Expect sales volume to ease, prices to increase more slowly
The British Columbia Real Estate Association (BCREA) has released its semi-yearly housing market forecast for the province. Despite economic troubles elsewhere in the country, B.C.’s economy is expected to remain strong and to outpace many other areas in Canada in terms of growth through 2009.
Provincial sales will dip to 93,800 in 2008 (a 9% drop) and 92,000 in 2009 (a further 2% drop). Eroding affordability and weaker economic growth are cited as reasons for the expected decline. Still, interprovincial and international migration will continue to underpin demand for housing in B.C., with individuals drawn to our province by robust job growth, climate, and amenities. The average residential price in B.C. is forecast ro increase 9 per cent to $479,000 this year, and a futher 4 per cent to $499,000 in 2009.
Regionally, BCREA predicts that Victoria MLS® sales will fall to 7800 units, a decline of 7 per cent from last year’s second-highest-on-record 8403 sales. Sales will remain above the ten-year average of 6750 units. The report notes that 12,000 jobs were created in the Victoria area in the first quarter of 2008. As I’ve said before, as our area diversifies its economy beyond government, military, and tourism, more and more people will continue to move here, attracted by competitive salaries and our Island way of life. The report forecasts an overall 10 per cent increase in prices this year, but notes that most of that growth has already occurred, and to expect single-digit growth for the rest of the year.
I think the most interesting prediction in the report is with housing starts. The report forecasts overall housing starts to drop 9 per cent this year (after a 6 per cent decline in 2007). Citing tight construction labour markets, higher credit costs, and trepidation on the part of developers, the BCREA feels that current new home inventories will be depleted, resulting in a higher level of construction activity in 2009 and 2010.
One thing to remember is that the BCREA’s report is based solely on MLS® data, and would not include sales of new homes by the developer’s private sales team, for example.
What do you think about the report? Comment below!
The full BCREA report can be found here.