EXECUTIVE SUMMARY
Regardless of current inverted bond yields and Canada’s economic contraction of GDP in Q3, Metro Vancouver and the Fraser Valley continue to be a robust place for commercial real estate because of the need for housing and the opportunity for investment in performance assets such as multifamily rentals. With interest rates now flattening we will start to see Buyer/Developer confidence as they enter the market place to acquire new opportunities based on pent up demand for land.
– ARI GELMON Personal Real Estate Corporation & Associate Vice President
INTEREST RATES
Wednesday, September 6th, 2023, The Bank of Canada announced that it will be holding its rate at 5%. “Governor Tiff Macklem and his policymakers are finished hiking”, according to the median response in a Bloomberg survey of economists.
BOND RATES
The yield curve is still inverted less than it was after U.S. and Canadian 10-year government bond yields jumped ~50 basis points in September. We will hold tight to see if the inverted yield curve is significant in its historical track record of accurately predicting recessions.
INFLATION
Higher gasoline prices were the main driver of Canada’s inflation rate in August. Excluding gasoline, the CPI rose 4.1% in August, matching the 4.1% increase in July.
THE REAL ESTATE MARKET
Housing – The BC housing market has been more resilient than expected in 2023, with both home sales and prices holding up well in the face of sharply higher interest rates. We expected home sales to slow in this second half of the year with annual sales in the province to be just under 80,000 units, essentially flat compared to 2022.
