BC home prices to remain flat for 2010: economist

Expect British Columbia's property prices to remain flat for the balance of the year, which will be good news for buyers again being squeezed by the province's sky-high values, according to the B.C. Real Estate Association.

Cameron Muir, the association's chief economist, said sales have stabilized while inventories of unsold homes have risen, which is keeping pressure off prices.

Provincially, realtors processed some 8,385 units through the Multiple Listing Service in April, 21 per cent higher than the same month a year ago, but when figures are adjusted to account for seasonality, April sales were four per cent below March, according to Muir.

At the same time, provincial inventories hit 54,029 in April, some nine per cent more than in April of 2009.

"Overall there is more balance in the Lower Mainland and Victoria markets going forward and much less upward pressure on prices," Muir said in an interview.

"I anticipate prices will remain fairly flat for the rest of the year as a result of the countervailing forces of improving economy and job growth [offset] by affordability."

And as it had become before the recession and downturn, Muir said buyers' constricted ability to pay for real estate will be "the single biggest constraint in the market over the next few years."

Muir expects banks' prime lending rate, currently resting at 2.25 per cent, to rise to the range of 4.5 per cent to five per cent by this time next year, if the economy keeps improving.

Carol Frketich, regional economist

for Canada Mortgage and Housing Corp., said economic fundamentals, such as the addition in April of 13,000 new jobs to the economy, and an unemployment rate of 7.3 per cent versus 7.5 per cent in Alberta, look good for the real estate market.

"B. C.'s unemployment rate is now below Alberta's, so that bodes well for migration," Frketich said. "Employment opportunities are supportive of housing demand."

Frketich noted that property prices have rebounded more strongly in the Lower Mainland and Victoria than they have in interior markets.

The provincial average home price in April hit $514,820, which was almost 15 per cent higher than the same month a year ago, but that average was driven in part by steep price increases in Metro Vancouver, which accounted for more than 40 per cent of provincial sales.

In Metro Vancouver, average prices have reached new highs with the overall average home price up some 19 per cent to $673,561 in April.

By contrast, the Kamloops region has seen year-over-year price growth of 6.3 per cent to hit an average of $316,520 in April.

Okanagan Mainline, which includes Kelowna, saw price growth of almost 10 per cent to an average of $394,516.

Paul Fabri, a CMHC market analyst in the Okanagan, said the region's markets have been hampered by a decline in the recreational real-estate market during the recession, when "Alberta [buyers] stayed home."

"We did see some price recovery in the latter half of 2009, but certainly not to the extent that was seen in the Lower Mainland," Fabri said.

For the year to date, residential sales totalled 26,669 units at the end of April, up 47 per cent from the same point a year ago, and the total value of properties sold came to $13.5 billion, some 73 per cent higher than for the same months of 2009

(prepared by Derrick Penner/Vancouver Sun)