VANCOUVER — The mortgage-rate fuelled bounce-back of British Columbia real estate in 2009 has probably used up most of the market’s growth for 2010 and 2011, according to a new estimate from the B.C. Real Estate Association.
Association chief economist Cameron Muir is forecasting provincewide sales in 2010 to increase only three per cent above a hot 2009’s results to 90,100 sales in 2010, then slip back three per cent to 87,500 units in 2011.
The provincial average price, Muir is forecasting, will advance five per cent to $490,900 in 2010 then eke out just one-per-cent growth to $494,800 in 2011.
Muir characterized his forecast as 2009 ending with a “gold-medal finish, [which] will give way to a silver-medal performance in 2010.”
“Affordability is the biggest factor over the longer term,” Muir added in an interview, “because home prices in markets such as Victoria and Vancouver are trending on record levels, and mortgage rates are likely to edge higher at the end of this year and through 2011.”
“That’s going to increase the carrying cost of housing, and by extension, overall housing demand.”
Home carrying costs, the monthly mortgage payment, taxes and other fees saw a dramatic trim during the downturn that lasted through the last half of 2008 and first part of 2009, but Muir noted that that advantage is rapidly disappearing.
And while B.C.’s economy is creeping towards a recovery with some job and income growth, Muir said the growth is not coming quickly enough to offset the rising unaffordability of housing.
“We’re unlikely to see record sales levels this year and next as a result of that,” Muir said.
However, Muir does expect B.C. home sales in 2010 and 2011 to remain slightly above the 10-year annual average, which is “what we would expect given the economy is just coming out of recession.”
In his forecast, Muir estimates that the markets that roared back the most in 2009 — Metro Vancouver, the Fraser Valley and Victoria — will be among those with the most muted results in 2010 and 2011.
After rocketing back 44 per cent in 2009, Muir is projecting Metro Vancouver sales to advance just three per cent to 37,500 units in 2010, then slip back five per cent to 35,500 in 2011.
Muir is forecasting that the Metro Vancouver average price will jump seven per cent in 2010 to $636,000, then edge up just one per cent to $643,000 in 2011.
Victoria, which saw sales rise 24 per cent in 2009, will see sales edge up to 7,850 units in 2010, then fall back six per cent to 7,350 in 2011.
Muir is forecasting that Chilliwack and Kamloops will see stronger surges in 2010 sales with both areas expected to see 17 per cent sales growth in 2010, followed by two per cent growth in 2011.
For Chilliwack, that means 2,650 sales in 2010 and 2,700 in 2011. For Kamloops, that works out to 2,740 2010 sales and 2,800 2011 sales.
The Okanagan Mainline real estate board, which includes Kelowna and Vernon, is forecast to see 14 per cent growth in sales to 6,450 sales in 2010 followed by six per cent growth to 6,850 units in 2011.
The Okanagan is also expected to see stronger price growth with a five per cent rise to $398,000 in 2010 followed by four per cent growth to $415,000 in 2011.
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