So, is the party finally over for the red-hot housing market?
It seems like it’s not done quite yet.
And based on a new forecast by the B.C. Real Estate Association, there may be some surprises left.
Although the market has started to exhibit indications of “fading momentum”, the BCREA predicts that 2021 will set a new all-time record.
Sales are expected to reach 125,600 units this year, shattering the historic high of 112,209 in 2016.
If BCREA is on the mark, 2021 will become the best selling year.
The association released its second quarter forecast Wednesday (May 5), which noted that the “record-setting pace of home sales that began in late fall of 2020 has continued into 2021”.
The forecast pointed to “markets across the province eclipsing previous monthly sales records by wide margins”.
The release comes a day after the Real Estate Board of Greater Vancouver reported that April 2021 sales in the region constituted the “highest total on record for the month”.
Also on May 4, the Fraser Valley Real Estate Board released a market report stating that April sales set a new record for the month.
However, the FVREB also noted that April 2021 “could be the turning point in this historic market” as agents now see “fewer multiple offers, fewer subject-free offers”.
Moreover, “homes over-priced are starting to sit longer”, the FVREB reported.
In its second quarter forecast, the BCREA noted that “with the economic recovery in full swing and mortgage rates still near record lows, sales in large markets have ramped up, putting provincial home sales on track for a record year”.
However, the association noted that mortgage rates are starting to creep up. Also, tighter mortgage rules are anticipated.
“Those measures, along with fading momentum after a frenetic pace of sales, mean home sales will likely slow toward the second half of this year,” the BCREA stated.
But it also stated that “even factoring in a second-half slowdown, provincial unit sales are still projected to reach a record 125,600 units in 2021”.
“A slowdown in sales from the current frenzied pace will help supply catch up, though it will take a significant period before markets return to balance,” the BCREA said.
Supply is expected to fall below demand for homes, and this means only one thing.
“Those tight market conditions, paired with a shift in the composition of sales toward single-detached homes, will translate to an outsized gain in the provincial average price in 2021, which is forecast to rise 14.3 per cent to [$]893,800,” the association stated.
In a media release, BCREA chief economist Brendon Ogmundson said that current sales in 2021 are “on pace to shatter previous records”.
“However,” Ogmundson added, “there are early signs that markets are calming from the frenetic pace of recent months and could balance out over the second half of this year.”More