B.C. Home prices to rise

VANCOUVER -- B.C.'s median home price is expected to rise five per cent this year from 2009 to $388,000, according to the latest economic analysis by Central 1 Credit Union.

 

However, prices are forecast to drop five per cent in 2011 to $370,000 before rebounding three per cent in 2012 to $380,000.

 

The gains in 2010 largely reflect higher prices and sales activity earlier in the year.

 

The downward trend in housing sales that has characterized much of 2010 will stabilize in the fourth quarter of this year before trending higher in 2011 and 2012, a release stated.

 

Residential transactions will fall seven per cent from 2009 levels to 93,000 units before rising by five per cent to 98,000 units in 2011 and nine per cent to 107,000 units in 2012.

 

"A weak sales environment and elevated inventory levels have led to downward pressure on prices in 2010 and those declines will persist into early 2011," said Central 1 economist Bryan Yu said in a statement. "Lower prices and attractive mortgage rates will be a powerful incentive in attracting an increased number of buyers to the market next year."

 

The report also noted that after a 54-per-cent rebound in 2010, housing starts are forecast to rise three per cent to 25,500 units in 2011. However, new construction will remain low compared to pre-recession highs when starts ranged between 34,000 to 40,000 units.

 

On a regional basis, housing sales will remain concentrated in the larger metro areas of Vancouver and Victoria, the report said.

 

However, regions with a larger secondary home market and recreational properties experienced a softer post-recession housing market rebound and will continue to experience a slow market recovery.

 

For Metro Vancouver, prices are forecast to rise eight per cent in 2010 to $460,000, before dropping five per cent in 2011 to $436,000 and then rising three per cent in 2012 to $450,000.

 

bmorton@vancouversun.com

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