Housing forecast predicts sales in B.C. to go down again

A new housing forecast released by a credit union is predicting home sales in British Columbia to continue their drop before a change in the market that will see prices rise again.

Central 1 chief economist Bryan Yu says he anticipates B.C.’s 2023 home-buying market will be similar to last year, with sales continuing to go down.

The group expects high-interest rates to continue, leaving nervous and prospective homebuyers in a challenging place with the cost of borrowing not expected to fall anytime soon.

“British Columbia’s housing market remains weak into early 2023 as higher interest rates continue to crush transaction volume after a record pace earlier in the pandemic. B.C.’s downturn is consistent with the broad national picture,” the group said in a news release.

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This year, he expects sales will fall by over 15 per cent, following a 28 per cent decline in 2022.

“This annual decline masks a deeper peak-to-trough retrenchment of about 20 per cent with more severe declines among markets in the Fraser Valley. High-flying markets during the pandemic that benefitted from mortgage rate affordability are rolling back,” Yu explained.

Although there may be a slight dip in prices this year, he says prices will likely jump back up.

“Home prices are experiencing a necessary correction following the pandemic surge. At the same time, conditions have remained surprisingly firm as a result of the strong economic conditions and relatively low housing supply,” it added.

In 2024, Yu says British Columbians can expect to see a change in the market.

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Yu is forecasting sales will start to jump next year by over 10.5 per cent, and then another jump in 2025 by another 12.5 per cent.

As the sales go up, he says the prices will also go up as the demand grows and people bid for the best places — making it even harder for homebuyers.

“Despite the drag from mortgage rates, a tight labour market and immigration are still supportive of demand. Population growth has surged and is expected to remain well above average over the coming years and drive both homeownership and rental market demand,” Yu said.

On top of this, he adds there has also been a slow-down in building houses, which will only further limit the number of homes on the market.

“Renters will face further challenges as fewer individuals are able to make the jump to homeownership and population-driven demand remains strong. Provincial rent control regulations limit rent growth for existing tenants, but new renters and those looking to move will face high turnover rent,” the group explained.

He adds that the turnover rents will also rise at a faster pace.