January 2022

All posts from January 2022

Canada’s Inflation Rate Rises to a 30 Year High of 4.8%

by Bevony on January 21, 2022 No comments

At the end of December 2021, the Consumer Price Index had increased by 4.8% for the year. With food costs increasing, the cost of living has risen the fastest we have seen since 1991. Statistics show grocery prices have risen by 5.7%, which is the largest gain since 2011. The two things that are mainly affecting the price of groceries would be weather conditions in growing regions and disruptions in the supply chain also due to the weather. 

Just How Much Has Food Prices Increased?

Apple prices increased by 6.7%, and oranges saw an increase of 6.6%. With the United States being the major supplier of oranges, having bad weather and citrus greening in the major growing region. Orange export and production numbers have fallen their smallest since 1945. This not only affects the price of the fruit, but also the price of frozen concentrate and any commodity it is used in. We are seeing that price increase, with the cost of orange juice doubling in the last few months. 

Other food prices are increasing too, such as frozen beef, which has gone up by 12% over the prices of 2021. Ham and Bacon have also increased in price by 15%. 

With supplier’s costs going up, retailers have to pass on the increases to their customers. Kendra Sozinho, Fiesta Farms grocery store manager, indicates she has never seen a price jump like this one in her 20 years working for the company. 

Current new rules which forbid unvaccinated truck drivers from entering the country could make price hikes more likely in the coming weeks and months. 

As pandemic spending winds down, we expect to see a decrease in pent-up demand, which is one thing driving price increases. We still expect challenges in inflation and the supply chain. 

What is Happening Outside the Food Industry?

Expect to see more rate hikes! Food is not the only thing that we are going to see price increases on  in the future. Shelter prices have increased by 5.4% over last year, which is even higher than the overall inflation rate. Worst is that the factors pushing up shelter costs are all local Canadian problems. 

Yes, domestic issues are what drives housing inflation. There is also the weather driving up insurance costs, which affects homeowners and dwellers. 

Politicians Weigh In

Pierre Poilievre blamed the inflation on the federal government. He is a conservative finance critic who believes that a nation such as Canada should be able to keep prices down. Poilievre told reporters that the biggest increases we have seen on consumer products are on stuff that we source here in Canada. 

He calls home price inflation a “home-grown” problem, and argues that all blame regarding the inflation should be placed on Prime Minister Justin Trudeau. He noted that the more the Prime Minister spends, the more prices go up. 

Early in the pandemic, we saw lending rates reduced to all time lows. This stimulated the economy, but two years later the housing market has seen skyrocketing prices and reduced listings. 

Investors Weigh In

Investors believe there is a 75% chance of a rate hike soon. While inflation is expected to come down over the year, it is necessary for the Bank of Canada to require tighter financial conditions.  

If we saw any relief at all, it was with gas prices. We saw a drop of 4.1% during one month, which is the largest monthly drop since April 2020. But gas prices are still high compared to 2020 rates. 

How is inflation affecting you? We’d love to hear in the comments!

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BevonyCanada’s Inflation Rate Rises to a 30 Year High of 4.8%

New Home Sales Record for British Columbia

by Bevony on January 14, 2022 No comments

Throughout the end of November 2021, British Columbia saw 117,965 unit sales, which surpassed the 2016 record of 112, 425 sales. This new record was made for 2021 without December’s total. 

The B.C Real Estate Association notes, the first part of 2021 had a lot of high volume sales, and this is what pushed up the number. Every market of the province saw records being set through spring. Then the numbers settled down during the summer, only to gain momentum into the fall and winter months. 

It is interesting that these record sales were seen while there were reports of a record low inventory. Both of these can’t be true, and the sales numbers do not lie. There are now new listings on the market, and these are seeing activity. So pretty much everything that came into the market was being bought. While the new supply is good, the rebuilt inventory is still low. And because the new inventory is being bought, the total inventory is still looking on the low side. 

The data showed the average British Columbia home price was just a little under a million dollars. This increased 22.1% since November 2020, where the average home prices were $814,310. 

Factors Affecting the Increase

Another factor affecting the price increase is the pandemic induced relocation demand. This is especially true of people moving out of Vancouver. Persons with Vancouver income were moving to different areas of the province that had a lower supply, and so this caused price increases. 

There were people looking for single detached homes and generally more space. Because more people were looking for these types of homes and features, they became more expensive. So this skewed the average a little bit. 

Average Home Prices 

Chilliwack – $794,605

Fraser Valley – $1,107,374

Victoria – $987,970

Greater Vancouver – $1,241,774

With just over 16,000 homes for sale in British Columbia, there is a short supply indeed, as usually the Vancouver area alone has that number of listings. The tightest market in the province is the Capital Region District and Victoria. The population is approximately 400,000, and there are just 672 active. One issue with this area is that people that retire here don’t often move away. 

Anybody looking to retire, whether in Victoria or in British Columbia, is bringing demand, but there is no major increase in supply. 

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BevonyNew Home Sales Record for British Columbia

Vancouver’s Affordability Crunch is Spreading to Smaller Municipalities

by Bevony on January 5, 2022 No comments

2022 assessed value notices are out! And they are showing a 40% jump or more for homes in some of British Columbia’s suburbs. The new data shows the increase up across the province. Some smaller suburbs and communities are hit the hardest. 

More affordable parts of Fraser Valley are seeing major increases. In Chilliwack, the average increase is 40% over the past year. In Langley we are seeing increases of 38% while in Abbotsford we are seeing increases of 39%. 

When you look at the cost of a single family home in Vancouver, which was already sky high, we are seeing an increase of 16%. This means an approximate average of $2 million. These numbers show how the affordability problem in Vancouver is spreading to other towns. 

Challenges Ahead 

There may be some serious challenges ahead as these price increases will mean locals can’t buy. Locals won’t be able to purchase as the local income has not increased to these sizable property value increases. 

Homeowners will welcome the increases whether they plan to sell or not. But this really is another blow to anybody hoping to get into the housing market. It will also be a major worry for renters as they will be affected too. If you have a leasehold property when the assessed value goes up your annual costs, paid over to the government will increase too. 

Retired individuals with recreational properties may not be able to keep their properties since they are on a fixed income. Others on fixed incomes may find they are unable to afford to keep their properties as well. 

What’s Needed to Address the Affordability Crunch?

When the assessment is done, there is no differentiation between freehold properties and leasehold properties. To address this affordability crunch that seems to be growing there are a number of factors that come into play. These include demand, supply and financing measures.  

There is also the need to look at emerging housing disruptors such as Airbnb and people who own multiple homes. The marketplace is under particular pressure due to the idea of housing for investment rather than for use as a home. And this was before the pandemic hit. 

B.C 2022 Assessment Notices

B.C Assessment is the authority within the province that determines how homes across the province are valued. This is done yearly for official records as well as for tax purposes. The current 2022 assessment notices reflect a property’s market value as at July 1st 2021. 

B.C Assessment notes the market is still very active, and property owners can only expect to see more of these higher assessments in 2022. Over the past two years, a heightened demand for homes has caused an increase in property values in both traditional hot spots and smaller towns. Across the Lower Mainland area, gains average between 10% and 30%. There were increases of more than 30% in Delta, Coquitlam and Surrey. In Chilliwack, the average worth of single-family properties is $877,000, and in Hope $620,000 up by 45%. 

Over in the City of Vancouver, we see where condos have seen increases on the lower end of the spectrum with single digit increases. 

Total overall assessments for the Lower Mainland area have increased to $1.75 trillion in 2022, coming from $1.46 trillion in 2021. Over $23.7 billion updated assessments are coming from new construction, property rezoning and subdivisions. 

According to the B.C Real Estate Association, 2021 December home sales hit a new high. The average house price is now almost at 1 million dollars, up by 22.1% from November 2020 prices. 

Vancouver Island Increases

On Vancouver Island the data is similar with Tofino seeing increases of 42% and Port Alberni up to 47%. The increased demand in homes in smaller cities and rural areas also drives the increase in assessments. 

Parksville, Duncan, North Cowichan, the Gulf Islands and Sooke, to name a few, saw 30% increases. 

The overall increase for Vancouver Island, according to the B.C Assessment, is $343 billion for 2022, coming from $269 billion in 2021. The biggest increase the region saw was in Peachland, with an increase of 39% in assessments of single family properties from 2021 to 2022. 

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BevonyVancouver’s Affordability Crunch is Spreading to Smaller Municipalities