BC Multiple Listing Service (MLS) home sales rose for a second straight month in September, re-asserting upward momentum after a three-month decline and reinforcing seller’s-market conditions. That said, this housing cycle is likely to cool by year’s end as higher mortgage rates and tighter federal lending standards bite.
Provincial MLS sales rose 5.5% from August to 9,075 units in September, outpacing the national increase of 2.1%. Sales rose 4.5% in the Lower Mainland-Southwest and 6% on Vancouver Island. Northern B.C. sales jumped 24%.
While still lower than early-2016 highs, sales remain moderately high and near mid-2000 cycle peaks driven by factors such as low interest rates and population inflows. Recent mortgage rate hikes have likely pulled forward some activity as buyers lock in their pre-approved rates.
Sales-to-active-listings ratios continue to suggest seller’s-market conditions across the province, excluding some commodity-dependent areas in the northern B.C. and Kootenay areas. Markets are especially hot in the largest urban markets.
The average provincial MLS price rose 2.2% to $728,650 – marking the first gains since May and just off early 2016 highs. That said, the provincial average price is heavily affected by compositional sales shifts, with regional price trends generally positive.
Meanwhile, international tourism to B.C. rose with an increase in visitors to the province in August, although the declining trend extending back to late 2016 continued. Total tourist inflows were up 0.6% from July to a seasonally adjusted 461,675 persons. B.C. saw a rebound in tourists from both the U.S. and overseas markets during the month, although inflows from both have softened in recent quarters.
Easing tourism patterns reflect a firming of the Canadian dollar against both the U.S. dollar and other international currencies. Against the U.S. dollar, the Canadian dollar has gained about 10% since May after holding range-bound in previous months. While still competitive, the currency is acting as a drag on the tourism sector compared with when the dollar was at its lowest point.
That said, inflows remain strong with levels higher than any time since 2000. Year-over-year, U.S. visits were up 2.6% while overseas visits were 1.5% higher. Through the first eight months, tourist visits were up nearly 3%, led by a 6.7% gain in overseas visitors. B.C. has benefited from a greater number of visits from China, and removal of visa restrictions for Mexican travellers.
Bryan Yu is deputy chief economist at Central 1 Credit Union.