BRYAN YU
BRITISH COLUMBIA – Consistent with the national picture, BC housing market activity sprang higher in October following what was a normalizing trend through most of the summer.
MLS® sales surged 8.6 per cent from September to reach a seasonally- adjusted 9,719 units. This was strongest monthly gain since March and pushed sales to a five-month high. Despite sales being down nearly 30 per cent from the record spring and lower than a year ago, this speaks more to the unsustainably strong performance over the past year. October marked the second highest same-month sales on record next to 2020 and were nearly 40 per cent above the average October pace from 2010 – 2019.
Surprisingly robust demand has continued despite rapid home price growth during the pandemic. Buyers continue to be incentivized by a low interest rate environment, investor demand, shifts in preferences due to the pandemic, and likely some fear of missing the homeownership boat as prices further increase.
Modest population growth and recovery trends are further supporting demand. That said, rising interest rates have likely triggered a rush by buyers to lock in their rates through a purchase – even if the property was less than desired.
Among regions, the sharpest rise in sales came in the Lower Mainland- Southwest with Chilliwack (up 24 per cent) and the Lower Mainland (up seven per cent). Sales in the Okanagan rose 17 per cent. Year-to-date provincial home sales have already exceeded 2020 full- year activity.
While new listings edged up, newfound sales momentum continued to reduce resale housing inventory to record low levels. Active listings declined nearly six per cent on a seasonally- adjusted basis and fell 40 per cent from a year ago. Months of inventory sits just below two months compared to 2.9 months a year ago, and trends at the lowest level on record.
Sellers’ markets are pervasive throughout most of the province with exceptionally tight conditions on Vancouver Island and in the Fraser Valley/Chilliwack regions. Not surprisingly, home values re-ignited. The average price rose three per cent to a record $963,269. Benchmark home values also accelerated with strongest gains in the Fraser Valley and Chilliwack real estate boards areas (2.5 per cent) and the Okanagan (2.3 per cent).
Market conditions are expected to soften as affordability pushes more households of the market although lack of inventory will remain supportive of prices and rotate demand for lower priced homes and apartments. The flow towards smaller urban and rural area is expected to slow as the pandemic wanes.
The devastating BC floods have affected numerous municipalities within the province and heavily damaged infrastructure which undoubtedly shifts focus away from real estate markets for the time being as communities look to build back into 2022, while potentially diminishing demand outside urban areas.
Bryan Yu is Chief Economist with Central 1
