B.C. Real Estate: Rising interest rates lead to slower sales and dropping home prices

B.C. Real Estate: Rising interest rates lead to slower sales and dropping home prices

Roger Pettingell Sarasota Real Estate

The slowdown in sales appears to be having an effect on prices, which have started trending downwards, according to BCREA data.

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High mortgage rates are slowing down real estate markets across the province as interest rates continue their climb from historic lows, said the B.C. Real Estate Association.

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In June, 7,136 residential sales were recorded on the Multiple Listing Service (MLS), a decrease of 35.7 per cent compared to last June and a 13 per cent dip compared to the previous month.

In its most recent report released Tuesday, the association said some markets and housing types have tipped into balanced or even buyers’ markets as high interest rates are keeping potential buyers to the sidelines.

“While a still growing economy and robust population growth point to strong demand, it is increasingly difficult to satisfy that demand at current interest rates,” said BCREA chief economist Brendon Ogmundson in a statement. “As a result, sales activity across the province, but especially in more expensive markets, continues to slow.”

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The slowdown in sales appears to be having an effect on prices, which have started trending downwards, according to BCREA statistics.

In June, the average residential price in B.C. was pegged at $951,105, a 4.6 per cent increase from the $909,657 recorded last June but down 14 per cent from this year’s highest average price of about $1.1 million in February.

In Greater Vancouver, the average home price is just over $1.2 million, down 9.5 per cent compared to February, while the Fraser Valley’s average price sits at just over $1 million, down 19.5 per cent compared to four months ago.

  1. Sales across much of Canada have slowed dramatically after the Bank of Canadas interest-rate hike forced banks to also move theirs up.

    Home sales plummet in Metro Vancouver as buyers adjust to interest rate hikes

  2. B.C. home sales were down 35 per cent in May from a year ago.

    B.C. home sales drop 35% as rising mortgage rates bite

Some of the most dramatic sales declines have occurred in Chilliwack, which recorded a 54 per cent drop in June sales compared to the previous year.

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Powell River (46.3 per cent), the Fraser Valley (43.8 per cent), the Okanagan (38 per cent) and Greater Vancouver (35.5 per cent) are also seeing less buyers close the deal.

The only region to record an increase in sales is South Peace River. It had 59 sales in June, a nine per cent increase from the same month in 2021.

Sales are slowing down despite an increase in the number of active listings: June saw 16.4 per cent higher active listings across the province compared to June 2021, said the BCREA.

In a housing forecast released last May, the BCREA said Canadian interest rates have largely dictated the direction of the housing market.

While the first quarter of 2022 wasn’t too different from the record pace set in 2021 during the pandemic when interest rates fell to all-time lows, the market is now adjusting to rising interest rates, it said.

Home sales are forecast to dip to “historically normal levels” for the rest of 2022 before falling to “slightly below average levels of activity” in 2023.

chchan@postmedia.com

twitter.com/cherylchan


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