VICTORIA—Housing sales in British Columbia are climbing faster than anticipated after a downturn, but a rebound won’t be as inflamed as the sellers’ market 2 years ago, says a report released by Central 1 Credit Union on Nov. 25.
Declines in home prices, falling mortgage rates, a population increase, and continued economic growth have prompted buyers to return to the market, especially in Metro Vancouver, said Bryan Yu, Central 1’s deputy chief economist.
His outlook report on B.C.’s resale market for 2019 to 2021 forecasts a 7 percent decline in B.C. housing resales this year, followed by an increase of 13 percent in 2020 and a further 4 percent jump in 2021, which amounts to an estimated 85,475 unit sales in 2021.
“The overall demand environment or sales environment has picked up quite significantly and what we’re seeing now is that stabilization in the pricing and some upward momentum building as markets are tightening right now throughout the province,” he said in an interview.
But a return to 2017 market levels where resales came close to 100,000 units is not anticipated, Yu said.
He said sales declines that started in 2018 and continued well into 2019 were largely driven by the federal government’s mortgage stress test for home buyers and the B.C. government’s foreign buyers and speculation taxes launched to increase the number of homes available for rent or sale in B.C.’s urban areas.
“The overall sales are still below late 2017 and early 2018 numbers,” said Yu. “But we have seen the mortgage rates drop anywhere up to 80 basis points. You can get a mortgage now for around 2.5 percent for 5 years where a year ago you would be paying somewhere above 3 percent.”
He said the average value of a home in B.C. dropped 2.4 percent in 2019 to $522,000, but that same home value is expected to increase 3.8 percent next year and by another 4 percent in 2021.
Yu said the median home price in Metro Vancouver dropped about 10 percent from last year and is currently at about $690,000. In Victoria, the median home price is $600,000.
He said the rental vacancy rate in most B.C. urban centres remains tight at slightly more than 1 percent, while rents are expected to increase by 4.5 percent for tenants looking for new homes.
The B.C. government’s most recent financial quarterly report released in September said home sales decreased by more than 16 percent from January to July 2019 compared with the same period in 2018.
The government’s report said Metro Vancouver home sales from January to July 2019 fell 21.5 percent compared to the first seven months of 2018.
Yu said the coming months will see the resale market rebuild but double−digit price increases are not expected.
“I don’t think there’s a lot of downside for this,” he said. “As we see the migration flows coming in, the population growth numbers and the tight labour market, those [factors] should be enough to provide some stimulus. It’s not going to be heading to the level you saw pre−stress test, but prices are on the rise again in our view.”
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