Real estate association predicts a 5% drop in housing prices in British Columbia by 2023
According to the latest B.C. Real Estate Association forecast, the housing market in British Columbia is unlikely to return to the record-breaking days of 2021 anytime soon.
The BCREA predicts a 34.4 percent drop in residential sales on the Multiple Listing Service from last year to the end of this year, followed by another 11.4 percent drop in 2023.
The association, which represents over 25,000 realtors in the province, also predicts a 5% drop in the provincial average home price next year.
“I believe 2023 will be a difficult year for the housing market,” BCREA chief economist Brendon Ogmundson said on CKNW’s Jill Bennett Show.
“Interest rates are the highest we’ve seen since 2007, and the economy is likely to slow, so those factors point to continued slow activity in the housing market.”
According to the fourth quarter update released on Tuesday, the Fraser Valley is expected to experience the largest average price drop on the Multiple Listing Service in 2023, which will be about 7.8%. Chilliwack and the surrounding areas are expected to experience a 6.2% decline.
According to the BCREA, Greater Vancouver could see an average price drop of 5.2%, while Victoria could see a drop of 4.3%. Average prices in the Kootenay region are expected to fall by 4.3%, while prices in the Okanagan are expected to fall by 4.9%.
“Home prices in the province peaked in February 2022, depending on where you look.” “They fell for about four or five months and are now really leveling out,” Ogmundson said.
“I believe where we are now in terms of prices is pretty much in line with our forecast for 2023.”
Across the province, sales have continued to fall as predicted, with approximately 30,000 listings currently on the market, according to the economist. He believes the province should have at least 45,000 listings in order to be considered “balanced” in the long run.
“We’re just not seeing inventory gains like we’ve seen in previous slowdowns… that’s why prices are levelling out.”
The greatest decreases are expected in Chilliwack and District, the Fraser Valley, Greater Vancouver, the Okanagan, and Victoria by the end of the year, at 47.9 percent, 41.6 percent, 33.2 percent, 33.1 percent, and 31.7 percent, 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,” Ogmundson said.
The BCREA forecast is similar to that of the Canada Mortgage and Housing Corporation, which predicts a steeper decline in the Canadian housing market due to higher-than-expected inflation and interest rate hikes this year. In an updated housing outlook last month, the Crown corporation stated that the national average home price in Canada will fall 14.3 percent by the second quarter of 2023, compared to the historical peak of $770,812 seen in the first quarter of this year.
Statistics Canada’s latest inflation reading showed that prices rose at an annual rate of 7.0 percent in August, with the “core” metrics remaining hot. To keep inflation under control, the Bank of Canada has stated that its benchmark rate will need to rise further before the end of the year.
The central bank’s policy rate is expected to reach 4.0 percent by the end of the year, up from 0.25 percent at the start of 2022, according to CMHC.
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