What's Happening in British Columbia - Credit Union bullish on housing outlook to '09

British Columbia's white-hot housing market will keep roaring into 2009, according to the chief economist for the Credit Union Central of B.C.

"Lower mortgage rates, high income growth and rising in-migration through to 2009 are favourable trends supporting sales demand," said Helmut Pastrick.

He cautioned, however, that first-time home buyers will find it difficult to break into the market, and this is the "main restraint to even higher sales levels."

Pastrick estimates that average house prices in British Columbia, already the highest in Canada, will increase by 10 to 12 per cent this year and from five to six per cent in 2009, to $504,000.

Supply will grow faster than sales, resulting in some easing in market conditions, according to the Credit Union's recent housing outlook report. "New construction will stay at a high level and possibly climb higher, although supply from the existing housing stock will be the larger source [of listings.]"

Patrick believes that smaller towns in B.C. will lead the sales increase over the next year. "The Kamloops, Kootenay and Okanagan markets have out-performed the B.C. average recently, and this will continue into 2009," he noted.

Weaker markets are likely in northern lumber-dependent economies hit by the U.S. housing recession, he said.

B.C.'s major urban markets will also see a strong year ahead, Pastrick suggests. Greater Vancouver, for example, is forecast to post 38,200 MLS sales in 2009, up from 36,800 this year and just 500 units below the record level 2007.

The Fraser Valley will see sales rise to 17,200 units in 2009, compared with a projection of 16,500 this year. In Victoria, the Credit Union expects 8,100 home sales in 2009, up from 7,700 this year and close to the record level of 2007.

"Tighter rental markets will emerge, with rising in-migration and less ability for renters to enter the home ownership market. Lower vacancy rates and higher rent increases will materialize in 2009," he added.

Courtest of the Western Investor

Krisendra Bisetty/BIV