B.C. Real Estate Association forecasts steep decline in home sales – Vancouver Sun

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B.C. home sales are forecast to continue to slump, as high mortgage rates put pressure on the housing market through to next year, according to the B.C. Real Estate Association.

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In its forecast released Thursday, the BCREA said residential sales in B.C. are forecast to decline 34.4 per cent from a record high in 2021 to 81,900 units this year.

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In 2023, home sales are forecast to fall an additional five per cent to 77,790 units, according to the agency’s report.

The report also predicts the average price of a home in the province will drop down an anticipated 4.3 per cent to $969,400 this year and a further 3.1 per cent in 2023 to $939,500.

In Metro Vancouver, the average price of a home is expected to dip 3.1 per cent to $1,225,000 this year and 2.9 per cent to $1,190,000 next year. The numbers are similar for the Fraser Valley, where prices are expected to fall 1.6 per cent to $1,030,000 this year and by 3.9 per cent next year to under a million at $990,000.

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Some of the steepest declines in home prices are forecast for the Kamloops region and on Vancouver Island, where average prices are expected to tumble by 15.4 per cent this year to $768,500 and another 2.4 per cent next year to $750,000, according to the report. In Kamloops, prices are anticipated to plunge 16.5 per cent this year to $652,000 but only slightly next year to $650,000 (0.3 per cent.)

Brendon Ogmundson, the BCREA’s chief economist, said mortgage rates have risen at a much faster rate and to a higher level than previously anticipated,.

“Faced with a dramatic shift in the cost of borrowing, housing market activity is likely to fall well below normal over the next year,” he said, in a statement Thursday.

Weaker sales and rising inventory mean that some regions, mainly in more expensive markets, have tipped into buyers’ market territory, added Ogmundson.

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The BCREA report says aggressive monetary tightening in response to the highest inflation in decades “quickly sent demand to the sidelines as five-year mortgage rates more than doubled.”

The report notes both fixed and variable mortgage rates are expected to stay elevated over the next year, and as a result, home sales will finish 2022 much weaker than last year’s record-breaking totals.

However, while the real estate market struggles under the weight of higher interest rates, the report says the downturn is unlikely to be long-lived as B.C.’s strong population growth means there will be no shortage of demand for housing in the province.