Housing market slowdown forecast to last next 3 years

Report follows November’s 29% drop in Kelowna home sales compared to last year

Kelowna is in step with the housingmarket slowdown predicted in British Columbia for next year and beyond.

In November, 282 residential properties sold in Kelowna, a 29 per cent plunge from the 395 sales in the same month last year, according to the Okanagan Mainline Real Estate Board.

Last month, the average selling price of a single-family home was $650,785, down dramatically from a record-setting $782,398 in July.

“It’s never ideal when markets take steep shifts in either direction,” said board president Marv Beer.

“While one might anticipate a sharp shift towards a strong buyers’ market might be positive, the reality is the B.C. economy is so tied to real estate values that these conditions could result in job losses, mortgage foreclosures and the like,” Beer said.

Central 1 Credit Union is forecasting an ongoing slowdown in the province’s housing market, one day after the Canadian Real Estate Association predicted home sales will continue to dip in the province next year.

Central 1 Credit Union, which provides services to more than 300 credit unions across Canada, says in its housing forecast for 2018 to 2021 that B.C. experienced a “mild provincial housing recession” this year.

The report released Tuesday points to the federal government’s mortgage stress test, higher interest rates and various provincial policy measures for the downturn and predicts “rising but subdued sales” over the next three years, with little movement in median home prices.

Bryan Yu, Central 1’s deputy chief economist, says builders have noted the shift and the result is a sharp drop in housing starts since September.

He says starts in B.C. are predicted to fall to about 32,000 units in each of the next two years after nearly 40,000 units were under construction this year and 43,500 in 2017.

But the update also predicts positive housing market outlooks in some areas, including northern B.C. as demand is boosted by a liquefied natural gas project and associated pipelines.

Central 1 says housing markets in the north are forecast to outperform those in southern B.C., which were hit the hardest this year.

“Sales in B.C.’s combined metro markets of Vancouver, Abbotsford-Mission, Kelowna and Victoria are down 40 per cent compared with the end of 2017, led by the Lower Mainland markets,” Yu says in a news release.