the Victoria Real Estate region in May, 2022. This is 27.5 per cent fewer than the 1,049 properties sold in May 2021 and a 7.6 per cent decrease from April 2022. Sales of condominiums were down 23.1 per cent from May 2021 with 250 units sold. Sales of single family homes decreased 31.7 per cent from May 2021 with 367 sold.
While May is typically a strong month for home sales, the Canadian Real Estate Association (CREA) said Wednesday that the volume of homes that sold fell precipitously during the month, down by 20 per cent compared with the same period a year ago.
The slowdown may offer a solid chance for first time buyer to take advantage of a shifting market. For the last several years, it has been a seller's market and that may be about to change. Instead of seeing multiple offers on each property, sellers may now start to see one or two offers and may eventually start price reductions.
First time buyers should keep their eyes on the key statistics for the Victoria market and watch for signs of the housing market bottoming out. If you are a first time buyer and wish to discuss this, please contact us and we can help decipher the vast amount of market data to help you make the correct decision.
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]]>So what is money laundering in the BC real estate market? In general, laundering is the process of making illegally-gained proceeds appear legitimate. If a criminal suddenly starts buying assets with cash, it attracts the attention of many government and police agencies. To hide the sudden rise in their own net worth, criminals like to wash the money through other transactions that can make the money in their bank accounts appear as if it was from legitimate sources. Some of the favourite methods are casinos (you can walk away and say you won the money, which is also tax free).
In Britosh Columbia, an expert panel was appointed by the Minister of Finance in September 2018 to review money laundering in the real estate sector after two independent reports revealed that B.C.’s real estate market is vulnerable to criminal activity and market manipulation. The panel’s final report (PDF, 4.7MB) was released in May 2019.
In their review of the sector, the Expert Panel estimated that more than $7 billion in dirty money was laundered in B.C. in 2018, and between $800 million and $5.3 billion was laundered through the real estate market, raising housing prices by an estimated 5%.
Sadly, rather than police it themselves, the BC government has placed a large degree of reporting into the hands of Realtors, licensed and trained real estate professionals. This is a rather misguided effort because it has two unexpected consequences.
First, any realtor who is involved with the criminals that are laundering the money can easily help them avoid detection. In British Columbia, realtors are carefully screened but a few nefarious types could slip through this process. Another side effect is that the watchdog can levy fines which results in lawsuits. On December 3, 2021, a news story broke about a realtor suing the watchdog back based on an alleged errant action.
Secondly, it places more strain on legitimate realtors who now must add law enforcement to their already large list of duties. This means that real estate agents are not focusing 100% of what they are supposed to be doing - getting the absolute best terms for you in real estate transactions.
We will follow future developments in this area and as always, bring the most relevant information about it's impact on the Victoria, BC Real Estate market.
]]>The single largest surprise was a section stating that home prices in Canada could see reductions by as much as 30% within 12 months, under certain conditions. This means the average price (as of mid 2021) of $713k could fall to as low as $500k. There is no data to indicate the spread of the impact over high, mid and low end price points. Historically, high end price points are relatively stable with the exception of the ultra high end, defined as over 10X the price of the average home. The real questions here are:
Can the princess fall as quick or quicker than they have risen; and Under what conditions will this happen.
Banks tend to make these predictions based largely on macroeconomic indicators like employment, consumer spending and economic growth. So for RBC’s worst case to play out, Canada would have to return to the economic turbulence seen in the first few months of the pandemic, with a colossal rise in unemployment, a prolonged recession and by June of next year.
A sudden drop to that extent — 29.6% — would be catastrophic for any recent homebuyers who were able to cobble together only a minimum down payment of 5%. Even new owners who put 20% down would find themselves short on equity, and if they felt pressure to sell after a price collapse, they’d have to do it at a loss.
At the same time, these are mere predictions based on a national average. Individual house prices in specific markets will likely react much differently. The best course of action for home owners is to contact a registered real estate agent and get sage advice from those in the business.
Real estate in Victoria BC is very different than the rest of Canada. For those interested in maintaining an accurate understanding of the general market, we highly recommend keeping up with the general Victoria MLS listings at Victoria BC Real Estate
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