Greater Vancouver will see home sales tumble by one-fifth this year, but the market should rebound in 2013, the B.C. Real Estate Association says in its new forecast as the group moves to calm fears of a local housing crash.
The number of single-family detached homes, condos and townhouses sold in Greater Vancouver will fall 20.5 per cent this year to 26,200, hurt by Ottawa's moves in the summer to tighten rules for mortgage borrowing at a time when the local market had already softened, the association said in its report.
In the B.C. Fraser Valley, which includes the sprawling and less expensive Vancouver suburb of Surrey, sales on the multiple listing service are predicted to decline 10.4 per cent to 13,200 this year. But the number of residential properties sold is forecast to climb 13.7 per cent to 29,800 next year in Greater Vancouver and rise 5.7 per cent to 13,950 in the Fraser Valley.
Cameron Muir, chief economist of the B.C. real estate group, said the federal government reduced the maximum period for a government-insured mortgage to 25 years from 30, effective July 9, resulting in a dampening effect on house sales. Ottawa also eliminated government-backed insurance for homes above $1-million in a bid to ward off highly leveraged borrowing.
"The resulting decline in purchasing power has squeezed some potential buyers out of the market," Mr. Muir wrote in the forecast. "However, strong full-time employment growth, persistently low mortgage interest rates and an expanding population base point to more robust consumer demand in 2013."
British Columbia is expected to attract 40,500 "net new migrants" to the province next year, mostly through international immigration, notably from China and other Pacific Rim countries. That total would represent an 8-per-cent increase from this year.
The average price for a Greater Vancouver residential property sold in 2012 is forecast to fall 5.9 per cent to $734,000 and decrease 3.1 per cent to $487,000 in the Fraser Valley, compared with 2011. The B.C. Real Estate Association predicts that Greater Vancouver's average prices will slip another 1.9 per cent next year to $720,000 while the Fraser Valley squeezes out a gain of 0.2 per cent to $488,000.
In an interview, Mr. Muir said restrictions on Ottawa's immigrant investor program also contributed to a slowdown in sales in some neighbourhoods, but he cautioned against jumping to conclusions that home prices will eventually plunge, triggered by this year's slump in the volume of units changing hands. Barring any large catastrophe such as a tsunami or major economic shock, the Vancouver region will experience a "gentle landing because home prices tend to be sticky on the way down," he said.
In addition, the Vancouver area's economy is healthy, and not dependent on any one sector, Mr. Muir said.
Provincially, the B.C. association forecasts residential sales will drop 9.8 per cent to 69,200 units this year – far off the 15-year average of 79,000 and a record 106,300 across British Columbia in 2005.
The average B.C. resale home price is predicted to decline 7.6 per cent this year to $518,600 but post a slight increase of 0.7 per cent to $522,000 next year. The statistics in 2011 were skewed by a large number of high-end homes sold in the B.C. Lower Mainland, especially on Vancouver's west side and in Richmond, said Mr. Muir, whose association represents 11 member boards.
Real estate boards in Greater Vancouver and the Fraser Valley prefer to track trends through what they call "benchmark index prices for typical homes" in a formula that effectively strips out sales of high-end luxury houses to better gauge regional changes.