RealPro Real Estate Services Inc. // 250-286-1877

BANK OF CANADA PUTS THE ECONOMY ON LIFE SUPPORT


Bank of Canada Stands Ready To Do Whatever It Takes

On the heels of a devastating decline in the Canadian economy, the Bank of Canada is taking unprecedented actions. With record job losses, plunging confidence and a shutdown of most businesses, this month’s newly released Monetary Policy Report (MPR) is a portrait of extreme financial stress and a sharp and sudden contraction across the globe. COVID-19 and the collapse in oil prices are having a never-before-seen economic impact and policy response.

The Bank’s MPR says, “Until the outbreak is contained, a substantial proportion of economic activity will be affected. The suddenness of these effects has created shockwaves in financial markets, leading to a general flight to safety, a sharp repricing of risky assets and a breakdown in the functioning of many markets.” It goes on to state, “While the global and Canadian economies are expected to rebound once the medical emergency ends, the timing and strength of the recovery will depend heavily on how the pandemic unfolds and what measures are required to contain it. The recovery will also depend on how households and businesses behave in response. None of these can be forecast with any degree of confidence.”

“The Canadian economy was in a solid position ahead of the COVID-19 outbreak but has since been hit by widespread shutdowns and lower oil prices. One early measure of the extent of the damage was an unprecedented drop in employment in March, with more than one million jobs lost across Canada. Many more workers reported shorter hours, and by early April, some six million Canadians had applied for the Canada Emergency Response Benefit.”

“The sudden halt in global activity will be followed by regional recoveries at different times, depending on the duration and severity of the outbreak in each region. This means that the global economic recovery, when it comes, could be protracted and uneven.”

Today’s MPR breaks with tradition. It does not provide a detailed economic forecast. Such forecasts are useless given the degree of uncertainty and the lack of former relevant precedents. However, Bank analysis of alternative scenarios suggests the level of real activity was down 1%-to-3% in the first quarter of this year and will be 15%-to-30% lower in the second quarter than in Q4 of 2019. Inflation is forecast at 0%, mainly owing to the fall in gasoline prices.

“Fiscal programs, designed to expand according to the magnitude of the shock, will help individuals and businesses weather this shutdown phase of the pandemic, and support incomes and confidence leading into the recovery. These programs have been complemented by actions taken by other federal agencies and provincial governments.”

The Bank of Canada, along with all other central banks, have taken measures to support the functioning of core financial markets and provide liquidity to financial institutions, including making large-scale asset purchases and sharply lowering interest rates. The Bank reduced overnight interest rates in three steps last month by 150 basis points to 0.25%, which the Bank considers its “effective lower bound”. It did not cut this policy rate again today, as promised, believing that negative interest rates are not the appropriate policy response. The Bank has also conducted lending operations to financial institutions and asset purchases in core funding markets, amounting to around $200 billion.

“These actions have served to ease market dysfunction and help keep credit channels open, although they remain strained. The next challenge for markets will be managing increased demand for near-term financing by federal and provincial governments, and businesses and households. The situation calls for special actions by the central bank.”

The Bank of Canada, in its efforts to provide liquidity to all strained financial markets, has, in essence, become the buyer of last resort. Under its previously-announced program, the Bank will continue to purchase at least $5 billion in Government of Canada securities per week in the secondary market. It will increase the level of purchases as required to maintain the proper functioning of the government bond market. Also, the Bank is temporarily increasing the amount of Treasury Bills it acquires at auctions to up to 40%, effective immediately.

The Bank announced new measures to provide additional support for Canada’s financial system. It will commence a new Provincial Bond Purchase Program of up to $50 billion, to supplement its Provincial Money Market Purchase Program. Further, the Bank is announcing a new Corporate Bond Purchase Program, in which the Bank will acquire up to a total of $10 billion in investment-grade corporate bonds in the secondary market. Both of these programs will be put in place in the coming weeks. Finally, the Bank is further enhancing its term repo facility to permit funding for up to 24 months.

The Bank will support all Canadian financial markets, with the exception of the stock market, and it “stands ready to adjust the scale or duration of its programs if necessary. All the Bank’s actions are aimed at helping to bridge the current period of containment and create the conditions for a sustainable recovery and achievement of the inflation target over time.”

This is exactly what the central bank needs to do to instill confidence that Canadian financial markets will remain viable. These measures are a warranted offset to panic selling. Too many investors are prone to panic in times like these, which has a snowball effect that must be avoided. As long as people are confident that the Bank of Canada is a backstop, panic can be mitigated. The Bank of Canada deserves high marks for responding effectively to this crisis and remaining on guard. Governor Poloz and the Governing Council saw it early for what it is, a Black Swan of enormous proportions.

As a result, Canada will not only weather the pandemic storm better than many other countries, but we will come out of this economic and financial tsunami in better condition.


DR. SHERRY COOPER

Chief Economist, Dominion Lending Centres




Campbell River Market Stats April 30 2020




Campbell River Market Stats March 2020




Funds to help low income working families, seniors and those in need of a housing adaptation to live safely and independently.


UPDATE: Temporary changes to the Rental Assistance Program (RAP) and Shelter Aid for Elderly Renters (SAFER)

Funding for rental housing support for renters and clients of BC Housing Rental Assistance Programs, SAFER and RAP, is now available.

BC Housing has made the following temporary changes to the Rental Assistance Program (RAP) and SAFER. These changes support our new and existing clients who experience a loss of employment income due to the COVID-19 crisis.

  • Clients with reduced employment income on or after March 1, 2020 may request a short-term adjustment to their monthly benefit. The adjusted benefit amount is effective the month the decrease occurs. BC Housing must be notified within 4 months for clients to receive this benefit.
  • New RAP applicants with reduced income may have their eligibility and benefit calculation temporarily based on new, reduced income. In addition, the Emergency Care Benefit from the federal government will be considered a qualifying, employment replacement income.
  • The 12 month BC Residency requirement will also be waived for any applicants that meet all other eligibility criteria.

To request an adjustment please contact our office toll free: 1-800-257-7756 or 604-433-2218.


https://www.bchousing.org/housing-assistance/rental-assistance






Latest Update on how the government is supporting renters and landlords during COVID-19. The application process through BC Housing is still in process. We will post the latest news and application process once it has been determined.


https://news.gov.bc.ca/releases/2020MAH0048-000561?bcgovtm=20200319_GCPE_AM_COVID_4_NOTIFICATION_BCGOV_BCGOV_EN_BC__NOTIFICATION

February 2020 Campbell River Market Stats


We support our Local Loggers and are hoping the USW and WFP get back to negotiations soon!


Unfortunately the reality is there are those that are facing the risk of bankruptcy or losing their home. We are here to help! Please contact our one stop shop DLC Coastal Mortgage’s/RealPro Real Estate and talk to Leslie or Paul Stapley for all of your options. Loonies for Loggers has posted a link to some useful information which we are more than happy to share.


https://pubsdb.lss.bc.ca/pdfs/pubs/Cant-Pay-Your-Mortgage-eng.pdf


Bank of Canada Holds Steady Despite Economic Slowdown

In a more dovish statement, the Bank of Canada maintained its target for the overnight rate at 1.75% for the tenth consecutive time. Today's decision was widely expected as members of the Governing Council have signalled that the Bank still believes that the Canadian economy is resilient, despite the marked slowdown in growth in the fourth quarter of last year that has spilled into the early part of this year. The economy has underperformed the forecast in the October Monetary Policy Report (MPR). 

In today's MPR, the Bank estimates growth of only 0.3% in Q4 of 2019 and 1.3%in the first quarter of 2020. Exports fell late last year, and business investment appears to have weakened after a strong Q3, reflecting a decline in business confidence. Job creation has slowed, and indicators of consumer confidence and spending have been much softer than expected. The one bright light has been residential investment, which was robust through most of 2019, moderating to a still-solid pace in the fourth quarter only because of a dearth of newly listed properties for sale. 

The central bank's press release stated that "Some of the slowdown in growth in late 2019 was related to temporary factors that include strikes, poor weather, and inventory adjustments. The weaker data could also signal that global economic conditions have been affecting Canada’s economy to a greater extent than was predicted. Moreover, during the past year, Canadians have been saving a larger share of their incomes, which could signal increased consumer caution which could dampen consumer spending but help to alleviate financial vulnerabilities at the same time." 

The January MPR states that over the projection horizon (2020 and 2021), "business investment and exports are anticipated to improve as oil transportation capacity expands, and the impact of trade policy headwinds on global growth diminishes. Household spending is projected to strengthen, driven by solid growth of both the population and household disposable income." Growth is expected to be 1.6% in 2019 and 2020 and is anticipated to strengthen to 2.0% in 2021.

Inflation has remained at roughly the Bank's target of 2%, and is expected to continue at that pace.

Also from the MPR: "The level of housing activity remains solid across most of Canada, although recent indicators suggest that residential investment growth has slowed from its previously strong pace. Demand remains robust in Quebec, where the labour market has been strong. In Ontario and British Columbia, population growth is boosting housing demand. In contrast, Alberta’s housing market continues to adjust to challenges in the oil and gas sector. Nationally, house prices have continued to increase and should strengthen slightly in the near term, consistent with the responses to the Bank’s recent Canadian Survey of Consumer Expectations."

Bottom Line: The Canadian dollar sold off on the release of this statement and I believe there is a downside risk to the Bank of Canada forecast. Today's release is a more dovish statement than last month, showing less confidence in the outlook. The Governing Council did express concern that the recent weakness in growth could be more persistent than their current forecast, saying that "the Bank will be paying particular attention to developments in consumer spending, the housing market, and business investment." They also raised estimates of slack in the economy and dropped language about the current rate being appropriate.

According to Bloomberg News, today's Governing Council comments "are a departure from recent communications in which officials sought to accentuate the positives of an economy that had been running near capacity and was deemed resilient in the face of global uncertainty. While Wednesday’s decision still leaves the Bank of Canada with the highest policy rate among major advanced economies, markets may interpret the statement as an attempt to, at the very least, open the door for a future move."

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drcooper@dominionlending.ca

Introducing Hannah Palmer Jones

RealPro Real Estate newest Realtor Hannah Palmer-Jones. Welcome to the team Hannah!

Congratulations to Paul Stapley for 25 years of dedication and commitment to the industry.


2nd Annual fundraiser to support our "Local Kids Breakfast Club"

 

Last year was such a great turnout that were doing it again! Come out and support our "Local Kids Breakfast and Lunch Club" this Friday, May 22 from 11-1pm.  We will be having a Hot Dog BBQ by donation at our office at 966 Shoppers Row.  All proceeds will be donated to our local schools.  Come out and help give our local kids the jump start they need!