Sales for year also expected to decline
Katie Mercer
Province
Prices in B.C.’s housing market will plummet by 18 per cent over the next two years due to the international credit crisis, according to a report released yesterday.
“A poor economic outlook for 2009 and tight credit conditions extending into the next year will keep housing sales on a downward trajectory for several more months,” said Helmut Pastrick, chief economist for Central 1 Credit Union.
Since March, B.C.’s house prices have dropped by 12 per cent. The report projects that 2008 house sales will fall by as much as 30 per cent between January and December.
With the current credit crisis, house prices are expected to fall another 13 per cent in 2009, bringing the median sales price down to $310,000. The report predicts the annual median price will fall to $294,000 before bottoming out in 2010.
The construction of new homes will tumble by 37 per cent as unit sales levels continue to hit multi-year lows while market listings are at a multi-year high, says the report.
Since August 2007, monthly sales are off by about 40 per cent and could continue a downward spiral to 60 per cent. The decline would be the steepest since the 1981-82 recession, the report concludes.
“It was not until August 2007, when the first wave of the financial crisis drove mortgage rates higher, that sales turned sharply lower,” the report states. “Subsequent shock waves from the financial and credit markets, along with deteriorating economic conditions, exacerbated the sales decline.”
Short-term market conditions will continue to be weak as long as the number of residential listings rise, pushing prices lower and throwing off the supply-demand market balance, the report said.
“Everything went sky-high a while ago,” said Iolanda Esposito, a realtor with Re/Max in Vancouver. “So now it has to adjust and fall. It will probably go a bit flat, and then people will be back to buying and selling like crazy.”
© The Vancouver Province 2008