B.C. housing hitting affordability limits
By Tom Fletcher - Clearwater Times
Published: July 21, 2008 5:00 AM
VICTORIA B.C.’s four-year real estate boom has finally cooled, but there are few signs that property values will lose significant ground as they have in the United States.
What the government now markets as “the best place on Earth” remains an attractive place to move for work or retirement, and that is expected to help soften the blow of the forest industry downturn and a continuing decline in U.S. tourism. But more B.C. sellers continue to try to cash in while fewer people are buying as prices have moved out of their affordable range.
Small price drops have been seen in the Fraser Valley and Metro Vancouver in the last two months, but year-over-year prices are still up by single-digit amounts. As in other regions of B.C., new listings are up while sales are down, although prices continued upward outside of the Lower Mainland.
“Price declines in Vancouver and the Fraser Valley look to continue in the near term,” according to Credit Union Central B.C.’s latest weekly economic briefing. “The long-awaited and much-anticipated price cycle peak probably occurred in February.”
Credit Union economists say the Bank of Canada’s next interest rate move will be upward, to counteract inflation, and could come as soon as October. That expectation, along with more listings to choose from, should motivate more buyers in the second half of this year.
Province-wide, home sales were down 14 per cent in the first quarter of 2008 while new listings were up 24 per cent. The B.C. Real Estate Association (BCREA) forecast this spring that the average residential price will still climb nine per cent this year and another four per cent in 2009, based on in-migration and continued strong economic growth in B.C.
Sales in the Victoria region were stronger than the Lower Mainland in June, and while slowing may not have peaked yet. New listings began to fall in both the Lower Mainland and Victoria regions in June after the biggest real estate run-up in B.C. history.
The Kootenays, which recorded the biggest price jump in British Columbia last year, expects to see less pressure as the overheated Calgary and Alberta property markets have stabilized. The BCREA forecasts that Kootenay prices should go up another 13 per cent in 2008 and six per cent in 2009.
The average Kootenay home price shot up 30 per cent in 2007 to more than $270,000, in some cases pricing local residents out of their own market.
In the Okanagan, May home sales were down by half from the same time last year, with the average house price up 10 per cent since May 2007 and closing in on $400,000. Despite fewer sales, the number of new Okanagan listings surged by 27 per cent in May, with no sign yet of a decline in prices.
Northern British Columbia has seen about a 25 per cent reduction in sales in the first half of the year, and more homes on the market.
The average home price in Prince George is up slightly over last year to more than $242,000.
