Langley Real Estate

By Bryan Yu, Special To The Sun December 18, 2010

Stronger sales momentum in the Lower Mainland and Vancouver Island housing markets drove provincial sales significantly higher in November.

Based on data released this week by the B.C. Real Estate Association, MLS home sales rose 11 per cent from October on a seasonally adjusted basis, marking a fourth consecutive monthly increase. Low mortgage rates over the past few months have been the major driver for the increase.

Annualized housing sales surpassed 80,000 units for the first time since April and upward sales trends have been established in most regions, despite some month-to-month volatility. While sales have climbed higher in recent months, absolute sales levels remain low in most regions.

At the same time, resale inventories have remained high relative to current sales, particularly in the Okanagan and Kootenay regions, in spite of a downward trend in new and active listings since the spring.

Vancouver Island (excluding Victoria) and Chilliwack also remained moderately over-supplied. Relatively weak market conditions reflect less than stellar employment trends outside the Lower Mainland and a continued lack of investment and recreational housing demand. The current demand and supply imbalance suggests further downward pressure on prices could be exerted in some markets, but rising sales should provide a moderating influence.

In contrast, the Lower Mainland and Victoria markets are hovering at or near balanced conditions. Sales in the Lower Mainland have risen 50 per cent since bottoming in July, and increased market activity has been reflected in a seasonally adjusted increase of 2.7 per cent since August in the MLSLink Housing Price Index.

New vehicle sales edge back in October

New vehicle sales in British Columbia and the territories fell 0.8 per cent from September to a seasonally adjusted 13,256 units in October. October's drop was led by a four-per-cent decline in truck sales, which was partly offset by an increase in passenger car sales, based on Statistics Canada data. After gradually moving higher over the spring and summer, sales have flattened in recent months.

New vehicle sales are generally a secondary indicator for B.C.'s economy, given the lack of automotive-related production in the province. They do, however, provide an indication of consumer confidence to make large-scale durable goods purchases or replace aging assets. Current seasonally adjusted annualized sales levels are low, hovering just under 160,000 vehicles, which contrasts with an average monthly trend of 193,500 annualized vehicles sold from 2005 to late 2008.

The low level of sales and slower pace of growth suggest that consumers remain hesitant to take on additional debt. Sales are expected to rise over next year helped by moderate growth in the economy and employment gains.

Bryan Yu is an economist with Central 1 Credit Union.