The association’s latest forecast calls for a 5.6-per-cent increase in the number of sales in 2013 and a further 6.1-per-cent increase in 2014, after the number of sales fell 11.8 per cent in 2012. In Metro Vancouver, the number of sales in Vancouver fell nearly 23 per cent in 2012, but the BCREA expects they will pick up over the next two years.
“I think 2013 is going to be a transition year into 2014 and 2015 when we are finally going to see the global economy start to post more regular performance,” said Cameron Muir, BCREA chief economist.
The economic fundamentals in B.C., such as low interest rates and growth in both employment and immigration, predict a much higher level of sales than are now occurring, Muir said.
“Tighter credit conditions introduced last year have had some impact, but a much larger impact is consumer psychology, where we’ve seen many consumers deciding to take a wait-and-see attitude in 2012. I think many of them will enter into the market in 2013.”
The forecast calls for 75,830 units to be sold in 2014 in B.C., while the five-year average is 74,600 and the 10-year average is 86,800 units, BCREA said.
“Sales, particularly in the fourth quarter of 2012 have certainly moderated, and Vancouver sales are likely going to be low again in January,” Muir said. “This forecast represents stronger activity happening in the second half of 2013.”
The average residential price is forecast to drop one per cent in the province to $510,000 in 2013, and edge up 0.6 per cent in 2014 to $513,500, BCREA said. In Vancouver, the forecast calls for average prices to drop 3.3 per cent in 2013 and a further 0.6 per cent in 2014.
“I don’t expect to see prices going anywhere fast, any time soon,” Muir said. “I expect to see prices remain quite flat over the next few years, and they would even likely decline in real terms if you put inflation into the picture.”
Most forecasts are inaccurate because conditions change over time, said Tsur Somerville, director of the centre for urban economics and real estate, Sauder School of Business at the University of B.C. “In general, BCREA is going to tend to be more optimistic than perhaps one of the banks might be.”
Somerville expects Metro Vancouver’s real estate market to remain slow for a while.
“Prices are more likely to decline over the next year than they are to to go up. I would be surprised if the declines are anything other than very moderate,” Somerville said.
Muir said average wages have been growing about two per cent each year, so condominiums and townhouses are becoming relatively more affordable.
“The benchmark price of condos and townhomes has been quite flat for the past three years, and if you discount that for inflation or wage growth, in a very real sense, real prices for apartments and townhouses are down about six per cent over (the) last three years.”
Muir expects an increase in immigration and solid employment will keep the market stable.
“We’re seeing part-time jobs being rolled over into full-time jobs, which points to a more solid underpinning for the economy and the housing market,” Muir said, adding that as the U.S. and the global economies recover, Canada will benefit.
Housing starts in the province will fall 3.5 per cent to 26,500 units in 2013, and go up 1.5 per cent to 26,900 units in 2014, the forecast said. The transition from the harmonized sales tax to the provincial sales tax may add a short-term boost to new homes sales this spring, the forecast said.
Source: Tracy Sherlock, Vancouver Sun