Photo: Ahmed Bukhamsin/Flickr
Lower BC home prices will bring some buyers off the sidelines by the midway point of this year, but discounted properties won’t be enough to bring market activity anywhere near previous peaks for years.
That’s according to a forecast from Canadian credit union Central 1 included in its new B.C. Economic Outlook 2019–2021.
“We will see people trying to jump back into the market, but it’s not going to be a big rebound in my view,” Bryan Yu, Central 1’s deputy chief economist and author of the report, tells Livabl.
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In fact, given the slow start to the year, Yu anticipates home sales this year to clock in at around 2018’s total of 78,345 residential units, which was down 24.5 percent from the year before.
“I think we’re going to be very close to what we saw in 2018 unless there is a significant change in policy,” explains Yu.
Extending the maximum amortization period for uninsured mortgages or letting first-time buyers draw more from their Registered Retirement Savings Plans could result in an upwardly revised forecast.
While industry experts have floated both ideas, neither has been implemented by the government, although the federal budget, slated for release March 19th, is expected to contain some form of relief measure for first-time homebuyers.
Barring a major policy change, Yu predicts home sales will increase between 3–4 percent in 2020, with a slightly stronger 2021 to follow.
With benchmark prices in the Lower Mainland off by 8 percent from their peak, Yu doesn’t expect to see prices to recover significantly over the forecast period, nor is a crash anticipated.
In fact, BC’s healthy job market has insulated the market from larger price drops. With a steady employment rate, many homeowners aren’t feeling pressure to accept lower prices. They are able to keep up with mortgage payments and in some cases are pulling their homes off the market altogether, Yu suggests.
Through the forecast period, Yu sees the province’s unemployment rate hovering around 4 percent. While there will be fewer jobs in residential construction amid the housing slowdown, other projects will offset the losses.