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Bank Of Canada December 2024 Update!

* Article courtesy from The Bank Of Canada

The Bank of Canada today reduced its target for the overnight rate to 3¼%, with the Bank Rate at 3½% and the deposit rate at 3¼%. The Bank is continuing its policy of balance sheet normalization.

The global economy is evolving largely as expected in the Bank’s October Monetary Policy Report (MPR). In the United States, the economy continues to show broad-based strength, with robust consumption and a solid labour market. US inflation has been holding steady, with some price pressures persisting. In the euro area, recent indicators point to weaker growth. In China, recent policy actions combined with strong exports are supporting growth, but household spending remains subdued. Global financial conditions have eased and the Canadian dollar has depreciated in the face of broad-based strength in the US dollar.

In Canada, the economy grew by 1% in the third quarter, somewhat below the Bank’s October projection, and the fourth quarter also looks weaker than projected. Third-quarter GDP growth was pulled down by business investment, inventories and exports. In contrast, consumer spending and housing activity both picked up, suggesting lower interest rates are beginning to boost household spending. Historical revisions to the National Accounts have increased the level of GDP over the past three years, largely reflecting higher investment and consumption. The unemployment rate rose to 6.8% in November as employment continued to grow more slowly than the labour force. Wage growth showed some signs of easing, but remains elevated relative to productivity.

A number of policy measures have been announced that will affect the outlook for near-term growth and inflation in Canada. Reductions in targeted immigration levels suggest GDP growth next year will be below the Bank’s October forecast. The effects on inflation will likely be more muted, given that lower immigration dampens both demand and supply. Other federal and provincial policies—including a temporary suspension of the GST on some consumer products, one-time payments to individuals, and changes to mortgage rules—will affect the dynamics of demand and inflation. The Bank will look through effects that are temporary and focus on underlying trends to guide its policy decisions.

In addition, the possibility the incoming US administration will impose new tariffs on Canadian exports to the United States has increased uncertainty and clouded the economic outlook.

CPI inflation has been about 2% since the summer, and is expected to average close to the 2% target over the next couple of years. Since October, the upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected. Looking ahead, the GST holiday will temporarily lower inflation but that will be unwound once the GST break ends. Measures of core inflation will help us assess the trend in CPI inflation.

With inflation around 2%, the economy in excess supply, and recent indicators tilted towards softer growth than projected, Governing Council decided to reduce the policy rate by a further 50 basis points to support growth and keep inflation close to the middle of the 1-3% target range. Governing Council has reduced the policy rate substantially since June. Going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time. Our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook. The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.

Information note

The next scheduled date for announcing the overnight rate target is January 29, 2025. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

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Supply On The Rise, But Not Across All Price Ranges

As we transition into winter, Calgary's housing market is following typical seasonal trends, with activity slowing compared to the fall. However, year-over-year demand remains relatively strong. In November, increased sales in detached, semi-detached, and row homes offset a decline in apartment condominium sales. The 1,797 sales for November mirrored last year’s levels and remained 20 per cent above long-term trends for the month.

The significant shift lies in supply. Inventory levels rose to 4,352 units in November, a notable increase from the 3,000 units reported last year. Despite the recent gains, inventory levels remain below long-term trends for the month.

“Housing supply has been a challenge over the past several years due to the sudden rise in population,” said Ann-Marie Lurie, Chief Economist at CREB®. “Rising new home construction has bolstered supply in rental, new home and resales ownership markets. However, supply improvements vary significantly by location, price range, and property type.”

The months of supply have increased to over two months, representing a shift away from the extremely low levels seen earlier this year and in the past three Novembers, which reported under two months of supply. While these more balanced conditions are promising for potential buyers, many market segments still favour sellers.

Improved supply options have tempered the pace of price growth. Year-over-year gains range from nearly seven per cent for row homes to nine per cent for apartment-style units. The total residential benchmark price reached $587,900, reflecting a year-over-year increase of just under four per cent. This slower growth reflects a shift toward more affordable row and apartment-style units. Seasonally adjusted prices have remained stable over the past four months despite unadjusted prices trending down in line with seasonal patterns.

Detached

Rising sales for homes above $600,000 offset the declines in the lower price ranges caused by limited supply choice. While inventory levels did improve, 85 per cent of the supply was priced above $600,000. Improving supply caused the months of supply to push above two months in November, with higher months of supply reported for homes priced above $700,000 and less than two months of supply for homes priced below that level. This variation within the market is likely to result in different price pressures.
 
The unadjusted detached benchmark price was $750,100, slightly lower than last month but over seven per cent higher than prices reported last year at this time. Year-over-year gains have ranged across the city, with slower growth reported in areas with the most competition from newer homes.  
 

Semi-Detached

There were 173 sales in November, an improvement over last year and contributing to the year-to-date growth of nearly five per cent. This was possible thanks to gains in new listings and higher supply levels. With two months of supply, conditions are not as tight as earlier in the year but still favour the seller, especially for properties priced below $700,000.

As of November, the unadjusted benchmark price was $675,100, nearly eight per cent higher than last November. The pace of price growth has eased over the past several months, primarily due to seasonal factors. Benchmark prices ranged from $926,800 in the City Centre district to $409,300 in the East district of the city.
 

Row

Row home sales improved in November compared to last year, contributing to nearly three per cent of year-to-date gains. Sales have remained exceptionally strong over the past three years as purchasers seek more affordable options. At the same time, new listings have also improved relative to sales, supporting year-over-year gains in inventory levels. Despite inventory improvements, conditions remained relatively tight with nearly two months of supply.

Following steep gains earlier in the year, the pace of price growth has eased. As of November, the unadjusted benchmark price was $454,200, nearly seven per cent higher than last year. Year-to-date average benchmark prices have improved by nearly 15 per cent. Row prices in the City Centre were the highest at $620,000, while the North East and East districts were the only areas to report benchmark prices below $400,000.
 

Apartment Condominium

Sales in November slowed over last year's record high. However, the 429 sales were still 47 per cent higher than long-term trends. New listings for apartment-style units have been on the rise. With 1,482 units available in November, more supply is available now than during the spring, and it is the only sector to see levels rise above long-term trends for the month.

The additional supply caused the months of supply to push above three months and is taking some of the pressure off home prices. As of November, the unadjusted benchmark price was $337,800, down over last month, but still nine per cent higher than last year. Supply has improved for units priced above $200,000, but most gains have been in the $300,000 to $500,000 range.  
 


REGIONAL MARKET FACTS


Airdrie

With 344 units available, Supply in Airdrie is returning to levels more consistent with activity reported prior to 2020. Supply levels have improved across all property types, with detached and row-style properties accounting for 84 per cent of the supply. While sales have remained strong relative to long-term trends, recent gains in new listings helped support improvements in supply levels.

Improved supply choice is taking some of the pressure off home prices. In November, the total residential benchmark price was $543,300, four per cent higher than last November. Apartment-style properties reported the largest year-over-year change at nearly 16 per cent.
 

Cochrane

New listings in the town reached a record high for November. The rise in new listings was met with a surge in sales, as November sales were amongst the highest levels reported in November. Much of the growth in sales was driven by detached activity. Strong sales activity prevented a significant shift in inventory levels, which remain 18 per cent below the month's long-term trends.

The pace of price growth has eased over the past few months, which is not uncommon for this time of year. As of November, the unadjusted benchmark price was $568,600, nearly four per cent higher than levels reported last year at this time. While prices grew across all property types, the largest price gains were reported for apartment-style homes.
 

Okotoks

Unlike other centres, Okotoks reported a pullback in new listings to 47 units this month. At the same time, there were 52 sales, preventing any significant change to the low inventory situation in the area. Okotoks has struggled with supply since the end of 2020, keeping the months of supply low below two months throughout most of that time.

In November, the unadjusted benchmark price was $624,000, six per cent higher than last year's levels. Prices have improved across all property types, with the largest gains occurring for row-style properties. Detached prices have also been on the rise and, in November, pushed up to $707,300.
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Supply Levels Improving For Higher-Priced Homes

Sales gains for homes priced above $600,000 offset declines at the lower end of the market, resulting in October sales that were similar to last year. The 2,174 sales in October increased over September and stood 24 per cent above long-term trends for the month.

“Housing demand has stayed relatively strong in our market as we move into the fourth quarter, with October sales rising over last month,” said Ann-Marie Lurie, Chief Economist at CREB®. “However, activity would likely have been stronger if more supply choices existed for lower-priced homes. Supply levels in our market are improving relative to the ultra-low levels experienced last year, but much of the gains have been driven by higher-priced units for each property type. This results in conditions far more balanced in the upper end of the market versus the seller's market conditions in the lower to mid-price ranges of each property type.” 

The gains in new listings relative to sales over the past six months have supported inventory gains in the city. As of October, 4,966 units were available, a significant improvement over the near-record low of 3,205 units reported last October. While inventories are starting to reach levels more consistent with long-term trends, the inventory composition has changed as nearly half of all the residential inventory is now priced above $600,000.

Adjustments in supply are helping move the market away from the tight market conditions experienced in the spring. However, conditions remain relatively tight, with 2.3 months of supply and a 67 per cent sales-to-new listings ratio, and the months of supply does vary significantly by price range and property type. For example, detached homes priced below $700,000 are reporting less than two months of supply, while homes priced over $1,000,000 are reporting over three months of supply. This is likely resulting in different price pressures depending on price range and property type.

Overall, the total residential benchmark price was $592,500 in October, over four per cent higher than last October and on a year-to-date basis, averaging over eight per cent higher than last year's levels. The unadjusted benchmark prices did ease slightly over last month due to seasonal factors, as seasonally adjusted prices remained relatively stable in October compared to September. 

Detached

Home sales rose to 1,071 in October, a gain over last month and nearly 10 per cent higher than last year. While new listings were higher than last year, they slowed over last month, causing the sales to new listings ratio to rise to 69 per cent and preventing any further monthly gain in inventory levels. With 2,199 units available, the months of supply remained near two months, a gain over the under two months reported last year at this time, but slightly lower than last month.

The unadjusted detached benchmark price was $753,900 in October, slightly lower than last month but still eight per cent higher than levels reported last October. Additional supply choices in the higher price ranges have taken some of the pressure off home prices. However, the recent monthly pullbacks are more related to seasonal conditions, as seasonally adjusted prices have remained relatively stable over the past three months.

 

Semi-Detached

Sales in October rose over last month and were over six per cent higher than levels reported last year at this time, contributing to the year-to-date growth of over three per cent. New listings for semi-detached homes have also been on the rise, supporting some steady gains in inventory levels. The shift in supply compared to demand has helped push the market toward more balanced conditions, especially for higher-priced properties. However, with only two months of supply, the overall conditions still favour the seller.

The unadjusted benchmark price was $677,000 in October, similar to last month and over eight per cent higher than last year. Year-to-date prices have averaged an over 11 per cent gain. 

 

Row

Following a strong start to the year, sales activity has slowed since June. However, the pullback in sales is not due to a shift in demand but related to supply constraints. The declines in sales have been driven by homes priced under $400,000, the same segment of the market which reported a 35 per cent decline in new listings. Year-to-date sales have remained relatively stable compared to last year, as pullbacks in the lower range offset the gains in the upper price ranges. Over 70 per cent of the sales have occurred over $400,000, a significant shift from last year, where the upper end accounted for 47 per cent of all the sales.

Improvements in supply did cause the months of supply to push above two months in October, the first time that has happened since the end of 2021. Supply growth, especially in the upper price ranges, has helped take some pressure off prices. However, with an unadjusted benchmark price of $456,600, prices are still over eight per cent higher than last October and year-to-date, which have averaged an increase of nearly 16 per cent.

 

Apartment Condominium

While sales in October improved over last month, October marks the fifth consecutive month with a year-over-year decline. However, it is important to note that the 6,782 sales so far this year are only down slightly over last year's record high and nearly double the number of sales we have averaged over the previous decade. Higher lending rates, rising rents, and limited supply choices for lower-priced properties have fuelled demand for apartment condominiums. However, like other property types, sales declines were driven by pullbacks for lower-priced units due to a significant drop in supply. Inventory levels in October did rise over the previous year, with most of the gains occurring in the $300,000 - $500,000 range, supporting more balanced conditions in those price ranges. Meanwhile, conditions remained relatively tight for lower-priced condominiums.

The additional supply choices, especially in the higher ranges of the condominium market, are taking some of the pressure off prices. In October, the unadjusted benchmark price was $341,700, down over last month but still 11 per cent higher than last year's levels. While much of the monthly decline can be attributed to seasonal factors, areas with a relatively high number of newly constructed and completed projects are impacting resale activity, resulting in a slightly higher monthly decline. Nonetheless, on average, year-to-date prices are nearly 17 per cent higher than levels reported last year.



REGIONAL MARKET FACTS


Airdrie

While both sales and new listings improved over the levels reported last October, the monthly pullback in new listings was enough to cause the sales-to-new-listings ratio to rise over last month, reaching 67 per cent. While this slowed the growth in monthly inventory levels, the 365 units in inventory is a significant gain over the exceptionally low levels of 213 reported last year at this time. Following three consecutive years of low inventory levels, recent gains are helping shift the market toward more balanced conditions. 

A shift away from the extreme sellers’ market has reduced the pressure on home prices. The unadjusted benchmark price was down over last month in October, but it was still five per cent higher than last October. Some of the monthly decline is related to seasonal factors, as seasonally adjusted data indicates prices remained relatively stable over the past four months.

 

Cochrane

Sales this month improved over last year, keeping above long-term trends for the town. At the same time, new listings also improved, reporting the highest October total on record. Recent gains in new listings relative to sales have helped support some steady gains in inventory levels. However, with 178 units available in October, inventories are still below long-term trends, keeping the months of supply relatively low at 2.3 months. 

While conditions are not as tight as in the spring, the shift is slowing the pace of price growth. The unadjusted benchmark price in October was slightly lower than last month but still six per cent higher than last year's levels. Overall year-to-date average benchmark prices are over nine per cent higher than last year's levels.

 

Okotoks

Sales in October improved over last year's levels as recent gains in new listings provided choices for many buyers struggling with supply options. While the sales gain relative to new listings prevented further monthly gains in inventory levels, the 103 units available in October significantly improved over the near-record low of 66 units reported last October. 

With less than two months of supply, conditions continue to favour the seller. The persistent seller market conditions have driven price growth in this market throughout most of the year. While unadjusted prices did ease slightly over last month in October, levels are still over six per cent higher than last October and over eight per cent higher on a year-to-date basis.  
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Categories:   Airdrie, Airdrie Real Estate | McKenzie Towne, Calgary Real Estate | Rural Rocky View County, Rural Rocky View County Real Estate
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