Detached-home market recovery may be slower than predicted

Experts differ on year ahead for B.C. property market, as real estate analyst predicts “rough year” for Metro Vancouver’s single-family homes

 

If real estate investors were to make some resolutions for the new year, analyst Dane Eitel might suggest exercising wariness amid forecasts painting an optimistic picture of the B.C. market.

After all, some organizations may not have a vested interest in sounding an alarm over bleakness ahead, he said.

“When you never offer a negative forecast it’s a little tougher to believe,” the founder of Eitel Insights told Business in Vancouver.

A 2020 forecast from the BC Real Estate Association predicts the Multiple Listing Service average price will rise 3.6 per cent to $723,000, with sales growing 10.9 per cent to 85,500 units across the province. Growth is expected to be even more robust in Greater Vancouver, with sales up 18.2 per cent to 30,100 units this year.

And Royal LePage expects the aggregate price of a home in the region to rise 1.5 per cent to $1,125,200.

In a statement, Royal LePage Sterling Realty managing broker Randy Ryalls cited a significant pickup in fall sales creating momentum in the market, which he expects to put pressure on available inventory.

While industry has been touting a recent bump in sales (up 88.1 per cent year-over-year in December, according to the Real Estate Board of Greater Vancouver), “the purchasing that has been going on here the last two quarters or so is largely stress test mitigation-based,” Eitel said, referring to government rules on the mortgage stress test that eased up over the summer.

“All the folks that had been sidelined are now out purchasing.”

Instead, he said, 2020 will be a “rough year” for detached homes, which will not begin to turn around until 2021.

“You’ll see some foreclosures come onto the market,” Eitel said. “And inevitably when you see foreclosures actually taking place in Greater Vancouver, you do see the investors dip their toes back in.”

Meanwhile, Central 1 Credit Union’s own forecast sees low mortgage rates, modest economic growth in the province and pent-up demand bolstering sales across B.C. in 2020.

It forecasts an 11 per cent bump for all types of residential transactions in the province, rising to 99,760 units in 2020 compared with 89,860 in 2019.

“There’s also still a lot of construction occurring on the residential front despite the fact we’ve seen a softening of the resale market in recent years,” Central 1 deputy chief economist Bryan Yu told BIV, referring to how transactions in the resale market fell as much as 20.3 per cent to 78,192 units in 2018 compared with a year earlier.

“The levels of new home construction are still quite strong.”

torton@biv.com

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