The State of B.C.'s Economy

A Look at the Housing Market, Labour Market, and Mortgage Delinquencies July 2023

As a B.C. homeowner, you may have heard rumblings about the cooling economy and rising interest rates. While these signs of economic slow-down may seem concerning, there's still good news for homeowners in the province. Despite some affordability pressures, the demand for housing remains strong, and mortgage delinquencies are still at record lows. In this blog post, we'll look closer at the state of B.C.'s economy and what it means for homeowners.

Demand for housing in British Columbia remains strong despite a slowing economy.

Housing Market:

Despite affordability challenges due to rising interest rates, demand for housing remains strong across the province. However, strong population growth and inadequate supply will likely underpin housing over the longer term. Although single-family housing starts have slowed to 10-year lows, multi-family construction activity (condos and rentals) remains near record highs. Dwellings under construction have jumped by 5.1% relative to the end of Q1, led by surging activity in the condo and rental segments.

Mortgage Delinquencies:

Mortgage delinquencies remain near record lows of just 0.12% across the province. However, the impact of rising rates and a softening labour market will likely push delinquencies higher to 0.7% from here and back toward the long-term average of closer to 0.6% to 0.30% over the next year. It's essential to keep this in mind if you're a homeowner looking to refinance or get a new mortgage.

Labour Market:

After adding 14,000 jobs in the first quarter, B.C.'s labour market stalled out in Q2, with employment effectively flat in the quarter. Unfortunately, since population growth is booming, the unemployment rate is rising, up 1.1% in Q2. Outside of the COVID downturn, that was the most significant increase in the unemployment rate since 2009. Keeping an eye on this trend is essential since it could potentially impact the housing market.

To wrap up, while there are signs of cooling in B.C.'s economy, the demand for housing remains strong across the province. However, affordability pressures due to rising interest rates may put pressure in the short term. Still, we can rely on long-term population growth to support the housing market. It's essential to track mortgage delinquencies and labour market trends since they may impact homeownership in the province. At the end of the day, homeowners in B.C. can be optimistic about the future of their properties, knowing that the economy remains relatively resilient, even amid the COVID-19 pandemic.

You can reach me at 604-710-8934 by text or phone and by email at karen.canning@mortgagegroup.com to discuss solutions built for you.