Average BC home price will reach $1 million for the first time in 2022

A row of Vancouver Special homes in East Vancouver. (Kenneth Chan/Daily Hive)

The upward climb of British Columbia’s residential real estate market will continue to push through into 2022.

A new forecast by the BC Real Estate Association (BCREA) anticipates the province’s average home price will see year-over-year increases of 8.5% to $1.006 million, and 2.7% to $1.033 million in 2023. This is up from $927,800 in 2021, when there was a 18.7% year-over-year increase from the pandemic shock year of 2020.

This year will be the first time ever BC’s average home price will reach, and exceed, the $1 million mark.

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Although there will be a steep ascent in prices, the opposite will be true for the number of home sales, which is the main driver of the price escalation.

Strong demand is expected to persist from BC’s strong economic recovery, the downward trend of the province’s unemployment rate towards pre-pandemic levels, and the growth in wages.

But an inevitable change in the Bank of Canada’s overnight policy rate later this year will soften some of this demand. Canadian mortgage rates have already jumped significantly in anticipation of tighter monetary races, and this should be reflected in the housing market’s conditions in the second half of 2022 and in 2023.

It is estimated that record low available listings will lead to a 17.3% year-over-year decrease in home sales — falling from the record 124,877 units sold in 2021 to 103,250 units sold in 2022. This trend will continue into 2023, when 90,200 units are expected to be sold, representing a 12.6% year-over-year drop.

The lower sales volume activity in 2022 will be comparable to what was recorded in 2015 and 2017, while 2023’s forecast will be comparable to 2020’s volume.

This comparative slowdown will allow the market to somewhat normalize, with supply catching up to demand, and the price growth slowing considerably in 2023.

“Slower sales activity will allow the inventory of resale listings to rebuild, but given how low listings currently are, it will take considerable time before markets can return to a healthy balance. In fact, active listings in most markets need to more than double to bring markets back into balance. Rebuilding the inventory of active listings is likely a multi-year process,” reads the report.

For area-specific forecasts, the Real Estate Board of Greater Vancouver’s (REBGV) jurisdiction is expected to see a steady drop in home sales — falling by 16% year-over-year with 37,800 in 2022, and 14% with 32,500 in 2023. This is down from 44,884 in 2021, when there was a 42% year-over-year increase.

After rising by 11.5% to $1.189 million in 2021, the average home price in REBGV will increase by 8.1% to $1.285 million in 2022, and 2.7% to $1.32 million in 2023.

But the Fraser Valley Real Estate Board (FVREB), which includes Metro Vancouver’s easternmost and southernmost communities such as Surrey, will perform stronger than its regional counterpart. Home sales in FVREB jurisdiction reached 26,546 units in 2021, representing a 41% decline from the previous year. The volume of home sales is forecast to fall by 19% to 21,500 units in 2022, and 16.3% to 18,000 units in 2023.

FVREB’s average home price ascended by 22.7% to $1.014 million in 2021, and it will continue to push upwards by 7.5% to $1.09 million in 2022 and 5.5% to $1.15 million in 2023.

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