BC home sales in 2020 will more than make up for an expected decline this year, according to the British Columbia Real Estate Association’s new forecast for housing activity in the province.
BCREA predicts 71,400 homes will change hands on the resale market this year, down 9 percent from 2018’s tally.
However, in 2020 BCREA expects residential transactions to total 81,700, rebounding by 14 percent.
Housing Market News Alerts
Sign up now for news alerts on the Vancouver housing market
“The shock to affordability from restrictive mortgage policies, especially the B20 stress test, will continue to limit housing demand in the province this year,” says Cameron Muir, BCREA’s chief economist.
With Guideline B-20, policymakers introduced in January 2018 a so-called “stress test” for uninsured mortgage applicants.
Through the test, homebuyers who put forward a downpayment of at least 20 percent (the minimum for an uninsured mortgage) need to qualify at a rate that is 2 percentage points higher than what the lender is offering.
Similar testing for insured mortgages was established in 2016.
Numerous voices in the industry say cooling in housing markets across the country is a byproduct of the regulations.
Muir also suggests the BC market is still reeling from the most recent mortgage-rule change, he anticipates demand will overcome the hurdle in 2020.
“[A] relatively strong economy and favourable demographics are likely creating pent-up demand in the housing market.”
BCREA expects the average price of a BC home to sink 2 percent to $697,000 this year.
But as with sales activity, BCREA forecasts recovery in 2020, with the average price set to climb to $726,000, representing a year-over-year increase of 4 percent.
“The inventory of homes for sale has climbed out of a cyclical low, leading to balanced market conditions in many areas and buyer’s market conditions in some communities and across some products types,” the forecast reads.