Thursday September 16th, 2010 - British Columbia Home Resale Market Predicted to Gain Strength Through 2011

After an extraordinarily strong first six months, the number of British Columbia housing starts will return to more balanced levels through December. The prediction of approximately 24,000 starts for the entire year was offered by the Canada Mortgage and Housing Corporation.

Carol Frketich, British Columbia regional economist for CMHC, said that two major factors are responsible for the high number of starts and sales in the first half of the year. Buyers anticipated a rise in mortgage rates, as well as the July 1 launch of the harmonized sales tax. As a result, the market was front-loaded with sales that might have been postponed for later months of this year or even next year.

Construction on new single-family homes surpassed a ten-year average for the category from January through June. Starts for dwellings such as townhomes and condominiums are predicted to ease slightly for the balance of 2010, but are projected to rise next year. The rebounding economic conditions and continuing healthy migration into the province are expected to assist in a construction uptick next year.

While the resale market has experienced a modest shortfall, it is actually moving toward more balanced circumstances, with home demand beginning to equalize with existing supply. Resale transactions are expected to increase next year, with 86,400 homes projected to sell in 2011 versus an anticipated 82,500 units this year.

One major indicator of resale market health is the ratio of home sales to newly-listed homes. The current ratio is pointing toward slight price increases for the second half of 2010, as well as modest growth in the prices of resale homes.