A strong economy and growing population are expected to continue fueling housing demand in the Lower Mainland.

A strong economy and growing population are expected to continue fueling housing demand in the Lower Mainland.

OUTLOOK: Housing sales decline in Ridge and Pitt, but construction continues

Sales of existing homes hit by a number of factors in 2018

  • Nov. 22, 2018 8:00 a.m.

As housing sales dropped to the lowest level in five years, new home starts continue to grow in the first quarter of the year in Metro Vancouver.

Building statistics from the City of Maple Ridge show that from Jan. 1 to Oct. 31. permits were issued for:

• 174 single family units;

• 66 townhouse units;

• 94 apartments;

• two commercial projects, 12 industrial and 2 institutional. This is a value of $145,791,800.00.

Pitt Meadows issued 17 permits for a value of $ 3,462,479, of which four were single-family detached homes and two were apartment projects.

A strong economy and growing population are expected to continue fueling housing demand in the Lower Mainland in the coming years – but that demand will meet the combined headwinds of tougher mortgage rules, rising interest rates and soaring home prices, according to a new report from the British Columbia Real Estate Association.

The BCREA’s first quarter housing forecast update predicts residential sales will drop 12.3 per cent in the valley and across the region this year and 8.6 per cent province-wide.

As housing sales dropped to the lowest level in five years, new home starts continue to grow in the first quarter of the year in Metro Vancouver.

There were 6,542 home sales on the Multiple Listing Service (MLS) in Metro Vancouver during the first quarter of 2018, which is a 13.1 per cent decrease from the same period last year.

The real estate board noted that sales of existing homes have been hit by a number of factors in 2018.

“We saw less demand from buyers and fewer homes listed for sale in our region in the first quarter of the year,” said Phil Moore, REBGV president.

“High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today.”

In August, the B.C. Real Estate Association predicted that residential sales would fall 21 percent by the end of 2018 – from 103,768 units last year to 82,000 this year.

That would take a big bite out of commission income for B.C. real-estate agents.

“The B.C. housing market is grappling with a sharp decline in affordability caused by tough B20 stress test rules for conventional mortgages,” BCREA chief economist Cameron Muir said in a news release.

“While these rules have had a negative effect on housing demand across the country, the impact has been especially severe in B.C.’s large urban centres because of already strained housing affordability.”

This year’s largest forecasted drops in sales are in the Fraser Valley (down 26.3 percent) and Greater Vancouver (down 25.7 percent).

Sales are expected to increase by 1.9 percent in northern B.C. in 2018.

Fraser Valley home prices are expected to continue rising to an average listing price of $758,000, an eight per cent jump over 2017’s $701,842. That would mean a significant drop in prices, as Fraser Valley Real Estate Board statistics show the average sale price in February 2018 already exceeding that price point, hitting $774,627.

“More stringent mortgage qualification rules for conventional borrowers are dampening housing demand in the province,” BCREA chief economist Cameron Muir said in a statement. “Since the new rules came into effect, B.C. home sales have fallen more than 26 per cent, on a seasonally adjusted basis.”

After three years in which the region was considered a ‘seller’s market,’ with a sales-to-listings ratio of above 20 per cent, the ratio hit 20 per cent again in June. If it slips any lower, the market will be considered “balanced.”

Developers who scrambled to pre-sale condos prior to construction as little as three years ago now find many units sitting unsold as buyers watch the market to see if prices will drop lower. Buyer incentives, such as free trips or not paying mortgage for the first year are being offered in some cases as developers find themselves with empty inventory for the first time in many years.

“The supply of homes for sale today is beginning to return to levels that we haven’t seen in our market in about four years,” Phil Moore, REBGV president said.

“For home buyers, this means you have more selection to choose from. For sellers, it means your home may face more competition, from other listings, in the marketplace.”