The BC housing market is in the Goldilocks zone heading into the busy spring buying season. The provincial housing sector has cooled off significantly after peaking early last year, but home sales and prices have recovered. Can the B.C. real estate market maintain its momentum? It might depend on the Bank of Canada (BoC).

The central bank recently raised interest rates yet again. As a result, rates are at their highest levels in about 22 years.

Because monetary policymakers have signalled that the quantitative tightening cycle has nearly peaked amid the disinflation trends throughout the Canadian economy, this could be a welcomed respite for the overall Canadian real estate market. By the time summer is in full swing, industry observers will be able to determine if conditions have normalized.

So, in the meantime, how did the western province perform in the early part of spring?

What’s Happening in the BC Housing Market?

According to the British Columbia Real Estate Association (BCREA), residential property sales tumbled 17.7 per cent year-over-year in April, totalling 7,427 units. However, home sales have risen for three straight months.

The average residential price in the western province fell 5.6 per cent from the same time a year ago to $995,506. However, on a month-over-month basis, association data show that the average price in the BC housing market has climbed for three consecutive months and increased more than nine per cent since the beginning of 2023.

“B.C. home sales have now risen for three consecutive months, but that recovery in sales has not been matched by listings which continue to fall well below normal levels,” said BCREA Chief Economist Brendon Ogmundson in a statement. “As a result, average prices across the province are once again rising, recovering much of the decline since prices peaked early last year.”

Here is a breakdown of how the markets throughout the province are performing:

Northern B.C.

  • Average Price: -9.2% to $403,733
  • Unit Sales: -29.5% to 292 units
  • Active Listings: +34% to 1,666 units

Chilliwack

  • Average Price: -17.9% to $735,614
  • Unit Sales: -4.2% to 277 units
  • Active Listings: -11% to 865 units

Fraser Valley

  • Average Price: -10.2% to $1,025,814
  • Unit Sales: -4.9% to 1,492 units
  • Active Listings: -21.7% to 3,690 units

Greater Vancouver

  • Average Price: -3.4% to $1,294,875
  • Unit Sales: -16.5% to 2,741 units
  • Active Listings: -4.2% to 8,790 units

Kamloops

  • Average Price: -12.6% to $580,436
  • Unit Sales: -21.6% to 210 units
  • Active Listings: +35.9% to 942 units

Powell River

  • Average Price: -20.2% to $660,600
  • Unit Sales: -40.0% to 18 units
  • Active Listings: +14.8% to 132 units

Vancouver Island

  • Average Price: -11.5% to $719,886
  • Unit Sales: -19.5% to 722 units
  • Active Listings: +49.9% to 2,493 units

Victoria

  • Average Price: -9.4% to $990,918
  • Unit Sales: -20.6% to 623 units
  • Active Listings: +48.4% to 1,563 units

Despite higher borrowing costs, new housing construction activity has remained steady this year. According to Canada Mortgage and Housing Corporation (CMHC), housing starts have soared 68 per cent year-over-year, totalling 4,018 units in March. In the first three months of 2023, housing starts have climbed nearly 40 per cent from the same time a year ago to 10,531 units.

Key Trend to Watch?

Market experts have been monitoring new construction activity in the provincial housing sector, mainly due to rising immigration levels in the coming years.

The BCREA published its latest Market Intelligence report, forecasting that new home completions in the province need to increase 25 per cent above their historical average for the next five years to roughly 43,000 per year. The association noted that the foreign buyers ban and record-high immigration targets will craft housing demand in the province over the next three years.

Here are the report’s chief findings:

  • Canada’s foreign buyers ban will do very little to lower home prices.
  • The province will welcome approximately 217,500 new permanent residents from 2023 to 2025.
  • Demand from a jump in immigration is five times as large as the foreign buyers ban and will drive up home prices.

“Lowering price growth so that income growth can catch up to prices is integral to improving housing affordability in B.C.,” stated Ogmundson. “In our simulations, an appropriate supply response can offset the negative impact on affordability from an immigration-driven demand shock and, if sustained, can achieve a permanent improvement in affordability in B.C.”

There are solutions available, such as zoning changes, boosting funding for affordable housing programs, and offering incentives for new housing construction.

Whether B.C. officials will employ these measures remains to be seen. But it is clear that something needs to be done to alleviate widespread housing affordability concerns.