B.C. housing market feels winter chill

B.C. Multiple Listing Service (MLS) home sales declined 14% from December to a seasonally adjusted 6,763 units as the blast of winter weather kept buyers on the sidelines.

While sales rose 22.7% from same-month 2018, gains largely owed to base-year effects from a weak sales environment in early 2019.

Monthly sales declined 18% in the Lower Mainland--Southwest region and 10% on Vancouver Island from December. Southern Interior market sales held relatively steady with a 5% drop, while northern B.C. sales fell 2%.

January’s dip is expected to be temporary as economic conditions and population growth remain supportive of housing demand, although coronavirus fears and concerns around hikes to strata building insurance could slow housing demand.

Even with January’s sales slip, housing market conditions remain firm due to low supply of active listings. Sales-to-inventory ratios in the province continue to favour sellers in the Lower Mainland and Vancouver Island, with softer conditions in B.C.’s Interior.

B.C.’s average price slipped 0.8% from December to $738,841 as a steep sales decline in the higher-priced Lower Mainland market also influenced overall prices. Year-over-year, the average price level rose 9.5%, with average home values generally higher in most regions.

Constant-quality housing price indexes, which adjust for housing composition, continue to trend up. Lower Mainland prices rose 1% from December but held slightly below a year ago. Broadly, Vancouver Island values are up more than 3% from a year ago with similar growth in the Okanagan.

Non-residential construction building permits finished 2019 on a weak note as volume fell 25% from November and 64% from same-month 2018 to $320.2 million. A declining trend in recent quarters narrowed annual growth to 5.8% after soaring increases early in the year. Private-sector permit growth was partly offset by a drop in government permits.

Among major metro regions, annual permits fell 4.1% in Metro Vancouver, 31% in Abbotsford-Mission and 3.7% in Victoria. Kelowna posted a 37% increase. It is noteworthy that the main driver of the gain came outside the metro areas, with permits in the rest of the province up 50% from 2019. Not surprisingly, permits more than doubled in the North Coast and contributed to half of the net increase in annual permits, which likely reflects investments related to liquefied natural gas project construction. Despite declines in Victoria, permits rose 25% on Vancouver Island, reflecting growth in smaller regional markets.•

Bryan Yu is deputy chief economist at Central 1 Credit Union.