The British Columbia Real Estate Association (BCREA) has now released its 2021 Second Quarter Housing Forecast.
Multiple Listing Service® (MLS®) residential sales in the province are forecast to rise 33.6 per cent to 125,600 units this year, after recording 94,013 sales in 2020. In 2022, MLS® residential sales are forecast to pull back 20.3 per cent to 100,150 units.
“Home sales across the province are on pace to shatter previous records,” said Brendon Ogmundson, BCREA Chief Economist.
“However, there are early signs that markets are calming from the frenetic pace of recent months and could balance out over the second half of this year.”
"The trajectory of home sales in the second half of 2021 and for 2022 will be highly dependent on the evolution of Canadian mortgage rates. Fixed mortgage rates have started to rise from a record-low average of 1.8 per cent to just over 2 per cent and could rise further as the Bank of Canada tapers its bond purchases through 2021."
"Additionally,the recent change to the B-20 mortgage stress test, which now sets a minimum qualifying rate of 5.25 per cent, may have some moderatiang impact on demand, though limited as it only lowers a buyer’s purchasing power by about 4 per cent compared to the existing regulation. "
"Those measures, along with fading momentum after a frenetic pace of sales, mean home sales will likely slow toward the second half of this year. However, even factoring in a second-half slowdown, provincial unit sales are still projected to reach a record 125,600 units in 2021. A slowdown in sales from the current frenzied pace will help supply catch up, though it will take a significant period before markets return to balance. "
"The supply shock experienced by BC markets during the initial phase of the COVID-19 pandemic and a sustained listings drought continues to drive price increases in 2021. This is particularly true in smaller markets, many of which have seen inventories of homes for sale fall to all-time lows. "
"Those tight market conditions, paired with a shift in the composition of sales toward single-detached homes, will translate to an outsized gain in the provincial average price in 2021, which is forecast to rise 14.3 percent to 893,800. "
Summary for the Thompson-Okanagan Area ( Central Okanagan & Kamloops)
Housing markets across the Thompson-Okanagan region are seeing an unprecedented level of activity as the COVID-19 pandemic accelerated retirement plans and made remote working a long-term possibility. As retirees and young workers compete for limited space throughout the Interior, the resulting surge in demand has put significant pressure on the limited inventory of homes for sale in the region, driving prices higher.
Strong interprovincial migration paired with increased migration from the Lower Mainland will continue to propel demand in the Thompson-Okanagan region over the next year. While the regional labour market has largely recovered from the initial shock of COVID-19. Employment in the Thompson-Okanagan is back to its pre-COVID-19 level, but the region’s vital tourism sector will take longer to recover. However, with the provincial vaccination program ramping up considerably, the timeline for a return to normal is improving. Those factors and continued low mortgage rates have MLS® unit sales on a record pace through the region so far in 2021. Although we expect some moderation in sales to occur in the second half of the year, we are forecasting that home sales will reach a record 15,000 units this year in the Okanagan. Kamloops home sales are forecast to increase by 28.1 per cent this year to a record 3,900 units.
The extraordinary recovery in home sales activity in the Thompson-Okanagan has not been met with a similar increase in supply. The inventory of homes for sale was already low as the COVID-19 pandemic began, and the resulting measures to mitigate the spread of the virus prompted a further pull-back in listings activity. Consequently, as demand recovered, total active listings have become severely depleted with record-low levels across the Okanagan and Kamloops. This scarcity means that MLS® average prices have been rising considerably as buyers enter the frenzied competition. These outsized increases in average prices have been skewed higher still by a shift in buyers’ preferences toward extra space, meaning more expensive single-detached homes on large properties are a higher share of total sales. Even still, price measures that adjust for sales composition, like the HPI for the Okanagan Valley, are showing home prices rising 15 percent compared to last year.
With the level of supply so low and home sales expected to remain at a record pace for the next several months, price pressure across the Thompson-Okanagan region is unlikely to be relieved anytime soon. We are forecasting the MLS® average price will rise 15 percent in the Okanagan and 17.3 percent in Kamloops in 2021.
MLS® Average Price. 2020 % 2021F % 2022F %
Assoc of Interior REALTORS® $ 588,195 16.1 $ 676,600 15 $ 696,000 2.9
Single Detached $ 730,629 16. $ 865,000 18.4 $ 882,100 2
Apartment $ 340,544 2.2 $ 385,000 13.1 $ 393,900 2.3
Townhouse $ 516,037 9.6 $ 604,000 17 $ 623,700 3.3
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