B.C. ended a six-month slide in Multiple Listing Service (MLS) home sales in July but activity remained low as mortgage stress tests, higher interest rates and provincial policy continued to weigh.
Total sales reached a seasonally adjusted 6,212 units, a 0.9% increase from June. Among real estate board areas, steady July sales were led by gains in the Fraser Valley, Kootenays and the northeast. The South Okanagan board area and Kamloops posted declines.
While B.C. was one of a handful of provinces posting a July gain, the province has experienced the sharpest sales declines since introduction of mortgage stress tests in January, reflecting the region’s higher-priced urban areas. Monthly sales in B.C. are down more than 30% from 2017 year-end compared with a 15% national decline. B.C. sales were down 27% on a year-over-year basis, and 21% through seven months.
For some buyers, recent policies have put their desired property types out of reach or priced them out of the market altogether. Other buyers may be staying on the sidelines to gauge market direction. A subdued sales trend in B.C. is anticipated to persist through the second half of 2018. Raging wildfires in the B.C. Interior will also dampen future sales.
While low sales nudged active listings higher, the upward trend decelerated across most regions as new listings fell. Resale market inventory remains low across all markets, which is supporting price levels. Owners can be patient given the strong economic backdrop and will delay selling or delist properties. Sales-to-active-listings ratios are consistent with balanced to seller’s market conditions in most real estate board areas.
Average prices in most regions are stable or rising. B.C.’s average price rose for a fourth straight month in July to a seasonally adjusted $723,131, up 1% from June. Notable increases from June were Victoria (up 3%), the Fraser Valley (up 5.5%), the Okanagan-Mainline (up 2.2%) and Kamloops (up 3.9%).
In the select markets where the constant-quality MLS housing price index is available, year-over-year price growth remained robust. Values were up 8% in Victoria, 14% on the Island excluding Victoria and 9% in the Lower Mainland, although values are easing.
New-vehicle sales in B.C. rose in June but the trend has softened since late 2017, suggesting a slowdown in consumer demand growth. Provincial sales (which also include data from the Canadian territories) reached 23,040 vehicles in June, which was down 4% year-over-year. On a seasonally adjusted basis, sales were virtually unchanged from June but trending 4% below peak 2017 levels. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.