BC home sales are forecast to continue to slump, as high mortgage rates put pressure on the housing market through to next year, according to the BC Real Estate Association.

In its forecast released Thursday, the BCREA said residential sales in BC are forecast to decline 34.4% from a record high in 2021 to 81,900 units this year.

In 2023, home sales are forecast to fall an additional 5% to 77,790 units, according to the agency’s report.
The report also predicts that while the average price of a home in the province will increase an anticipated 4.3% this year to $969,400, it will drop to 3.1% in 2023 to $939,500.

In Metro Vancouver, the average price of a home is expected to rise 3.1% to $1,225,000 this year and fall 2.9% to $1,190,000 next year. The numbers are similar for the Fraser Valley, where prices are expected to rise 1.6% to $1,030,000 this year and go down 3.9% next year to $990,000.

On Vancouver Island, average prices are expected to increase 15.4% this year to $768,500 but fall 2.4% next year to $750,000, according to the report. And in the Kamloops region prices are anticipated to rise 16.5% this year to $652,000, and then fall slightly to $650,000 in 2023.

Brendon Ogmundson, the BCREA’s chief economist, said mortgage rates have risen at a much faster rate and to a higher level than previously anticipated.

“Faced with a dramatic shift in the cost of borrowing, housing market activity is likely to fall well below normal over the next year,” he said in a statement Thursday.

Weaker sales and rising inventory mean that some regions, mainly in more expensive markets, have tipped into buyers’ market territory, added Ogmundson.

The BCREA report says aggressive monetary tightening in response to the highest inflation in decades “quickly sent demand to the sidelines as five-year mortgage rates more than doubled.”

The report notes both fixed and variable mortgage rates are expected to stay elevated over the next year, and as a result, home sales will finish 2022 much weaker than last year’s record-breaking totals.

However, while the real estate market struggles under the weight of higher interest rates, the report says the downturn is unlikely to be long-lived as BC’s strong population growth means there will be no shortage of demand for housing in the province.

BC Real Estate Association Forecasts Steep Decline in Home Sales by Tiffany Crawford | Vancouver Sun