According to the latest forecasts, residential sales are expected to recover in 2020. All regions in B.C. saw lower home sales in 2019.
First of all, BCREA forecasted that every board will see considerable sales jumps in 2020. A province-wide increase of nearly 11 per cent is expected. Which would mean the sale of 82,700 homes. Consequently, the association said it would be just below the 10-year annual average.
“B.C. markets are showing signs of recovery after nearly a year and a half of policy-induced declines,” said Brendon Ogmundson, BCREA’s deputy chief economist. “We expect that recovery to continue into next year, with home sales normalizing around long-term averages.”
BCREA said the Fraser Valley is expected to outperform the previous two years of home re-sales. There is a forecast rise in 2020 of 12.4 per cent year over year.
Average home prices are expected to improve in 2020 over those achieved in 2019. Therefore, reflected in every B.C. real estate board jurisdiction. The overall B.C. average sale price is forecast to rise by 3.3 per cent.
B.C. housing market to stabilize in 2020, accelerate in 2021: federal report
After two years of declines in the Metro Vancouver housing market, experts at Canada Mortgage and Housing Corporation are predicting a rebound over the next two years.
British Columbia’s housing slowdown bottoming out
According to a new housing market outlook by the Canada Mortgage and Housing Corporation (CMHC), forecasting housing starts, sales and prices in B.C., the market will begin to stabilize next year. It is in contrast, expected to accelerate in 2021.
As a result of favorable economic and demographic conditions in the province, it will drive new housing starts. The agency says there 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 in 2019. While 2020 could see a low of 40,700 starts and a high of 44,700. Followed by a low of 41,900 and a high of 46,900 in 2021.
Stronger growth in B.C.’s Residential Sales
CMHC projects that B.C. will see stronger growth in residential sales 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.”
In 2020, CMHC is projecting between 74,600 and 84,400 residential sales, climbing to between 79,800 and 90,800 in 2021.
Second-highest rate of price growth
“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. 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. It is expected to climb three percent, $675,100 to $749,500 in 2020. $718,400 to $801,600 in 2021.
The agency projects five-year mortgage rates to climb from about 5.2 per cent this year to 5.6 per cent by 2021.
Near recession-level housing demand
The BCREA has been a frequent critic of the B-20 mortgage-stress test. The B-20 stress test was ordered by the Office of the Superintendent of Financial Institutions at the start of last year.
Unfortunately, it requires that lenders qualify prospective borrowers only if they’re able to repay mortgages at an interest rate of 200 basis points above the contracted amount.
“The erosion of affordability caused by the B-20 stress test has created near recession-level housing demand despite the province boasting the lowest unemployment rates in a decade,” BCREA chief economist Cameron Muir said in April.
In conclusion, Ogmundson anticipates that there will be a 2.4 percent decline in the MLS benchmark on a year-over-year basis across the province in 2019. This will be followed by a three percent rise in 2020 to $718,000.