Is BC real estate cooling down? BC Real Estate Association (BCREA) released its first forecast since the foreign buyer tax was implemented, and they’re still predicting strong growth. While the accuracy of these industry forecasts can be a little bias, they’re predicting an increase in the rest of the province, which will offset any losses in Vancouver.
Prices Are Still Strong
Despite what you’ve read from some media outlets, no region is being forecasted as a crash from BCREA. Almost all regions are still projected to makes gains at least with the rate of inflation, with the exception of South Oakanagan – which is projected to see a 2.9% decrease in prices. Traditionally a crash would imply a prolonged decline, not a reasonable expectation of profit.
Expect Moderation
The recent breakneck returns are expected to slow down. BCREA Chief Economist Cameron Muir said Vancouver is expected to display a “moderating trend in the market that began earlier this year”. Despite the poor performance in Vancouver’s market, the rest of the province “performed above expectation, largely offsetting Metro Vancouver’s deceleration.”
The average residential price in the province is forecast to increase 11% to $706,900 by year end. They’re also predicting another 5.2% gain in 2017. While these numbers are less than BC has been seeing for the past few years, these would still be strong gains. Beats the hell out of mutual funds.
BC Is Ramping Up Construction
Muir further added that building has reached record levels, “the highest amount since 1993. A moderation in housing demand combined with a rising number of both new and resale homes on the market is expected to create more balance and less upward pressure on home prices.”
He’s a little more optimistic than I am, it sounds like BC may be overbuilding. If prices are expected to moderate based on demand decreasing, increasing construction is an odd choice. Flooding inventory would likely bring prices down faster than the foreign buyer tax.
Despite the media frenzy and claims that there’s a “crash”, with only 25 days of data it’s tough to make any solid, well constructed conclusions. Just like the BC government couldn’t have accurately made a call using six weeks of data before rushing in a foreign buyer tax. While I would be surprised to see BC turn out another year of increasing prices, it does appear that the industry is still optimistic. For better or worse.
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A lot of developers are going to be out a lot of money listening to CREA.