Last month, the British Columbia Real Estate Association (BCREA) released its 2024 First Quarter Housing Forecast Update.

In 2023, British Columbia experienced its slowest housing activity since 2013, with home sales totaling 73,000 as elevated mortgage rates deterred both buyers and sellers. However, a recent decline in mortgage rates, coupled with potential rate cuts by the Bank of Canada, is expected to revitalize the housing market in 2024 and set the stage for a strong 2025.

More specifically, the update reveals that this year, MLS residential sales in British Columbia are expected to increase 7.8 per cent to 78,775 units. Next year, MLS residential sales are forecasted to rise to 86,475 units.

“We expect a delicate balance between rising sales and normalizing inventories”

Brendon Ogmundson, the association’s chief economist, weighs in:

“In 2023, the housing market faced headwinds due to elevated mortgage rates, but the recent decline in fixed mortgage rates and potential Bank of Canada rate cuts present an optimistic outlook for 2024. As we navigate through 2024, we expect a delicate balance between rising sales and normalizing inventories, which should lead to a relatively quiet year for prices.”

Bank of Canada expected to lower policy rate

The update indicates thanks to the progress in lowering inflation back to 2 per cent and softer economic growth and employment, a stringent monetary policy is less needed. For this reason, the BCREA anticipates the Bank of Canada will lower its policy rate (to 4 per cent by end of year) which will lead to higher home sales in the province. This belief has already led to drops in some fixed mortgage rates to below 5.5 per cent, stimulating affordability.

While there’s a risk of rapid price appreciation if sales outpace inventory, the prospect of higher mortgage payments could lead to a larger influx of new listings, resulting in a more balanced market with stable pricing.

Read the full update here.