British Columbia’s housing slowdown may be bottoming out.
That’s according to a new housing market outlook by the Canada Mortgage and Housing Corporation (CMHC), which forecasts housing starts, sales and prices in B.C. will begin to stabilize next year, before accelerating in 2021.
The agency says favorable economic and demographic conditions in the province will drive new housing starts, which it says will be “relatively strong growth … when compared to other regions.”
After close to 41,000 starts in 2018, CMHC is estimating a low of 39,300 and a high of 42,300 starts this year. Next year could see a low of 40,700 starts and a high of 44,700, followed by a low of 41,900 in 2021 and a high of 46,900.
As far as sales go, CMHC projects that B.C. will also see stronger growth compared to other parts of Canada, “consistent with growth in real disposable income that is forecast to exceed the national average over this time period.”
According to the agency, sales across B.C. dropped from over 103,000 in 2017 to about 78,000 in 2018, with an anticipated dip in 2019 to between 62,000 and about 69,000.
But in 2020, CMHC is projecting between 74,600 and 84,400 home sales, climbing to between 79,800 and 90,800 in 2021.
Along with an uptick in sales, CMHC is forecasting prices will begin to climb again next year.
“British Columbia will see modest recovery in price growth in 2020 from a decline in 2019, but rise to the second-highest rate of price growth after Ontario in 2021,” states the report.
Despite an anticipated hike in prices, the agency says concerns around overvaluation in the region have lessened, as growth in market fundamentals over the same period could be enough to support the uptick in sales and prices.
The CMHC’s forecast projects a benchmark B.C. price range of $656,600 to $723,400 for 2019, climbing to $675,100 to $749,500 in 2020, and $718,400 to $801,600.
The agency projects five-year mortgage rates to climb from about 5.2 per cent this year to 5.6 per cent by 2021.
It says risks remain for the market, including global trade tensions and high household debt which could be vulnerable to interest rate hikes.