BC home sales expected to rise in 2011

BC home sales expected to rise in 2011  
BCREA Housing Forecast Update - Third Quarter 2010

BC housing markets are
returning to typical post-re-
cession demand patterns. The
dramatic rebound in consum-
er demand during 2009 and
subsequent decline during
the first two quarters of 2010
has set the stage for a gradual
increase in home sales during
the fall and through 2011.
Residential unit sales through
the Multiple Listing Service®
(MLS®) in BC are forecast to
decrease 7 per cent to 79,500
units in 2010, before climb-
ing 5 per cent to 83,400 units
in 2011.
A slower than expected
normalization of interest rates
will temper erosion of afford-
ability as economic output
posts more moderate growth
for the balance of this year
and through 2011. Stronger
corporate profits are trigger-
ing employment growth and
a reduction in the unemploy-
ment rate is now underway.
A larger inventory of homes
for sale has created the most
favourable supply conditions
for home buyers in more
than a year. While tighter
mortgage qualifications for
low equity home buyers has
negatively impacted demand,
more borrowers are now
channeling into 5-year fixed
mortgages where discounted
rates increase purchasing
power.
The average MLS® resi-
dential price is forecast to in-
crease 6 per cent to $492,800
this year and edge down 1
per cent to $489,500 in 2011.
Some softness in home prices
is expected through the sum-
mer months in most regional
markets. However, in-
ventory levels peaked in May
and will likely edge lower in
the coming months, leading
to more balanced conditions
in the fall with a commensu-
rate firming of home prices.
 “The volatility in con-
sumer demand character-
istic of the past 24 months
is expected to give way to
more gradual improvement
through 2011,” said Cameron
Muir, BCREA Chief Econo-
mist. “Housing demand has
fallen back to earth from its
break-neck pace at the end of
2009 and is expected to more
closely match overall eco-
nomic performance over the
next 18 months.
“A larger inventory of
homes for sale has created the
most favourable conditions
for home buyers in more than
a year,” added Muir. “How-
ever, the buyers’ market is
expected to be short-lived as
total active listings peaked
in May and are beginning to
wane, with more balanced
conditions set to emerge in the fall.”
After a sharp pull back
in new home construction
last year, home builders are
gradually increasing produc-
tion to meet demand. BC
led the country in popula-
tion growth over the last
three quarters and with the
inventory of complete and
unoccupied units expected to
decline, builders are adjusting
production to match supply
with household formation.

RealtoR link® august 13, 2010

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Chantal Vignola

Chantal Vignola

REALTORĀ®
CENTURY 21 In Town Realty
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