Falling B.C. real estate market projected to bring national home sales down to nearly 10-year low

Falling home sales in B.C. are set to drag national sales down to lows not seen in nearly a decade, according to projections released by the Canadian Real Estate Association (CREA) on Monday.

The association’s latest quarterly forecast projects B.C.’s market to take another 5.2-per-cent hit in 2019, bringing home sales in the province down nearly 30 per cent since 2017, when sales exceeded 100,000 units.

Rising interest rates and strict mortgage stress-test rules are being blamed for the nationwide slump, which is expected to fall 0.5 per cent in 2019 to a nine-year low of 456,200 units sold, after dropping just over 11 per cent in 2018 to 458,200 units, which was already a five-year low.

In the west, the CREA is holding B.C.’s rising foreign buyers tax and oil price declines in Alberta responsible for falling sales there, which are expected to continue well into the new year.

“In the Lower Mainland, we have a higher supply than we’ve seen in three or four years because everyone’s been taking the wait-and-see approach,” said Phil Moore, president of the Real Estate Board of Greater Vancouver.

“The spring is usually a good time for people to buy so we’ll have to wait until then to see if we’re going to see sales numbers like this over the long term.”

The fall across Canada comes despite forecasted gains in Quebec and Ontario next year, the latter of which the CREA says will rebound from slumping sales in 2018 that were largely felt in the Greater Toronto Area and which helped B.C. bring sales down across Canada.

Quebec has been on an upward swing recently, the CREA noted, while also calling sales in New Brunswick and the Maritimes “historically strong.”

The forecast from CREA, which represents 125,000 realtors across the country, also projects the average price for a home will climb yet again next year, this time by 1.7 per cent to $496,800.

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Meanwhile, in a separate release of monthly sales data, CREA reported that home sales across the country fell for a third month in a row in November, as two of what had been the hottest markets — the Greater Vancouver Area and the Greater Toronto Area — reported lower activity.

Canadian home sales through the CREA’s multiple listing service system dropped by 2.3 per cent last month compared with October, as the number of transactions fell in more than half of all local markets.

Sales were down year over year in three-quarters of all local markets, including the Lower Mainland.

CREA says the number of new listings also saw a decline, falling 3.3 per cent in November.

The drop came as the average price for a home sold last month dropped to $488,000, down 2.9 per cent compared with the same month a year ago. Excluding the Greater Vancouver and Greater Toronto areas, the average price of a sold home was just under $378,000.

“The decline in home ownership affordability caused by this year’s new mortgage stress-test remains very much in evidence,” said Gregory Klump, CREA’s chief economist, in a statement.

“Despite supportive economic and demographic fundamentals, national home sales have begun trending lower. While national home sales were anticipated to recover in the wake of a large drop in activity earlier this year due to the introduction of the stress-test, the rebound appears to have run its course.”

—With files from the Canadian Press