Real estate sales forecast to fall by a third in B.C. this year as interest rates rise
Number of sales expected to keep falling in 2023, according to B.C. Real Estate Association
The B.C. Real Estate Association is forecasting that the number of home sales will have dropped by more than a third this year compared to the record highs of 2021, and sales will keep dropping into next year as well.
The BCREA says the slowdown is a result of rising interest rates as well as an end to pandemic-induced conditions that saw many buyers driven by a desire for more space and the ability to work remotely.
"When interest rates rise rapidly into the levels they have, it's going to have a major impact," BCREA chief economist Brendon Ogmundson said.
The fourth-quarter forecast anticipates that 82,345 units will be sold in 2022, down 34.4 per cent from last year. The current forecast for 2023 is another 11.4 per cent drop to 72,960 units sold.
Ogmundson argued that the cooling market is "a lot healthier" than the overheated one B.C. has seen in recent years, allowing buyers more time to decide and more choices to pick from.
Tsur Somerville, a professor of real estate finance at the University of B.C., said that markets across North America are seeing a sharp decline in home sales right now. That's been accompanied by a slight drop in prices, at least in B.C.
"The challenge for first-time buyers is that even though prices are falling with the increases in interest rates, that doesn't necessarily help folks because … the payments for any given price level are going up," he said.
Somerville added that further economic slowdowns expected in the coming months should cool the market even further.
With files from Cali McTavish, Astrid Agbayani and Joel Ballard