VANCOUVER, BRITISH COLUMBIA - (March 27, 2013) - B.C. home sales will gather a bit of strength this fall and hold steady for the rest of the year, but the recovery will be weak and slow, says a new forecast by Central 1 Credit Union.
"The year-long correction in home sales is likely to bottom out in the first quarter of 2013 and we'll see a slow recovery through the rest of the year. But the gains will be modest," cautioned Bryan Yu, economist for Central 1, the trade association and financial facility for credit unions in British Columbia and Ontario.
Coming off a 12-year low with sales of 64,400 homes in 2012, B.C.'s home sales this year will languish at around 64,200 units. The resale housing market continues to be anchored by sluggish employment and population growth as well as tighter mortgage requirements that have pushed some first-time buyers out of the market.
Following last year's 4 per cent decline, Central 1 expects the province's median annual price to slip 5 per cent in 2013 to about $363,000, a level last seen in 2009. Median home prices will decline for the second consecutive year.
In Greater Vancouver, annual resale activity is forecast to decline about 4 per cent this year to 31,500 homes. The median price will dip 6 per cent to $474,000 but is expected to edge higher at the tail-end of 2013. Declines in the MLS(R) and Teranet home price indices, which better measure pure price change, will be less steep than the decline in the median price.
Lower Mainland-Southwest resale transactions, which account for about 60 per cent of provincial sales, are forecast to decline by 4 per cent, despite a second half increase that will extend into 2014. Tightening of mortgage insurance rules has hit this region particularly hard.
House sales in the Okanagan, Kootenay and Vancouver Island remain near recessionary levels due to weak demand and excess inventory, but sales are expected to rise.
"Stopping the price slide will require cuts in the housing supply and an upturn in demand," Yu said. "We are already seeing supply changes with fewer houses coming onto the market as potential sellers choose to wait for better market conditions."
Combined with the start of an uptrend in sales in the latter half 2013, price levels are forecast to stabilize by the third quarter. However, a build-up of new home inventory, particularly in the Lower Mainland, suggests underlying supply will remain elevated, despite owners taking their properties off the market.
Following three annual declines, new home transactions will rise sharply to more than 19,000 units this year as multi-family projects starts from 2010 and 2011 reach completion. New home transactions are forecast to ease in 2014 as housing starts slow in 2013.
Housing starts decelerated in the latter part of 2012 as developers pulled back in light of low resale market activity, declining prices and high resale and new home inventories. Excess supply in the central and southern interior markets and Vancouver Island will constrain new home starts for another year, keeping them near recessionary lows.
Stronger economic conditions should generate increased starts in 2014, but the uptrend will be tempered as interest rates are expected to rise from record lows. Nonetheless, a cyclical upturn in demand is predicted to pull housing starts up 7.3 per cent in 2014 and to above 30,000 units annually in 2015.
The B.C. Housing Forecast 2013-2015 is available here: http://www.central1.com/sites/default/files/uploads/files/analysis_report/report_file/ea%202013_02%20BC.pdf
About Central 1
Central 1 is the central financial facility and trade association for the B.C. and Ontario credit union systems. Central 1 represents a consumer-oriented, full-service retail financial system that serves three million members and holds $86.2 billion in assets and is owned primarily by its member credit unions, 44 in B.C. and 97 in Ontario.
With offices in Vancouver, Mississauga, and Toronto, Central 1 provides a wide range of services such as liquidity management, direct banking, and flexible payment service solutions. For more information, visit www.central1.com.