BC Business
With buyers still outnumbering sellers, will Metro Vancouver housing prices and sales continue their record-breaking pace in 2022?
With buyers still outnumbering sellers, will Metro Vancouver housing prices and sales continue their record-breaking pace in 2022? Keith Stewart, economist with the Real Estate Board of Greater Vancouver, shares some insights in the REBGV’s new housing overview for the first quarter.
Inventory plunged to new lows last fall, putting more upward pressure on prices, Stewart notes in the report. “With persistently strong demand and new listings unable to keep up, benchmark prices have risen 36 percent for detached, 28 percent for attached and 13 percent for apartments since the beginning of the COVID-19 pandemic in March of 2020,” he adds. “Looking ahead into 2022, home price growth will come back toward longer-term averages as rising mortgage rates and price levels squeeze some potential buyers out of the market.”
Even if the number of buyers and sellers returns to normal levels, it will take 18 to 24 months for listings inventory to recover from the shortage dating back to late 2020, Stewart explains. “Heading into the traditionally busy spring buying season, the market is tightening again as it did in the spring of 2021, with the number of buyers searching for a home increasing and the number of sellers in decline since the fall of 2020.”
Gradually rising interest rates should help restore some balance to the market, Stewart predicts. “Barring any additional changes to the stress test rules (which is never a given), the stress test rate is expected to be flat through 2022,” he says. “However, rising rates will depress demand for mortgages despite maximum borrowing amounts being unchanged. This will reduce future demand and ultimately reduce sales volumes and moderate price growth.”
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The outlook for the rest of this year? “After setting an all-time high in 2021 with just over 44,000 sales, sales are expected to moderate due to the combined decrease in carrying-cost affordability of higher prices seen through 2021 and a coming rising interest rate environment.”
The REBGV expects Metro Vancouver housing prices to rise by an average of about 9 percent in 2022. Detached properties will lead with a 13-percent increase, followed by attached homes and apartments at 9.5 percent and 8 percent, respectively.
“Sales at the beginning of 2022 have remained elevated and new listings are entering the market back at typical levels,” Stewart concludes. “Going forward, we expect sales to pull back and price growth to remain elevated, but matching 2021’s numbers is highly unlikely.”