Home sales in British Columbia are expected to hit a new record this year as soaring demand pushes the cost of a home to a new high. That’s the forecast from the British Columbia Real Estate Association on Thursday, which predicts residential sales to climb 12.3 per cent in 2016.
Here are five things of note from the BCREA forecast:
1. B.C. residential sales are forecast to reach more than 115,000 units this year, which is well above the 10-year average of 83,000. The previous record was in 2005, when just over 106,000 units were sold. Frenetic consumer demand is driving the numbers in Metro Vancouver and the Fraser Valley, where population growth continues to be fuelled by migration. Weaker economic conditions in Alberta combined with robust employment growth in Metro Vancouver is contributing to an increase in net inter-provincial migration.
2. The report says housing demand across the Lower Mainland-Southwest region of the province has increased significantly during the past 12 months. Sales activity in the Fraser Valley and Chilliwack are mirroring Vancouver’s breakneck pace of transactions. The association says residential sales are projected to rise nearly nine per cent to 47,000 units this year, while home sales are projected to soar to more than 21 per cent in the Fraser Valley and nearly 19 per cent in Chilliwack to 24,300 and 3,725 units, respectively.
3. All those sales and an imbalance between supply and demand are going to continue the current trend of prices rising, with the association predicting that the average cost of a home in B.C. will go up a whopping 20.4 per cent in 2016 to $766,600 and a further 3.4 per cent to $792,800 in 2017. In Vancouver and the Fraser Valley, those numbers are higher. The average home price is expected to increase between 22 and 25 per cent in Vancouver and the Fraser Valley, and nearly 16 per cent in Chilliwack this year.
4. The average cost of a single detached home in Metro Vancouver in 2015 was $1,454,277. That number is forecast to jump by 30 per cent in 2016 to $1,890,000. In 2017, the association expects the market to cool a little with prices rising only 4.8 per cent to $1,980,000. An average townhouse in the Metro region cost $631,201 and is projected to go up 21.2 per cent to $765,000 in 2016. An average condo last year cost $481,399 and the cost this year is expected to go up 16.1 per cent to $559,000.
5. Strong housing demand and a lack of inventory has not gone unnoticed by home builders. Total housing starts in the province are forecast to reach 37,800 units this year, the highest level of production since 2007. However, the lengthy time lag between a housing start and its completion means that markets experiencing the most severe supply droughts, like Metro Vancouver, will likely remain in sellers’ market territory for the foreseeable future