Home sale activity in the coming year is expected to decline alongside housing prices as B.C. housing construction remains “strong,” according to the province’s Budget 2023 economic review and outlook.
Home sales fell sharply in 2022 as a result of steep interest rate hikes that raised mortgage rates to a high not seen since 2008. MLS home sales in the province fell by 35.2 per cent last year, with many regions throughout B.C. posting double-digit sales declines, according to the budget.
Metro Vancouver saw a decrease of 34.8 per cent with Fraser Valley home sales falling by 44.9 per cent.
Looking ahead, the Ministry of Finance predicts that home sale activity is expected to continue to decline by 13.3 per cent in 2023, followed by an increase of 17 per cent in 2024.
The provincial budget, released Feb. 28th, includes an outlook for the B.C. real estate market. The budget includes a total of $4.2 billion of funding over the next three years to tackle the housing and affordability crisis, with many of the funds working to add more supply to the market.
Last year saw the second highest number of housing starts on record, with a 1.9 per cent decline from the record high of 47,607 units in 2021. The value of residential building permits, a leading indicator of construction, increased by 24.2 per cent in 2022.
As the province looks to build more housing stock, the Ministry of Finance expects that housing starts in B.C. will total approximately 39,000 units in 2023, 37,000 in 2024 and average 38,000 per year from 2025 to 2027.
Finance Minister Katrine Conroy said that more details on building the province’s housing stock will come with the announcement of a refreshed housing plan in spring 2023.
When it comes to pricing, the average home sale price has fallen from the Febuary 2022 peak as a result of decreased demand, high mortgage rates, a compositional shift in sales and more balanced market conditions.
In 2022, the MLS average home price increased by 7.5 per cent, following the 18.7 per cent growth seen in 2021. Average pricing decreased over the course of 10 consecutive months to reach $901,540 in Dec. 2022.
This coming year, prices are expected to decrease further with a 7.4 per cent decline in 2023. This will be followed by a growth of 3.0 per cent in 2024 and an increase of 2.0 per cent annually in the medium-term.
The total value of home sales is expected to fall by 19.8 per cent, but rebound in 2024 with a growth of 20.5 per cent.