Home prices and number of sales are predicted to rise this year and in 2021 in Greater Victoria and on the rest of Vancouver Island, says a new real estate report.
The lift in the housing market is expected to reflect a province-wide trend of higher prices and stronger sales numbers, the B.C. Real Estate Association said in its 2020 first quarter housing forecast update, released Thursday.
“The outlook for home sales in 2020 is considerably brighter than the past two years,” said Brendon Ogmundson, the association’s chief economist. “Momentum carried through from the end of 2019 to 2020 will put the housing market on more solid footing, aided by low interest rates and an improving economy.”
But the supply of homes has not been able to match demand, Ogmundson said.
He anticipates the average home price will rise by 4.8% to $734,000 this year in B.C., and by 3.8% to $762,200 in 2021.
At the same time, total provincial sales numbers are forecast to climb by 10.3% this year to 85,290, followed by a 6.3% rise in 2121 for a total of 90,700 sales.
Greater Victoria home prices (for all types of housing) will likely rise by 2.4% this year to an average of $705,000, Ogmundson said, predicting a continuing climb by 2.1% next year. Sales numbers are forecast to move to 7,300 — up by 5.9% this year over last, he said. And 2022 should see another increase by 2.7%.
“The whole Island was hit pretty hard by B-20 [the federal mortgage stress test] mostly. And then, since about the early spring of 2019, Victoria has actually had a very, very strong recovery.”
It is one of few markets in the country which is coming close to its sales numbers prior to the introduction of the stress test, he said. The stress test was introduced in 2018.
“Things looked pretty bleak at the beginning of 2019, but home sales were on a pretty strong rebound.”
December saw fewer than 2,000 property listings through the Victoria Real Estate Board. The benchmark value of a single- family house in the core region was $855,000 last month, the board said. The benchmark for a condominium in the core was $520,700. The core consists of Victoria, Saanich, Esquimalt, Oak Bay and View Royal.
For the rest of Vancouver Island, total sales are anticipated to increase to 7,800 or by 3.5% this year, he said, with 1.9% rise in 2021.
Prices for the Island are forecast to move up by 3.4% to $505,400 this year and by another 2.9% next year.
Although Greater Victoria’s market picked up in spring 2019, “a lot of the other markets across the Island have really kind of flattened out,” Ogmundson said.
“I think a lot of that has to do with local economic conditions.”
As employment growth picked up in the capital region, the rest of the Island has seen “declining year-over-year employment.”
He points to struggles within the forestry sector and mill closures on the Island. Island communities have been hard hit by an eight-month strike by the United Steelworkers union at Western Forest Products.
“So there is that kind of divergence in prospects” between Greater Victoria and the rest of the Island, he said.