Based on projections for the remainder of the year, MLS® residential sales are expected to decline 9% to 94,200 units compared to 103,700 units in 2017. As well, 2019 and 2020 forecasts predict sales to decrease to 94,000 and 84,800 units, respectively.

The Lower Mainland - Southwest region of the province (which includes the Greater Vancouver Area, the Fraser Valley and Chilliwack) constitutes ~60% of the housing demand in BC. Housing demand fell sharply in the first four months of 2018 as a result of tighter mortgage qualifications. There was minimal impact on home prices as a result of the slower housing demand.

The type of housing market varies depending on housing type. The detached market in Vancouver and the Fraser Valley is showing a balanced market whereas the attached and apartment markets remain significantly undersupplied. 

While the housing market is slowing in growth, it is still continuing to be supported by a strong economy. Looking at the health of BC's economy has been promising. The economy has expanded at an above-trend growth rate for four consecutive years resulting in increased interprovincial migration, employment growth and overall strong consumer confidence. Early 2018 data has been consistent with the interpretation that the "BC economy will continue to produce the remarkable economic and employment growth enjoyed since 2014".

Currently, there are over 60,000 residential units under construction in BC. The increase in new home completions coupled with the slowing housing demand will result in trending most BC markets towards balanced conditions this year, and lead to less upward pressure on home prices.

For a more detailed look at the housing and economic forecast, click here. For all your real estate needs, contact our offices at 604-801-6654 or alternatively at info@wesellvancouver.ca.

Source: British Columbia Real Estate Association (BCREA)

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Join us in this three part series on Canada's financial perspective featuring blogs on the (1) Mortgage Rate Outlook (2) Economic Outlook and (3) Interest Rate Outlook

Economic Outlook

Looking back at 2015, the first half of the year saw negative growth but looking at the big picture reveals a registered economic growth of 1.2%. Multiple factors attributing to the slow economic growth in 2015 has trickled into 2016 as well such as the low oil prices and the related adverse effects on income and job growth. With the newly elected federal government in place, there is an effort to utilizing old-fashioned fiscal policy in order to boost economic growth.

The range for the estimate of the fiscal multiplier for Canada ranges from 0.5 to 1.5. The fiscal multiplier is a ratio that shows the effect of government spending on economic activity. However, the level of impact of fiscal policy is highly interdependent on the state of the economy. BCREA's current forecast for the Canadian economy is for economic growth of 1.6% in 2016 and 2.5% in the following year, taking into account the impact of expansionary fiscal policy. 

Source: British Columbia Real Estate Association

Stay tuned for the last part of the blog series where we'll dive into the Interest Rate Outlook. For all your real estate needs, contact Amalia Liapis at amalia@wesellvancouver.ca or alternatively, at 604-618-7000.

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