Central 1 housing analysis predicts slower market in 2022 but prices continue upward
VANCOUVER - The latest analysis of British Columbia's housing market predicts yo-yo-like activity over the next 18 months as sales spin out this year and curl back in 2022.
The forecast from Central 1, the financial services partner for 250 credit unions across Canada, predicts B.C. home sales will leap 37 per cent this year but slip 21 per cent next year and a further 3.7 per cent in 2023.
Central 1 chief economist Bryan Yu makes the forecast in his latest housing market economic analysis looking at trends through 2023.
Yu says current "red hot" sales are unsustainable and he expects a move toward more normal markets by the second half of this year as the pandemic wanes, but his forecast shows prices won't follow.
After a nearly nine per cent boost in the median resale price of a home in 2020, he predicts a 10 per cent hike this year to $643,000 followed by jumps of 4.2 per cent next year and three per cent in 2023.
Yu says recent federal and provincial budgets indicate governments have few tools to temper the causes of the latest surge, but he predicts the real estate boom will cool with the pandemic.
“The primary drivers of the current boom are low borrowing costs and a shift in household pandemic preferences," Yu says in a statement.
"Both are outside the control of policy-makers and are expected to naturally wane as the pandemic eases."
Higher mortgage rates are also unlikely, Yu says, "given ongoing economic uncertainties, excess economic slack and anchoring of the Bank of Canada’s policy rate at current levels for the coming year."
The number of homes listed for sale is still far below demand and Yu says that explains ongoing price hikes as bidding wars develop among the qualified buyers.
He predicts lack of supply, coupled with long-term population growth in B.C., "will underpin housing market strength over the long term."
This report by The Canadian Press was first published May 6, 2021.