BC Homes Sales Carry Momentum into 2020
BCREA
The British Columbia Real Estate Association (BCREA) released its 2020 First Quarter Housing Forecast Update today.
Multiple Listing Service® (MLS®) residential sales in the province are forecast to increase 10.3 per cent to 85,290 units this year, after recording 77,349 residential sales in 2019. MLS® residential sales are forecast to increase 6.3 per cent to 90,700 units in 2021.
The outlook for home sales in 2020 is considerably brighter than the past two years. A strong recovery that began in the middle of last year helped to offset an uncommonly languid spring, and sales closed out 2019 essentially unchanged from the year before. Momentum carried through to 2020 will put the housing market on more solid footing, aided by low interest rates and an improving economy. We forecast 2020 MLS® unit sales will normalize around their long-run average of about 85,000 units before rising to 90,700 units in 2021. The BC economy has slowed over the past two years, hindered by heightened uncertainty in global trade and a faltering housing market. Weaker home sales and a more stringent consumer credit environment dragged household consumption to a second straight year of sub-par growth, as evidenced by sputtering retail sales. However, strong wage growth and an expected rise in home prices should translate to higher consumption spending as consumer confidence brightens. With major investment projects also ramping up – LNG Canada being most prominent – we expect to see a modest uptick in provincial economic growth from an estimated 2 per cent in 2019 to 2.4 per cent in 2020.
While demand is recovering, the supply of homes for sale has not managed to keep pace. New listings activity did not materially increase during the downturn in home sales, and total inventory did not accumulate to the same extent as in prior slowdowns. New home construction hit a record high for BC in 2019, adding to the already historically high number of units under construction. However, much of that new supply is still years from reaching the market. As a result, market conditions around the province are tightening and home prices will likely face upward pressure as demand continues to firm. In 2020, we expect the MLS® average price will rise 4.8 per cent to $734,000.
