B.C. real estate sales to heat up by end of 2024: BCREA

While the start of 2024 has seen a soft real estate market, the BC Real Estate Association (BCREA) believes home sales will pick up by the end of the year.

In its latest economic outlook, released Thursday morning, the BCREA says all eyes are on the Bank of Canada’s interest rates, and when the country will begin to see those drop.

“It appears that buyer confidence is hinging on seeing the Bank of Canada lower its policy rate returning to the market. BC home sales are tracking at a 65,000 unit annual rate through the first quarter of this year, essentially the same languid pace as the first quarter of last year,” the BCREA said.

“This is even though Canadian five-year fixed mortgage rates have already plummeted to start the year, falling from over 6 per cent in late 2023 to 5.09 per cent in the first quarter,” the association added.

“Therefore, the biggest question for the provincial housing market is when the Bank of Canada will lower its policy rate and by how much. The answer to that question depends on how the Canadian economy and, crucially, Canadian inflation will evolve in the coming months.”

The BCREA says the Lower Mainland tends to be “the engine room” of the province’s economy, balancing out the rest of B.C.’s “underperformance.”

It notes that deteriorating affordability in Greater Vancouver will remain a significant concern, however, it does expect sales to pick up later this year.

“A combination of falling fixed mortgage rates and strong population growth is forecast to drive sales higher this year and next. After a very slow 2023, we forecast sales in Greater Vancouver will rise 7.3 per cent this year, while the Fraser Valley will see sales rise 7.4 per cent, and Chilliwack sales are expected to increase 8.1 per cent.”

The BCREA says it expects price growth in the region to “mute” as listings are expected to normalize this year after a 20-year low in 2023.

All markets in the Lower Mainland should see a one to two per cent increase, the BCREA says.

“However, the full impact of falling interest rates and a recovering economy is expected to buoy prices in the more affordable areas of the Lower Mainland in 2025, with prices rising 4 per cent or more in Chilliwack and the Fraser Valley.”

The BCREA says it believes the BoC will begin to lower interest rates in June, as the economy signals “weak economic growth, a slowing labour market, and a downward trend in inflation.”

“We continue to forecast that the Bank will cut its policy rate starting in June, with as much as 100 basis points of cuts by the end of 2024. As a result, we expect home sales to pick up in the second half of the year ultimately rising 6.9 per cent over last year and heading into 2025 with strong momentum.”