Unit sales expected to slow this year as interest-rate hikes cool demand throughout market
Derrick Penner
Sun
British Columbia‘s total 2005 real estate sales topped out at a record 106,290 transactions worth some $35.3 billion, the highest value of property transfers ever in the province, according to the B.C. Real Estate Association.
The association tracks sales recorded through the realtor-driven Multiple Listing Service. Those sales show that B.C., in just the first 11 months of 2005, broke the previous record set in 2004 for the number of total transactions in a year.
In a report issued Tuesday, the association said 2005’s 106,290 transactions were 10-per-cent higher than the 96,352 sales in 2004. The value of those transactions, at $35.3 billion, was 26.8-per-cent higher than in all of 2004.
“[It was] not a surprise that 2005 was a record year in terms of the resale market,” Carol Frketich, regional economist for the Canada Mortgage and Housing Corp., said in an interview.
Frketich added that long-term mortgage interest rates averaged lower than in 2004, and with job growth and wage gains across B.C., “that definitely fed through into real estate markets.”
“People were feeling confident, and the demand was there,” she said.
Around B.C., the Northern Lights Real Estate Board, in the northeast’s booming oil and gas region, saw the biggest gain in unit sales. Its 611 total sales in 2005 represented a 31.4-per-cent gain over 2004.
The B.C. Northern Real Estate Board, which includes Prince George, saw 5,130 transactions, which is a 16.8-per-cent gain over 2004. The Fraser Valley’s 20,128 2005 sales were 16.9-per-cent higher than a year earlier.
Dave Barclay, president of the B.C. Real Estate Association, said that increases in sales and prices might not continue as steeply as they have in the past, but the market still seems to be busy.
“People seem very comfortable with the economy, they seem to have lots of confidence and there are not an awful lot of negative thoughts,” Barclay said.
Frketich, however, is projecting that the number of new real estate listings in many markets will rise to put supply into more balance with demand during 2006, and mortgage interest rates that began to climb late last year to cool sales.
Credit Union Central B.C. chief economist Helmut Pastrick noted in his Weekly Economic Briefing of Jan. 6 that higher interest rates had caused monthly sales, on a seasonally adjusted basis, to slow from a high of 3,941 in August of 2005 to 3,261 in December.
Pastrick characterized the situation as a “mini-correction” that would stabilize as interest-rate increases stop.
Frketich added that “2005 could well be the peak in terms of resale activity.”
“Given that interest rates are now rising, and we’re coming off a very solid year in terms of economic growth and job gains, it’s not hard to understand that things will slow, and that’s not a bad thing.”
She is forecasting that B.C. real estate sales will reach about 95,000 units in 2006, with prices to increases across the province by an average of six to seven per cent.
Frketich said that at over 100,000 transactions, B.C. accounted for about a fifth of all real estate resales in Canada, and even with a decline, “resale markets will remain very active.”
