Demand for homes is gradually recovering and expected to pick up this fall, asserts BCREA
Is B.C.'s residential real estate market already showing signs of bouncing back from its government intervention-induced downturn?
That’s the message from the B.C. Real Estate Association, which reported September 13that MLS home sales across the province totalled 6,743 in August. That’s lower than the 7,055 transactions in July this year, and down 26.4 per cent from August 2017.
Despite the continued slide in home sales totals, the BCREA said that the market is already looking like it is recovering from the recent downturn, which it believes was largely caused by government intervention in the market, especially the federal mortgage stress test introduced in January.
Cameron Muir, BCREA’s chief economist, said in a phone interview that the actual sales totals do not take into account seasonal trends in home buying, and a much more accurate graph looks at the seasonally adjusted sales figure – a common measure of economic trends. According to the association’s calculations, the market has turned from its trough in June, and since then has seen a relative increase in activity of around 3.5 per cent, on a seasonally adjusted basis.
Muir said, “The BC housing market is evolving along the same path blazed by Ontario and Alberta, where the initial shock of the mortgage stress-test is already dissipating, leading to increasing home sales.” The Greater Toronto Area has seen a marked increase in home sales and prices over the past three months, following significant sales declines in spring, following the stress test’s launch.
The BCREA’s August figures also show there has been little to no improvement in affordability of B.C.’s home prices. Although price growth has decelerated from the past couple of years, all but one of the province’s 12 real estate boards registered an overall average sale price rise in August, compared with one year previously.
At $669,776, the province’s average August sale price was 1.2 per cent lower than one year previously. However, Muir said that this doesn’t mean that home prices are dropping. “It’s misleading, because it’s dependent on the mix of housing being sold, and the areas. As we’ve seen bigger sales declines in more expensive areas such as Vancouver, and an increase in apartments being sold compared with houses, the average prices get skewed.”