As we step into 2024, the British Columbia Real Estate Association (BCREA) presents an encouraging outlook for the province's housing market, forecasting a 7.8% increase in MLS® residential sales, climbing to 78,775 units. This positive trend is expected to continue into 2025, but does hinge on declining fixed mortgage rates and potential policy rate cuts by the Bank of Canada. That being said there is a flaw with these forecasts which I will get into later.
After a drop in prices across BC of- 2.6% in 2023 they are estimating prices in 2024 to recover+1.7% in 2024 and another +3.4% in 2025.
The BCREA's forecast attributes this optimism to the anticipated reduction in mortgage rates. These factors are expected to contribute to a boost in consumer confidence resulting in increased home sales across the province. However, the report also emphasizes that the price impact will largely depend on changes in inventory levels. With a more balanced market on the horizon, they expect relatively stable pricing as new listing activities normalize.
The Interior Okanagan is set to witness a notable recovery, with the number of residential sales predicted to increase 7.5% in 2024 to 8,500 total sales. This upswing is attributed to improved affordability and economic stability, drawing attention from both local buyers and investors. They are estimating the Okanagan to return to more of a balanced market dynamic, which is likely to foster gradual price stabilization. The average sale price is expected to grow by +1.3% overall after a drop this past year of -5.3%. If you look further out to 2025 BCREA is expecting prices to increase another 3.3%.The Interior Okanagan's growth prospects are buoyed by a robust demand for housing, making it a key area to watch in the coming year.
The Flaw…
I generally support the BCREA's positive housing forecast for BC, influenced by expected monetary policy easing and interest rate cuts. However, the prediction overlooks certain factors, notably the impact of new provincial legislation on Small Scale Multi Unit Housing (SSMUH) and short-term rentals. The uncertainty surrounding the implementation of these regulations by municipalities before the May 1 and June 30 deadlines could significantly affect the market but the positive/negative impacts could also vary drastically depending on the municipality. Particularly, the real estate landscape in Kelowna might see an influx of apartments as short-term rental owners reevaluate their properties' viability as long-term rentals or consider selling and development properties might see less of a premium as other homes are now almost created equal.
For those interested in delving deeper into the BCREA's housing forecast, we invite you to click here to access the full report. This comprehensive analysis offers valuable insights into the factors driving the housing market in British Columbia and the Interior Okanagan.
Do you have questions about how this forecast might impact your real estate decisions? Whether you're considering buying, selling, or simply seeking more information, we're here to help. Don't hesitate to reach out to us for personalized advice and support. Our team is dedicated to providing you with the insights you need to navigate the housing market confidently.
