VANCOUVER (NEWS 1130) – The challenges in Metro Vancouver’s housing market won’t be going away anytime soon.
The Canada Mortgage and Housing Corporation’s forecast for the next three years predicts rising prices and tighter budgets for homebuyers, cooling the local market.
“In essence, the market will face the same sorts of affordability and housing shortage challenges that preexisted the shock of COVID-19,” said Braden Batch, senior analyst, economics, CMHC.
"In essence, the market will
face the same sorts of affordability and
housing shortage challenges that preexisted the shock of COVID-19."
— Mike Lloyd (@llikemoyd) May 6, 2021
The past year has seen borders close, businesses shutter, many forced out of work, and many forced to work from home. Amid COVID-19, many people have moved farther away from city centres and into the suburbs, where price for value has been more appealing to those wanting to get into the market.
Housing sales have hit record highs in recent months, with bidding wars common. But with the return to a semblance of normal hopefully on the horizon, the housing market is expected to moderate in the years ahead.
With that, we won’t see quite as many bidding wars or transactions. Prices are expected to be pushed up again as supply of homes for sale decreases.
“This will act as a fundamental limit on the growth of sales in the market,” the corporation adds. “As the price is bid up, a smaller pool of buyers will be able to continue to make transactions. Therefore, the current high levels of sales activity in Vancouver is expected to fall back to the long run average sales level.”
— Amanda Wawryk (@AmandaWawryk) May 6, 2021
The CMHC says sales will decline as buyers face tightening budgets.
“The sudden cut to interest rates in response to the pandemic worked its way through financial markets to affect mortgage rates very rapidly,” the CMHC’s outlook reads. “The house price adjustment to this change, however, does not happen quickly. Real estate transactions are much slower than trades in financial markets, so asset repricing takes time to work itself out. Regardless, house prices will adjust upward to incorporate lower mortgage rates.”