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THU JANUARY 10, 2019
REAL ESTATE OUTLOOK 2
018 was an extremely taxing – quite literally – year for B.C. real estate, in which taxation measures and other government interventions slowed down market activity considerably and creating a softening in average sale prices. So what will the forthcoming year hold? A further sales slowdown, a plateau, or a recovery? Falling or rising home prices? As ever, industry organizations, brokerages and economists all have their opinions – which can differ widely, but often overlap. Here’s a look at a range of forecasts in key areas of B.C.’s real estate market.
Sales activity According to Central 1 Credit Union’s B.C. forecast, the provincial housing market is expected to remain “subdued” over the next three years. However, that doesn’t mean sales will fall further, said the credit union. Although they are expected to stay much lower than 2015-2017 levels, B.C. resale transactions are predicted to rise year-over-year by 0.6 per cent in 2019, 3.8 per cent in 2020 and 2.2 per cent in 2021. “In order for there to be a deeper crash, there would need to be a global
economic recession,” said Bryan Yu, Central 1’s chief economist. “That’s not something we have in our forecast right now.” CMHC’s Housing Market Outlook largely agreed, predicting, “Overall, we anticipate MLS sales to trough in 2018 and see some recovery in 2019-20.” The Canadian Real Estate Association’s forecast was much less optimistic, saying that B.C. home resale transactions would drop by a further 5.2 per cent in 2019. The B.C. Real Estate Association went in the other direction with its sales predictions, taking a bullish stance. It said in November that B.C. home sales in 2018 would total around 80,000 by the end of December, down 23 per cent from the previous year, but would then rise in 2019 by around 12 per cent to total 89,500 units.
Home prices The Canadian Real Estate Association is pegging the average sale price of a B.C. home in 2019 at $720,000 – a rise of 0.9 per cent over 2018’s figure. That’s following a yearover-year increase of 0.6 per cent in 2018 to $713,700, despite the slow sales activity.
Central 1’s forecast looked at median prices rather than averages, and said it expected the median provincial resale price to fall two per cent (or around $10,000) in 2019 to $520,000 but then see a slight increase in 2020. The credit union stressed in its forecast that no price crash was forecast. For Metro Vancouver, Central 1’s Yu said, “The expectation is that we will see about a few per cent dropoff, which will bring us down to $1.2 million. It’s still very high for a lot of households, for many it will be out of reach. But we will also see a decline in the condo market, which is clearly looking at higher supply levels.”
The RE/MAX 2019 Housing Market Outlook similarly predicted that Metro Vancouver’s average home sale price would see a drop of three per cent in 2019 compared with 2018, due to the “low absorption rate.” A three per cent decline in 2019 would take the average price down to $1,017,881, which is slightly lower than 2017’s average price but still well above 2016. The Royal LePage Market Survey Forecast predicted that the median aggregate price of a home in Greater Vancouver would remain fairly level next year, rising a modest 0.6 per cent in 2019 compared with 2018, to $1,291,144.
Housing construction Central 1ʼs Bryan Yu said that builders have noted the market slowdown and the result is a sharp drop in housing starts since September 2018, especially in urban areas. Starts in B.C. are predicted to fall to about 32,000 units in each of the next two years after nearly 40,000 units in 2018 and 43,500 in 2017. However, starts are predicted to rise in northern B.C. as demand is boosted by a liquefied natural gas project and associated pipelines. Central 1 says housing markets in the north are forecast to outperform those in southern B.C. CMHCʼs forecast for B.C. agrees with that of Central 1. Following a few years of frenzied construction activity, it said, “Housing starts are anticipated to soften going into 2019 through to 2020, moving back towards the 10-year average pace of new construction.”
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