Housing sales in the Fraser Valley will fall more than 30 per cent this year – most in the province - compared to 2021 and Valley price increases will flatline by 2023, according to the BC Real Estate Association (BCREA).
The average price forecast may prove optimistic. Recent listings show price reductions ranging from $10,000 to $300,000 on more than 300 Fraser Valley condos, townhomes and detached houses.
No area of British Columbia will be immune to the sales downturn and price corrections, according to the BCREA’s 2022 Second Quarter Housing Forecast, released May 31.
Multiple Listing Service residential sales in the province are forecast to decline 22 per cent from a record high 2021 to 97,240 units this year. In 2023, MLS residential sales are forecast to fall an additional 12.4 per cent to 85,150 units, the forecasts states.
“After a strong first quarter, B.C. markets are now adjusting to a much different interest rate environment,” said BCREA chief economist Brendon Ogmundson. “With mortgage rates surpassing 4 per cent for the first time in over a decade, the housing market over the next two years may have very little resemblance to the housing market of the past year.”
BCREA anticipates “that prices may be somewhat volatile but will ultimately flatten out through 2023.”
The biggest sales declines this year are forecast in the Fraser Valley, down 30.3 per cent from a year earlier, and Chilliwack, with a 27.1 per cent decline. Greater Vancouver housing sales will drop 22 per cent in 2022 from a year earlier, which matches the sales forecast for the province, according to the BCREA.
The BCREA predicts that home prices will increase 11.5 per cent this year compared to 2021, but that now appears optimistic based on recent listings information, particularly in the Lower Mainland.
On May 31, real estate listing portal ojohome posted more than 300 homes in Surrey where the listing price had been reduced. An example is a 7-bedroom luxury detached house on 62 Avenue, Surrey, where the asking price was cut by $301,000 to $1.99 million after 13 days on the market.
The Royal Bank of Canada is forecasting that B.C. will see the largest price reductions in Canada next year, due to rising interest rates.
Most analysts now expect the Bank of Canada to increase its key overnight lending rate with consecutive rate hikes of 50 basis points on June 1 and in July, which would bring the key rate from 0.25 per cent to 2 per cent in a matter of four months.
