BCREA’s 4th Quarter 2017 Housing Forecast is entitled Strong Economy Versus Housing Headwinds. They are forecasting that due to rising interest rates and the new mortgage stress test for mortgages with 20% or more down payment a return to pretty much balanced markets in 2018. This is augmented by an increase in new home construction and a pulling back of the economy from 3.8% increase in GDP projected this year to 2.8% for 2018.
For the VIREB area (Malahat north) the forecast for single family homes for 2018 is a 2.4% increase in price. They have revised their 2017 forecast to 14.5%, which appears that it will be accurate. Last fall their forecast was for a 2% increase over 2017, which turn out to be quite off the mark. The government changes announced in the fall of 2016 had little effect on the markets on the Island.
Low inventory levels continue to be the story for Vancouver Island where we are running under 50% of the 2008 to 2014 average. This graph shows the inventory history for the VIREB area for September. Until that inventory levels rises there will be upward pressure on price.
While the report mentions it, I do not believe BCREA is weighing the inventory levels or the amount of people coming out here to retire enough, over 50% of the buyers are purchasing for retirement and close to 50% are from off the Island. Unless the mortgage stress test will have a larger effect than I am anticipating I believe the increases will be between 5-7% for VIREB and higher for the eastern markets, Duncan to Campbell River.
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