Canadian and US Bond Yields

The perpetual threat of rising bond yields that (one assumes) translate to higher mortgage rates are back in the news. Well, rising US yields are in the press, anyways, and we all know that Canadian yields are tightly linked to US bond yields.

The graph below shows the linear spread between Canadian and US 10 year bond yields (ie the Canadian 10Y bond yield minus the US 10Y bond yield) since 1955:

When we say Canadian and US yields track, it is in the statistical context.

Teranet House Price Index - Home Prices Down in November

HOME PRICES DOWN 0.1% IN NOVEMBER

In November the Teranet–National Bank National Composite House Price Index™ was down 0.1% from the month before, essentially reversing the October gain. Because prices in November 2012 had declined by a greater margin, 12-month home price inflation accelerated to 3.4% from 3.1% in October. The rise from a year earlier exceeded the cross-country average in five of the 11 metropolitan markets surveyed for the index: Calgary (5.9%), Hamilton (5.2%), Toronto (4.2%), Vancouver (3.9%) and Quebec City (3.7%). The 12-month gain lagged the average in Edmonton (3.0%), Winnipeg (2.8%), Ottawa-Gatineau (1.2%), Halifax and Montreal (0.8%). Prices were down from a year earlier for a ninth consecutive month in Victoria (−1.4%).

Teranet – National Bank National Composite House Price Index™

The 0.1% monthly decline of the composite index was the fourth November decline in a row. Be it as it may, since November prices have on average gained 0.1% from the month before over the 15 years of data index collection, this year’s retreat does not signal a buoying market. Prices were up on the month in four of the 11 metropolitan areas: Vancouver and Halifax (0.6%), Hamilton (0.3%) and Winnipeg (0.1%). The Winnipeg gain was the first in five months. Prices were down from the month before in Victoria (−1.8%), in Montreal (−0.6%), in Calgary (−0.3%) and in Edmonton, Quebec City, Ottawa-Gatineau and Toronto (−0.2%). Vancouver prices have been rising for seven straight months, reaching a new record in November. However, prices in six of the 11 markets have been trending down recently: for four consecutive months in Quebec City (total −1.8%), Montreal (−1.4%) and Edmonton (−1.1%); for three consecutive months in Ottawa-Gatineau (total −0.8%). Prices have declined 0.4% in Toronto over the last three months and 2.4% over the last two months in Victoria. Despite November’s increase, prices are down 0.7% over the last five months in Winnipeg.

Teranet – National Bank House Price Index™

The historical data of the Teranet–National Bank House Price Index™ is available at www.housepriceindex.ca.

Metropolitan area	Index level November	% change m/m	% change y/y
Calgary	172.23	-0.3 %	5.9 %
Edmonton	171.19	-0.2 %	3.0 %
Halifax	142.07	0.6 %	0.8 %
Hamilton	147.03	0.3 %	5.2 %
Montreal	149.65	-0.6 %	0.8 %
Ottawa	142.39	-0.2 %	1.2 %
Quebec	176.42	-0.2 %	3.7 %
Toronto	153.50	-0.2 %	4.2 %
Vancouver	174.04	0.6 %	3.9 %
Victoria	136.22	-1.8 %	-1.4 %
Winnipeg	193.82	0.1 %	2.8 %
National Composite 6	158.53	0.0 %	3.5 %
National Composite 11	159.21	-0.1 %	3.4 %

The Teranet–National Bank House Price Index™ is estimated by tracking ob­served or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at www.housepriceindex.ca.

The Teranet–National Bank House Price Index™ is an independently developed representation of average home price changes in six metropolitan areas: Ottawa, To­ronto, Calgary, Vancouver, Montreal and Halifax. The national composite index is the weighted average of the six metropolitan areas. The weights are based on aggregate value of dwellings as retrieved from the 2006 Statistics Canada Cen­sus. According to that census¹, the aggregate value of occupied dwellings in the metropolitan areas covered by the indices was $1.168 trillion, or 53% of the Canadian aggregate value of $2.207 trillion.

All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005.

By :

Marc Pinsonneault Senior Economist Economy & Strategy Group National Bank of Canada

Teranet - National Bank House Price Index™ thanks the author for his special collaboration on this report.

IMF says Ottawa should consider ending CMHC mortgage insurance

IMF says Ottawa should consider ending CMHC mortgage insurance

BC Employment October 2013

Below are some graphs highlighting Vancouver's and BC's employment situation. Here are the historical employment, participation, and unemployment rates (CANSIM tables 282-0117 and 282-0087) (click on chart for larger image)

American economics blogger Calculated Risk looks at employment from the point of view of participation rate for the 25-54 age cohorts and the so-called "employment to population ratio", the ratio of those employed to the population. Below is BC's participation rate and employment-population ratio for the 25-54 cohort:

Somewhat of a surprise was graphing Canada's participation rate and employment-population ratio compared to the US. Here I quickly overlaid Calculated Risk's US graph with the Canadian one, again for the 25-54 age cohort:

Since 2002 there has been a marked divergence in the countries' participation rates and a reversal of the countries' employment-population ratio differential.

Greater Vancouver Market Snapshot October 2013

Below are updated sales, inventory, months of inventory, and sell-newlist ratio graphs for Greater Vancouver to October 2013. (see REBGV news releases) (click on image to enlarge)

The scatterplot of 6 month price changes and months of inventory is below. The most recent datum is the brown dot at about (MOI=6.3,price_change=2%) . The trend is roughly in line with past years.

My estimates for October were for inventory of 15605 (actual 15257) and sales of 2657 (actual 2661) based on estimating average changes from September of years 2005-2012. Using the same technique estimates inventory and sales for November of 13968 and 2185 respectively (MOI=6.4).