BC home sales in 2021 forecast to return to 2016's red hot volumes

Burnaby's Metrotown area. (Shutterstock)

2021 is setting up to be another piping hot year for the residential real estate market in BC, according to the new forecast released this week by the British Columbia Real Estate Association (BCREA).

It is estimated the number of residential sales in the province will increase by 15.5% to a total of nearly 109,000 units in 2021. This is up from 94,021 sales in 2020, which exceeded the volumes recorded in 2019 and 2018.

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The expected spike in home sales in 2021 is largely driven by the activity in the Lower Mainland and Southwest regions. The overall provincial sales for this year will be just slightly under the highly active market conditions of 2016 — the same year the provincial government introduced the foreign buyers tax in a bid to curb market activity.

BC residential real estate market forecast. (BC Real Estate Association)

There will be a slight dip in market conditions in 2022, when residential sales are expected to shrink by 9% to 98,850 units, but the activity will still be higher than 2020’s volumes, and comparable to 2017.

The growth in 2021 will be particularly pronounced in the jurisdictions of the Real Estate Board of Greater Vancouver (REBGV) and the Fraser Valley Real Estate Board (FVREB), which includes Metro Vancouver’s easternmost communities such as Surrey, Langley, North Delta, and White Rock.

REBGV will see its unit sales increase by 21.8% to 38,500 units in 2021, with average MLS home prices growing by 5% to $1.12 million. In 2020, home sales increased by 23% to 31,611 units, and prices went up by 8% to $1.066 million.

The current forecast for REBGV’s subsequent year, 2022, is more modest, with analysts anticipating a 6.5% dip in unit sales to 36,000 units and a smaller average price increase of 2.7% to $1.15 million.

In the FVREB, the strong growth trends that were experienced in 2020, propelled by families seeking larger homes due to COVID-19’s impact on living conditions, will continue. Home sales in 2020 increased by 28.5% to 18,871 units, and average prices went up by 14.4% to $826,005. In 2021, there will be more modest gains of 16.6% to 22,000 units, and average prices rising by 9% to $900,000.

But there will be a decrease in activity in 2022, with the number of homes sold falling by 9.1% to 20,000 units, and average prices increasing slightly by 1.7% to $915,000.

Further to the east, Chilliwack and District Real Estate Board will see similar market conditions as FVREB through 2022.

“After an unprecedented and often surprising performance in 2020, the provincial housing market is set up for a very strong year in 2021,” said Brendon Ogmundson, BCREA Chief Economist.

“A strong economic recovery and recordlow mortgage rates will continue to drive strong demand this year.”

BCREA also notes that there was a surge in new listings throughout the second half 2020, after the dip over the first half from the onset of the pandemic. However, it was not enough to offset the strong pent-up sales demand in the second half of 2020, and as a result there will be very tight market conditions at the start of 2021, with the potential for strong price increases through the spring and summer.

However, this could all change from the evolving situation of the pandemic’s health crisis, and the resulting impact on the economy, such as the potential for new health safety restrictions. The pace of the rollout of the vaccine to the general public will also be another factor for the extend of the economy’s rebound later in 2021 and throughout 2022.

BC residential real estate market forecast. (BC Real Estate Association)

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