BCREA Market Forecast:

The BC housing market is entering 2022 with the lowest level of active listings on record and significant demand-side momentum. That means strong sales should persist through the first few months of the year and supply will remain severely limited. As a result, we expect to see continued upward pressure on home prices in all markets. As the provincial economy continues its strong recovery, housing demand should remain robust. Though the latest wave of COVID-19 adds uncertainty, the provincial unemployment rate continues to trend downwards toward its prepandemic level, wages are rising and employment growth has become more balanced across sectors. Consequently, we are forecasting that provincial home sales will reach 103,250 units this year, a 17 per cent decline from the record set in 2021. However, with inflation running at a multidecade high, it is widely expected that the Bank of Canada will begin raising its overnight policy rate this year. Canadian mortgage rates have already risen substantially in expectation of tighter monetary policy and we should begin to see the impacts of those rising rates in the second half of 2022 and into 2023. As a result, home sales next year should further moderate toward a more normal, long-term average level of about 90,000 unit sales province-wide. Slower sales activity will allow the inventory of resale listings to rebuild, but given how low listings currently are, it will take considerable time before markets can return to a healthy balance. In fact, active listings in most markets need to more than double to bring markets back into balance. Rebuilding the inventory of active listings is likely a multi-year process. As a result, home prices are expected to rise by 8.5 per cent in 2022 with much of that gain happening in the first half of the year. With sales activity normalizing in 2023 and inventories rebuilding, market conditions around the province should improve, and price growth is anticipated to slow to 2.7 per cent

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