As we move into the final part of 2018 there are a few things to keep an eye on and how they relate to the mortgages in Vancouver.
A trade deal between China and the USA
With Democrats taking back the House of Representatives, we expect a more measured approach and a trade deal with China before the end of the year. This is particularly important as global stock markets have grown more sensitive and volatile in recent months. Peak valuations in real estate and stock markets are behind us which means capital markets are looking for stability from the world’s largest economies.
The Canadian Economy
We continue to watch home price compression with the lower end of the market seeing the most activity. Some of our Vancouver mortgage clients are making the most of the price compression and trading up the real estate ladder with their equity. Clients whose home values have fallen can now consider reverse mortgages or equity loans to renovate etc. rather than sell.
Overall the Canadian economy continues to perform well but there are some signs of weakness which has us wondering if the Bank of Canada may lessen the pace of their overnight rate increases. Global oil prices have fallen with OPEC talking about more production cuts to shore up prices, and consumer and mortgage loan growth is at its slowest pace since 1990. Weakened housing and energy prices mean there is little to keep pushing up inflation and interest rates. Bond yields are down again this week and we expect no increases in fixed term rates anytime soon.
Locally: October’s Labour Market Report
Central 1 Credit Union’s October Labour Market Report was recently released and continues to trend positive for Vancouver and the Lower Mainland. Over the last quarter, employment in the Lower Mainland / Southwest area increased by 52,700 persons or 3.4%. As such the unemployment rate fell to 4.1%. Most economists view full employment at 4% which means there are ample opportunities for those in the lower mainland seeking work. With continued migration and excellent employment prospects, the area continues to attract new people with approximately 31,000 new residents expected this year.
On the real estate side, we expect property listing inventories to remain in balanced conditions with lots of selection for those in the market for a new home or a move up. There are fewer single-family homes being built and we expect population-based demand to be in the condo and townhouse sector based on affordability.
If you have any questions about real estate or mortgages, we’d love to hear from you! Thanks again for your support and recommendations. Our team has had a great year thanks to your support and we look forward to hearing from you soon!
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