British Columbia’s housing market is unlikely to bounce back to the record-breaking days of 2021 anytime soon, according to the latest forecast from the B.C. Real Estate Association.
The BCREA predicts a residential sales slump of 34.4 per cent on the Multiple Listing Service from last year to the end of this year and an additional drop of 11.4 per cent in 2023.
The association, which represents more than 25,000 realtors in the province, also forecasts a decrease in the provincial average home price of about five per cent next year.
“I think 2023 is going to be a challenging year for the housing market,” BCREA chief economist Brendon Ogmundson told CKNW’s Jill Bennett Show.
“Interest rates are the highest we’ve seen since 2007 and we’re probably going to see the economy slowing, so those factors mean continued slow activity in the housing market.”
The Fraser Valley is forecast to see the greatest average price drop on the Multiple Listing Service in 2023 — about 7.8 per cent, according to the fourth quarter update released on Tuesday. Chilliwack and surrounding communities follow with an expected decrease of 6.2 per cent.
Greater Vancouver could see an average price drop of 5.2 per cent, the BCREA said, while Victoria could see a decline of 4.3 per cent. The Kootenay region is also expected to see a 4.3 per cent drop, while average prices in the Okanagan could decrease by 4.9 per cent.
“Depending on where you’re looking across the province, home prices peaked in February of 2022. They fell for about four or five months and right now are really levelling out,” said Ogmundson.
“I think where we are right now on prices is pretty much what our forecast is for 2023.”
Across the province, sales have continued their predicted decline and about 30,000 listings are currently on the market, the economist added. He said the province ought to have about 45,000 listings or more for to be considered “in-balance” long-term.
“We’re just not seeing inventory gains like we’ve seen in previous slow-downs … that’s why we’re seeing prices kind of level out.”
By the end of the year, the greatest decreases are forecast in Chilliwack and District, the Fraser Valley, Greater Vancouver, the Okanagan and Victoria, at 47.9 per cent, 41.6 per cent, 33.2 per cent, 33.1 per cent, and 31.7 per cent, respectively.
“Things are very slow and I think we’re going to carry that into next year — hopefully things will pick up in the second half of next year — but generally we’re going to have very slow market activity for the next 12 months,” Ogmundson said.
The BCREA forecast echoes that of the Canada Mortgage and Housing Corp., which is also calling for a steeper decline in the Canadian housing market amid higher-than-expected inflation and interest rate hikes so far this year.
Last month, the Crown corporation said in an updated housing outlook it believes the national average home price in Canada will fall 14.3 per cent by the second quarter of 2023, as compared with the historical peak of $770,812 seen in the first quarter of this year.
The latest inflation reading from Statistics Canada showed prices rose at an annual clip of 7.0 per cent in August, with the “core” metrics staying hot. The Bank of Canada has made it clear since that its benchmark rate will need to rise higher still before the end of the year to tame inflation.
CMHC expects the central bank’s policy rate to hit 4.0 per cent by year’s end, up from 0.25 per cent at the start of 2022.
— with files from Craig Lord