Housing market conditions are improving more rapidly than expected, with the average price for a home in B.C. now predicted to decline five percentage points less in 2009 than forecasted at the beginning of the year, the B.C. Real Estate Association said Tuesday.
"The imbalance between supply and demand was putting significant downward pressure on home prices," BCREA chief economist Cameron Muir said. "[But] on the demand side, we've now seen three consecutive months of double-digit increases in home sales. On the supply side, the number of homes for sale in Vancouver has declined for six consecutive months. The imbalance has waned considerably."
Muir said he believes most of the decline in prices has already occurred and that there's little downward pressure on prices in Victoria, Vancouver and the Fraser Valley. "There will be much better price stability, especially for the balance of the year."
As part of its spring 2009 housing forecast, the BCREA reported that housing market conditions have improved more rapidly than expected. As a result, BCREA has revised its price forecast upwards, reflecting greater stability through the balance of the year.
The average residential price is now forecast to decline eight per cent to $420,600, instead of the 13-per-cent increase originally forecast.
That compares with a Canada Mortgage and Housing Corp. report released last week that forecast average prices in B.C. to drop 11 per cent in 2009 and increase marginally in 2010.
The CMHC report predicted Metro Vancouver prices would sink 13 per cent in 2009 and a further 2.3 per cent in 2010.
The BCREA report said residential sales will decline 12 per cent to 60,755 units this year, as a result of a weak first quarter. However, stronger consumer demand is expected to continue for the balance of the year and through 2010. Residential sales in 2010 are forecast to climb 10 per cent to 66,740 units.
Reasons for the change include affordability, with lower home prices and record-low interest rates reducing the carrying cost of the average-priced home by 24 per cent over the last year.
"First-time buyers are a stronger force in the marketplace than in the fall and winter months," added Muir.
Asked how long it might be before home prices return to their peak in February 2008, Muir replied there's no way of knowing.
Regionally, the report forecast that price drops will be deepest in the Okanagan, with 15-per-cent declines in Okanagan Mainline and South Okanagan in 2009 and two-per-cent declines in 2010.
It's estimated that the Northern Lights area will experience the least drop in prices, with four-per-cent declines this year and three-per-cent declines in 2010. Greater Vancouver and the Fraser Valley are both forecast to see price drops of nine per cent in 2009 and one per cent in 2010.
