BCREA released its Housing Forecast Update last week and they are continuing to forecast a slower pace in the housing market. . In it they note some competing factors and are forecasting a 10.8% drop in units sold for the Vancouver Island Real Estate Board area (Malahat northward). Prices are forecasted to increase 7.6% percent for 2018, which is more reasonable than the 2.4% forecasted in November. The major factors include:
Strong economy: "The BC experienced four consecutive years of 3 per cent or more real GDP growth, with 2017 growth estimated at 3.8 per cent." The update also notes:
- Exports increased 13% to $43.8 billion despite softwood tariffs.
- Employment increased 3.7%, nearly twice the national average of 1.9%.
Unemployment at its lowest level since 2008.
Reducing Demand: Several factors are expected to reduce demands and sales. For the province total unit sales is expected to fall 8.6% to 94,855. This is down from 103,763 units in 2017 and a record high of 112,200 units in 2016. Reasons for this drop in unit sales include:
- New stringent mortgage qualifications rules.
- Interest rates are on the rise and expected to increase further in 2018.
Already high home prices.
For the Vancouver Island Real Estate Board area, all of the Island except Victoria and Saanich, the update is projecting:
- 10.8% reduction in unit sales.
- 7.6% increase in average price (forecast was 2.4% in November, which was low).
As you will see in the table below, while the units sold (demand) are dropping, the price is still increasing. This is due to the fact that the number of active listings (supply) is very low, about 40% here compared to the 2008 to 2014 average.