Predictions for BC’s Housing Market 2020
British Columbia’s real estate industry impacts many facets of the community – from both a business and personal-use lens, across sellers and buyers. In ways more than one, the housing market saw relative stagnancy in 2019. However, 2020 brings robust forecasts for a more positive outlook, as sales rise back up with an increase in prices, to pay the way for a more accelerated 2021.
Len Catling, senior officer, media relations, at the Canada Mortgage and Housing Corporation (CMHC), points out that 2020 resale market activity is expected to return towards levels in line with the growing population. The growing number of new homes entering the selling arena are expected to balance out the decrease in inventories of homes for sale. As per the Canadian Real Estate Organization, prices are also expected to rebound in 2020 after a year in decline.
CEO of Gilco Real Estate Services, Rahul Gill, predicts that the housing market also depends on Prime Minister, Justin Trudeau, who has directed his finance minister, Bill Morneau, to review mortgage stress tests and potentially make them more dynamic. Such a scenario may increase sales by 10 per cent to 20 percent within the province, coupled with an increase in price by just over 3 per cent. This means that the market will be lucrative for buying in the first quarter of the year; buyers should buy before the prices start to increase in summertime.
Gill reasons, “The positive forecast for housing markets in 2020 is supported by strong immigration numbers that are likely to maintain a sustained demand for housing in Canada’s most populous housing markets like Vancouver. Newcomers to Canada are expected to purchase one in every five homes on the market over the next five years.”
Varun Chaudhry, director of Kraft Mortgages Canada, adds that 2020 is also a good time for people who are looking to invest for business purposes. There are many builders in the market sitting with good inventory, but without holding power, and are thus looking to sell at a good price. That said, there are specific types of properties that are expected to be more so riding the growth wave.
CMHC’s Senior Specialist of Market Analysis, Eric Bond, suggests that multi-family units will account for the vast majority of new home construction as densification continues, and affordability challenges persist.
Realtor Mayur Arora specifically outlines, “The market will be active in the condo and town home segment, but slower in the higher end segment of over1.3 million-dollar homes due to the government having introduced restrictions on financing.”
Regardless of the upward trend in selling and buying, rental demand is also expected to remain high throughout the forecast period. This entails a two-pronged result: (a) low vacancy rates in absolute terms, propelled by strong demand, and (b) rise in rental prices, increasing at a rate higher than that of inflation.
On the contrary, Gill claims that buying is smarter than selling, “Real estate consistently increases in value over time and outperforms other investments. The market is strong, with increasing prices and transactions. Renting a two-bedroom basement can cost $1,500 to $1,800 per month in certain neighbourhoods today. Yet, you can buy a $500,000 townhouse with just $1,700 per month in mortgage payments, with the rate fixed for 30 years— the best kind of rent control.”
Arora interestingly positions, “We live in a unique geographical area, where there is no more land availability. Our area is locked by the ocean on one side, and mountains on the other side. Best is to get in the market, if you are not already.” Predictions for 2020 do look favourable from a stability standpoint. While the market is not anticipated to accelerate heavily, growth is predicted for British Columbia. However, each individual buyer or seller, aside from an external analysis of market conditions, should also consider individual circumstances and needs to make a sound investment decision!
For tips on home buying in 2020, Catling shines light on the following steps:
1 Decide if homeownership is right for you.
This means assessing your financial stability, discipline and management skills in tandem with taking up the responsibility and time required.
2 Check if you are financially ready to own a home.
Costs are not just limited to the monthly payments, but also upfront costs that can cover a variety of areas such as inspections, down payments, legal fees, taxes and moving costs. It is essential to check savings and credit scores.
3 Finance your home.
A broker or lender is central to the pre-approval process. Chaudhry suggests a good mortgage broker on your side who can do proper evaluations and guide you properly to ensure you can qualify for a home right for you.
4 Make an offer and close the deal.
While the negotiation process can be stressful, it is for the betterment for all parties involved.
5 Maintain your home and protect your investment.
After ownership, financial and operational obligations must be met in a timely manner.