Real estate association offers optimistic forecast, saying buyers are gradually “adjusting” to mortgage stress test
Home sales in B.C. are likely to rise slightly this year, and more in 2020, according to a forecast released February 25 by the B.C. Real Estate Association (BCREA).
The association said it expects residential sales in the province to rise two per cent to 80,000 units this year. This follows a slow 2018 in which 78,345 homes traded hands on B.C.’s MLS®, which was 24.9 per cent lower than in 2017.
BCREA also predicted home sales to increase a further 6.9 per cent to 85,500 units in 2020. This would be a very normal level of activity, as the 10-year average for home sales in the province is 85,800 units.
The association said that the mortgage stress test introduced January 2018 would keep the market dampened, but that buyers were getting accustomed to it and its effects would be gradually outweighed by rising demand.
The report said, “Modest improvement in consumer demand is expected to unfold over the next two years as households further adjust to the mortgage stress test.”
Cameron Muir, BCREA Chief Economist, said, “The negative shock to affordability and purchasing power created by the B20 stress test on mortgage borrowers is expected to continue constraining housing demand in the province this year.
However, he added, “Favourable demographics along with continuing strong performance of the BC economy is expected to underpin housing demand over the next two years.”
BCREA said that the slow market has seen a rise in the number of homes for sale, which will keep prices flat.
The report said, “Market conditions are expected to provide little upward pressure on home prices this year, with the average annual residential price forecast to remain essentially unchanged, albeit up 0.5 per cent to $716,100.
The association broke down its forecast for both home sales and prices by region. Greater Vancouver, having seen the province's biggest home sales decline last year, will bounce back the furthest over the next two years, according to BCREA. Unit transactions in the region are prediced to rise 5.8 per cent in 2019 and 13.2 per cent in 2020. However, Greater Vancouver home prices are expected to slide this year, and only recover some of those losses in 2020.
Victoria and Vancouver Island are predicted to see lower home sales in 2019 and 2020 than in 2018, but prices are forecast to edge slightly upwards. The province's hottest real estate market, BC Northern is expected to continue its steady sales growth and see prices spike more than 10 per cent this year. See detailed regional forecasts in the table, below.