Lower Mainland's "deteriorating affordability" a major concern: BCREA
The BC Real Estate Association (BCREA) says housing affordability is getting worse in the region, and it’s going to be a major economic hurdle as Metro Vancouverites try to battle inflation and high interest rates.
The BCREA predicts the Bank of Canada will begin cutting interest rates in June, which could spark real estate listings in the province to rebound from a 20-year low in 2023.
BCREA
“Though deteriorating affordability is and will remain a significant concern, particularly in the pricier markets of Greater Vancouver, we do expect sales activity to pick up significantly later this year,” its latest Housing Forecast said.
A drop in interest rates will likely mean an increase in prices, but the BCREA predicts it will remain muted in 2024 as a greater number of listings cap overall growth in the 1 to 2% range for Vancouver.
BCREA predicts that the full effects of mortgage rates coming down will be felt in 2025 when average home prices increase in earnest.
This year, the Fraser Valley could see larger price gains than Vancouver itself, with the BCREA predicting a close to the year with homes 4% more expensive than they were at the end of 2023.
Strong population growth in Metro Vancouver, coupled with cheaper mortgage borrowing costs, is predicted to stoke the real estate market starting this summer. Currently, the BCREA says buyers are largely waiting for a drop in interest rates.
Though the country isn’t technically in a recession, a “wide range of measures paint a portrait of a rather sickly Canadian economy,” the BCREA said. Households just aren’t willing to spend their money right now, and unemployment is at a three-year high.
“Clearly, the main driver of inflation is shelter costs, which are currently being propelled by high population growth and a lack of supply, neither of which are problems high interest rates can solve.”
So, while there may be more listings coming on the market later this year, they won’t necessarily be any more affordable as price gains make up for interest rate cuts.
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