B.C. real estate sales forecast to drop in 2022, prices to still rise: BCREA
Posted February 2, 2022 7:34 am.
Last Updated February 2, 2022 9:30 am.
Real estate in Metro Vancouver and the Fraser Valley has seen its share of record-breakers over the last few years, but now, a new forecast suggests sales are expected to decline.
According to the B.C. Real Estate Association (BCREA), MLS residential sales are forecast to drop 17 per cent from last year’s record high.
However, the forecast also estimates home prices to rise by 8.5 per cent in 2022, mostly in the first half of the year.
BCREA chief economist Brendon Ogmundson says home sales in 2022 are expected to “moderate from the frenetic pace of 2021,” with declines forecast to continue into 2023, by an additional 12 per cent.
Despite a potential decline in home sales, “sales activity will remain high by historical standards,” he adds.
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Supply remains a major problem in Lower Mainland real estate.
“We started the year at an all-time low in terms of listings. There’s just not a lot of product out there to buy. Demand is still pretty strong and that means a lot of upward pressure on prices,” Ogmundson said.
“We are not at record levels. This isn’t like the start of last year, but sales are still pretty strong,” he said.
It’s for this reason that the association sees strong sales persisting through the first few months of 2022. The severely limited supply will also likely continue to put pressure on home prices across the province.
The Real Estate Board of Greater Vancouver also notes low supply has affected home prices.
“Our listing inventory on MLS® is less than half of what would be optimal to begin the year. As a result, hopeful home buyers have limited choice in the market today. This trend is causing fierce competition for a scarce number of homes for sale, which, in turn, increases prices,” REBGV economist Keith Stewart said.
“With home prices reaching new highs in recent months, the need has never been greater for government to collaborate with the building community to expedite the creation of housing supply and provide more choice for those struggling to buy a home today,” added Stewart.
The REBGV says the composite benchmark price for all residential properties in the Metro Vancouver region rose 18.5 per cent in January 2022 over the same time last year. It increased two per cent compared to December 2021.
The BCREA forecast estimates sales activity will “normalize” in 2023 due to several factors, including the upcoming predicted interest rate hikes by the Bank of Canada.
“The combination of higher fixed rates, higher variable rates should start to soften demand in the market but probably not until second half of this year, probably 2023,” Ogmundson said.
With files from Martin MacMahon
