Multiple Listing Service® (MLS®) residential sales in the province are forecast to increase 4 per cent to 77,500 units this year. This reflects a slight downgrade from the second quarter forecast of 78,200 unit sales.
Slower than expected economic growth will temper wage and job growth in BC both this year and next, keeping housing demand below long-term averages. However, recent volatility in global financial markets is keeping investors well anchored in bonds. As a result, mortgage interest rates will not only stay lower longer than previously anticipated, they may also decline in the short term. We expect the 5-year fixed mortgage rate to continue acting as a stimulus for housing demand, ranging between a relatively modest 5.19 and 5.60 per cent through 2012.
While BC home sales are forecast to increase this year and next, they are expected to remain well below their 10-year average of 87,600 unit sales.
Moderate consumer demand and a larger than ideal new home inventory is expected to keep housing starts relatively unchanged this year, albeit down by 1 per cent to 26,250 units. In the existing home market, inventories also remain relatively high compared to pre-recession levels. As a result, market conditions are expected to range between buyers and balanced through 2012, leading to relatively stable home prices in most BC markets.
The average home price in BC increased dramatically over the first two quarters, leading to speculation that the market was over-heating. However, upward skewing of average price data was the result of a change in regional demand patterns and a shift in the mix of home types sold rather than a harbinger of a housing market correction. Indeed, recent data points to a return to more typical regional sales patterns, which is reflected in our average price forecast. The average annual BC MLS® residential price is forecast to increase 11 per cent to $559,800 this year, before edging back 2.5 per cent to $546,000 in 2012. However, the price of a typical home in BC is expected to remain relatively unchanged through the balance of this year and through 2012.
If you have any questions on this news release from the BCREA or if you would like a complementary Comparative Market Analysis of your home, please feel free to contact me on (604) 781-5692.