If you plan on buying a property in B.C. this year, then you’ll be happy to learn that the B.C. Real Estate Association (BCREA) just released its first quarterly Housing Forecast Update for 2019, and things look good. Economists at BCREA are predicting a slow, yet visible recovery for B.C.’s real estate market in 2019.
According to the BCREA report, the total number of residential sales in the province are expected to hover around 80,000 units in 2019. This may seem like a drop in sales activity, compared to sales activity between 2015 and 2017, but this anticipated sales volume represents a 2.1% increase over sales reported in 2018. And it’s this optimism that is prompting BCREA officials to anticipate a modest recovery in real estate sales activity in 2019.
A booming economy in B.C. adds to the real estate recovery
Though the effects of the B20 stress test — known as the mortgage stress test — continues to be a limiting factor amongst mortgage buyers, B.C.’s economy continues to boom, allowing for a modest return in sales activity within the province’s real estate market. As the BCREA forecast points out: “After five consecutive years of above-trend economic growth, the province now boasts the lowest unemployment rate in the country.”
A decrease in the unemployment rate usually translates into an increase in real estate demand and a potential to see the real estate recovery that is predicted. But as a number of key industries are now near full employment, it would be unreasonable to expect job growth to grow significantly.
But the B20 stress test is not the only factor preventing prices from rising. The province still has an abundance of housing inventory — and this build-up on the supply side is expected to continue throughout 2019, which prevents prices from climbing.
Less red tape allows for more building permits and more housing inventory
The B.C. government has placed a heavy emphasis on eliminating red tape that slows down approval of new building permits. It has unveiled a number of programs to increase housing inventory.
And while BCREA predicts housing starts to decrease by 14.6% in 2019 on a year-over-year basis, and by 14% in 2020, right now there is a record-breaking number of new homes under construction. BCREA claims this wave of inventory should, at least partially, offset any supply shortages that could happen in the near future.
The B20 stress test and the foreign investor and speculator taxes also had a negative impact on the total number of home renovations. Most major renos occur shortly after the purchase of a home, but higher purchasing costs meant that buyers had less cash to spend on home updates and renovations. This is expected to continue all through 2019. As a result, BCREA forecasts Real GDP growth in the province to slow down to 2.6% this year. These economic policies have also caused a shift in most B.C. markets. They have moved from seller’s markets into buyer’s and balanced markets. The good news for home buyers is that home prices will stay relatively unchanged, with an expected rise of only 0.5% this year and 2.9% in 2020.