BC HOME SALES TO REACH 100,000 UNITS IN 2015

Multiple Listing Service® (MLS®) residential sales in the province are expected to reach 100,000 units in 2015 for only the third time on record. This will also be the first time since 2007 that BC home sales surpass the ten year average. The surge in housing demand is broad-based across most BC regions, with nine of 11 boards expecting an increase in unit sales ranging from 10 to 26 per cent over 2014 levels. A record 106,300 homes traded hands on the BC MLS® during 2005.

The housing market is being underpinned by strong economic growth, improving labour markets, population growth and persistently low mortgage interest rates. British Columbia can boast the best performing economy in the country this year. Real GDP growth of 2.5 per cent this year and a further 2.7 per cent in 2016, along with the attendant employment and wage growth, is strengthening consumer confidence. Indeed, retail sales are growing at nearly an 8 per cent annual pace in the province, with Metro Vancouver shoppers consuming at an even higher rate. While lower oil prices did not translate into significant savings at the pump, the falling loonie against the greenback has put tourism back on the front burner in BC, with international visitors and local “stay-cations” creating additional revenue for BC businesses. In addition, vacation and secondary home purchases are more likely to occur north of the US border this year. Even Albertans, although injured by the melancholy of the oil patch, are still purchasing BC properties at the same rate as a year ago.

Mortgage interest rates continue to surprise on the down side, contributing to housing affordability. While the national economy struggles with near recession-like conditions, British Columbian households are arguably in the best position to benefit from monetary stimulus. Low mortgage interest rates are expected to remain entrenched through the balance of this year and only a modest uptick appears on the 2016 horizon. Market conditions are variable around the province; however, most markets are tightening as elevated housing demand draws down inventory levels. The south coast markets, as well as the Okanagan, are now exhibiting sellers’ market characteristics, with home prices rising above the rate of the consumer price index.

The average MLS® residential price in the province is forecast to increase 10.1 per cent to $626,000 this year and a further 2.5 per cent to $641,600 in 2016. The waning of home inventories in both the new and resale market is signaling home builders to continue ramping up production. In addition, a pullback of British Columbians moving to other provinces, especially Alberta, has pushed net interprovincial migration back into the black. As a result, net migration from all sources is expected to average 46,000 individuals per year through 2016.

After rising nearly 5 per cent to over 28,000 units in 2014, BC housing starts are forecast to increase a further 4.5 per cent this year to over 29,600 units.

Copyright British Columbia Real Estate Association. Reprinted with permission