Real estate

Home prices in British Columbia will fall about 5% in 2023, real estate association says

According to the latest forecast from the BC Real Estate Association, the British Columbia housing market is not expected to rebound to the record days of 2021 anytime soon.

BCREA predicts a 34.4% drop in residential sales on the multiple listing service from last year to the end of this year and a further drop of 11.4% in 2023.

The association, which represents more than 25,000 real estate agents in the province, also predicts the provincial average home price will drop about 5% next year.

“I think 2023 will be a tough year for the housing market,” BCREA chief economist Brendon Ogmundson told CKNW’s Jill Bennett Show.

“Interest rates are the highest we’ve seen since 2007 and we’re likely to see the economy slow, so these factors mean continued slow activity in the housing market.”

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The Fraser Valley is expected to experience the largest average price drop on multiple listing service in 2023 – about 7.8%, according to the fourth quarter update released Tuesday. Chilliwack and surrounding communities follow with a forecast decline of 6.2%.

Greater Vancouver could see an average price drop of 5.2%, according to BCREA, while Victoria could see a drop of 4.3%. The Kootenay region is also expected to see a decline of 4.3%, while average prices in the Okanagan could decrease by 4.9%.

“Depending on where you look in the province, house prices peaked in February 2022. They’ve been falling for about four or five months and are really leveling off right now,” Ogmundson said.

“I think where we are now on prices is roughly in line with our 2023 forecast.”

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Across the province, sales continued their expected decline and about 30,000 listings are currently on the market, the economist added. He said the province would need to have about 45,000 or more enrollments to be considered “in balance” over the long term.

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“We’re just not seeing inventory gains like we’ve seen in previous downturns…that’s why we’re seeing prices kind of stabilize.”

By the end of the year, the largest declines are expected in Chilliwack and District, the Fraser Valley, Greater Vancouver, the Okanagan and Victoria, at 47.9%, 41.6%, 33.2 %, 33.1% and 31.7%. , respectively.

“Things are going very slowly and I think we’re going to continue that until next year – hopefully things pick up in the second half of next year – but in general we’re going to have very slow for the next 12 months,” Ogmundson said.

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BCREA’s forecast echoes that of the Canada Mortgage and Housing Corporation, which also predicts a steeper decline in the Canadian housing market amid higher-than-expected inflation and interest rate hikes. interest so far this year.

Last month, the crown corporation said in a housing outlook update that it estimates the average national house price in Canada will fall 14.3% by the second quarter of 2023, compared to to the all-time high of $770,812 recorded in the first quarter of this year.

Statistics Canada’s latest inflation reading showed prices rose at an annual rate of 7.0% in August, with “basic” measures remaining elevated. The Bank of Canada has since specified that its reference rate will have to rise further before the end of the year to control inflation.

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CMHC expects the central bank’s policy rate to reach 4.0% by the end of the year, up from 0.25% at the start of 2022.

— with files by Craig Lord

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