ECONOMICS Housing Forecast

Second Quarter – May 2021

The record-setting pace of home sales that began in late fall of 2020 has continued into 2021 with markets across the province eclipsing previous monthly sales records by wide margins. Early in the recovery, that record pace was led by markets outside of large metropolitan areas as buyers flocked to less populated markets with greater availability and affordability of single-detached homes. However, 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. The trajectory of home sales in the second half of 2021 and for 2022 will be highly dependent on the evolution of Canadian mortgage rates. Fixed mortgage rates have started to rise from a record-low average of 1.8 per cent to just over 2 per cent and could rise further as the Bank of tapers its bond purchases through 2021. Additionally,the recent change to the B-20 mortgage stress test, which now sets a minimum qualifying rate of 5.25 per cent, may have some moderatiang impact on demand, though limited as it only lowers a buyer’s purchasing power by about 4 per cent compared to the existing regulation. 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. However, 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 supply shock experienced by BC markets during the initial phase of the COVID-19 pandemic and a sustained listings drought continues to drive price INSIDE increases in 2021. This is particularly true in smaller Economic Outlook ...... 2 markets, many of which have seen inventories of Island-Coast ...... 4 homes for sale fall to all-time lows. -Southwest ...... 6 Those tight market conditions, paired with a shift in the composition of sales toward single-detached Thompson-...... 8 homes, will translate to an outsized gain in the Northern BC ...... 10 provincial average price in 2021, which is forecast Kootenay ...... 12 to rise 14.3 per cent to 893,800. Tables ...... 14 1 BCREA Housing Forecast May 2021

ECONOMIC OUTLOOK

BC’s economic recovery from the COVID-19- BC Economic Outlook1 2020 2021F 2022F induced recession of 2020 is well underway and Real GDP Growth -3.8% 5.5% 4% we anticipate 2021 will record the highest growth Employment (millions) 2.5 2.6 2.7 in provincial real GDP since 1988. We forecast Employment Growth -6.5% 5.8% 3.0% the BC economy will expand by 5.5 per cent this Unemployment Rate 9% 7.2% 5.5% year, followed by nearly 4 per cent growth in 2022. Personal Disposable Income ($billions) 192 201 210 That elevated rate of growth will be fueled by Personal Disposable Income Growth -4% 5.0% 4.5% pent-up consumer spending and aided by record Average Weekly Wage ($) household savings, as well as a recovering global 1,081 1,090 1,117 economy and strong non-residential investment. Weekly Wage Growth 8.1% 0.8% 2.5% Retail Sales ($billions) 89 97.5 102 Growth in the BC economy bottomed out in the Retails Sales Growth 2.6% 10.0% 5% early months of the COVID-19 pandemic before Average 5-year Fixed Mortgage Rate 1.80-2.99 1.80-2.30 2.30-2.6 a gradual recovery began to take hold. The BC 1. Values have been estimated where data has not yet been released. economy has now posted five consecutive months Source: BCREA Economics, of positive year-over-year real GDP growth as measured by our BCREA Nowcast and is set to take Much of that savings is already being funneled into off in the coming months. Household consumption the red-hot BC housing market. Home sales across of retail goods is already rising at a double-digit nearly all regions of the province are on a record- rate and with a strong progression of vaccinations, setting pace. The impact of the pandemic is still the service side of the economy should begin to motivating homebuyers toward increased space, reopen, bringing continued but more balanced and record-low interest rates are making the cost growth in household consumption. Much of the of acquiring that space more affordable, though increase in pent-up spending is expected to be rapidly rising prices and extremely competitive driven by a record accumulation of household markets are quickly eroding that affordability. savings. Due to a generous fiscal response by the Mortgage rates have moved modestly higher since federal and provincial governments, as well as the middle of February. Recognizing the much a build-up of precautionary savings, Canadians brighter economic outlook, we expect the Bank of saved more in 2020 than in the previous six years Canada will begin tapering its current purchases of combined. As that money begins to move out of Government of Canada bonds but will stick to its bank accounts and into the economy, we expect commitment to keep the policy rate on hold. This that spending on retail goods, home renovations, will mean some additional upward pressure on vacations and recreational spending will benefit.

22 BCREA Housing Forecast May 2021

Canadian mortgage rates over the next year. While a BC economic recovery is well underway That should help moderate the rapid pace of there continues to be an asymmetry in the home sales over the second half of this year and recovery. This is especially true in the labour bring some balance to markets. The outsized market. Although total BC employment has appreciation of home prices over the past year essentially regained its pre-pandemic level should continue to spur strong residential following a historic decline, occupations that construction, with housing starts continuing to pay a higher-than-average wage and that are trend near 40,000 units this year. That adds to an less reliant on in-person transactions continue already large pipeline of units under construction, to grow, with employment in high-wage sectors the timely completion of which is desperately rising 10 per cent since the start of the pandemic. needed in supply-starved BC housing markets. On the other hand, high-touch, front-line service sector employment, particularly for lower-wage or younger workers, continues to struggle and will only recover once the population hits herd immunity with vaccinations. Fortunately, an increase in the supply of vaccines has dramatically improved vaccination timelines, and that recovery is closer at hand than previously thought.

Economic growth will be further propelled by the resumption of construction activity at BC’s large LNG and pipeline projects. After being interrupted by the outbreak of the pandemic, those projects are once again ramping up and could match investment activity that rivals 2019, a year that saw non- residential investment in BC account for more than two-thirds of economic growth.

As COVID-19 recoveries ramp up globally, demand for BC exports is anticipated to be very strong in 2021. That strength will be compounded by a surge in global commodity prices, especially lumber, as well as an extraordinary fiscal stimulus injected into the economy of our largest trading partner. The passing of the American Rescue Plan, a nearly $2 trillion spending package, is expected to translate to rapid economic growth in the , which should have at least some growth-boosting effects for the BC export market.

13 BCREA Housing Forecast May 2021

VANCOUVER ISLAND-COAST ( REAL ESTATE BOARD / VICTORIA REAL ESTATE BOARD / POWELL RIVER AND SUNSHINE COAST REAL ESTATE BOARD)

Housing markets in the Vancouver Island-Coast Region are forecast to rise by 11.3 per cent in Victoria and are experiencing a surge in home sales activity, as a 17.1 per cent in the Vancouver Island board area in 2021. result of low mortgage rates, a recovering economy and an influx of homebuyers from other parts of the province. Altogether, those factors are driving MLS® unit sales in the region to record-high territory.

The recovery in the BC economy remains uneven, and sectors vital to the Island economy, such as tourism, are not anticipated to fully recover for quite some time. However, we are optimistic that as vaccinations reach important herd-immunity thresholds, spending in the service sector will see significant growth. This should help employment on the Island, and especially in Victoria, regain and swiftly surpass its pre-pandemic level.

While a recent uptick in mortgage rates and the spectre of government intervention may slow home sales in the second half of 2021, MLS® unit sales in the region are still forecast to finish the year at a new record high. Our forecast is for home sales in the Victoria board region to reach a record high of 10,500 units. Likewise, home sales in the Vancouver Island board region are forecast to rise to a record high of 11,500 units in 2021.

The negative shock to the supply of homes for sale at the onset of the pandemic has led to a crisis in the availability of listings in 2021 and nowhere is this crisis more severe than on Vancouver Island. The total inventory of homes for sale was already low across the region before the pandemic, and the situation has only become worse as demand for homes in markets outside of major metro areas has intensified, further depleting inventory. As a result, active listings in the Vancouver Island board area are lingering around 1,500 listings or just over one month of supply at the current pace of sales. In Victoria, listings have fallen to their lowest point in five years.

As a result, market conditions across the Island are historically tight, creating substantial pressure on home prices. MLS® average prices are sharply higher due to buyers’ increased demand for space during the pandemic. This enhanced demand tends to skew average prices higher as more expensive homes are a larger share of sales volume. Average home prices

24 BCREA Housing Forecast May 2021

Vancouver Island-Coast

MLS® Unit Sales 2020 % 2021F % 2022F % Victoria Real Estate Board 8,060 16.9 10,500 30.3 8,300 -21 Single Detached 4,247 15.8 5,600 31.8 4,400 -21.4 Apartment 2,411 9.5 3,100 28.6 2,600 -16.1 Townhouse 1,053 27.5 1,500 42.4 1,100 -26.6

Vancouver Island Real Estate Board 9,055 20.1 11,500 27 8,900 -22.6 Single Detached 5,673 13.8 7,600 34 6,000 -21.1 Apartment 984 4.6 1,400 42.3 1,000 -28.6 Townhouse 1,181 2.9 1,700 43.9 1,300 -23.5

Powell River Sunshine Coast Real Estate Board 416 29.6 575 38.2 400 -30.4 Single Detached 344 40.4 400 16.3 300 -25 Condo 18 -10 30 66.7 25 -16.7 Single Family Mobile 19 -20.8 30 57.9 25 -16.7 MLS® Average Price 2020 % 2021F % 2022F % Victoria Real Estate Board $ 777,993 13 $ 866,200 11.3 $ 880,000 1.6 Single Detached $ 986,557 14 $ 1,110,000 12.5 $ 1,130,000 1.8 Apartment $ 480,402 3.2 $ 530,000 10.3 $ 538,000 1.5 Townhouse $ 613,613 2.6 $ 685,000 11.6 $ 697,000 1.8

Vancouver Island Real Estate Board $ 531,086 8.6 $ 622,000 17.1 $ 655,300 5.4 Single Detached $ 632,555 12.1 $ 770,000 21.7 $ 805,000 4.5 Apartment $ 301,318 4.8 $ 350,400 16.3 $ 360,000 2.7 Townhouse $ 411,846 5.6 $ 477,000 15.8 $ 494,000 3.6

Powell River Sunshine Coast Real Estate Board $ 420,586 15.8 $ 490,000 16.5 $ 500,000 2 Single Detached $ 459,501 14.2 $ 550,000 19.7 $ 560,000 1.8 Condo $ 246,656 -4.1 $ 275,000 11.5 $ 280,000 1.8 Single Family Mobile $ 350,597 3.2 $ 360,000 2.7 $ 367,500 2.1 Housing Starts 2020 % 2021F % 2022F % Victoria CMA 3,209 -8.3 3,400 6 2,880 -15.3 Single 694 8.8 800 15.3 780 -2.5 Multiple 2,515 -12.1 2,600 3.4 2,100 -19.2

Nanaimo CMA 768 -42.6 775 0.9 825 6.5 Single 300 -2 325 8.3 350 7.7 Multiple 468 -54.7 450 -3.8 475 5.6

15 BCREA Housing Forecast May 2021

LOWER MAINLAND-SOUTHWEST (REAL ESTATE BOARD OF / REAL ESTATE BOARD / AND DISTRICT REAL ESTATE BOARD)

Housing markets in the Lower Mainland-Southwest region prices this year while in Chilliwack, where the supply of BC are experiencing record home sales, well surpassing drought is particularly severe, average prices will close out the heights of the 2016 housing boom. the year up 20 per cent.

The recovery of the BC economy from the shock of the COVID-19 pandemic is well underway and economic growth is set to accelerate in 2021. Employment in the region, while not yet fully recovered due to the struggles of the service sector, has been growing, particularly in above-average wage occupations that tend to support home ownership in larger, more expensive markets like Metro Vancouver. As vaccinations reach important herd-immunity thresholds, we expect the economic recovery to become more widespread.

Home sales were boosted through the fall of 2020 as 5-year fixed mortgage rates reached new record lows. While mortgage rates have moved slightly higher, they are still well below pre-pandemic levels. Those low rates, along with a remarkable accumulation of household savings and a pandemic-motivated shift toward a preference for increased living space, have caused a surge of demand within Greater Vancouver and especially in areas like the Fraser Valley where single-detached homes are more available and affordable. MLS® home sales across the Lower Mainland are forecast to reach a new record in 2021. We forecast sales in the Greater Vancouver board area will reach a record 44,500 sales this year before moderating to 36,000 home sales in 2022. Similarly, we expect to see a 27.2 per cent increase in the Fraser Valley board area in 2021 to a record high of 24,000 units. In the Chilliwack board area, we forecast a record 5,300 MLS® unit sales this year before sales return to a more historically normal level of 3,800 unit sales in 2022.

The negative supply shock at the onset of the pandemic has led to a crisis in the availability of listings in 2021. While new listings activity has recently increased considerably, the new additions are only enough to keep up with current demand, leaving total active listings in record-low territory.

The resulting imbalance means that home prices, especially for single-detached homes, are under extraordinary pressure. As long as this imbalance remains, home prices are going to be growing at an accelerated rate. We expect MLS® average home prices will rise 10.1 per cent in Greater Vancouver in 2021, followed by 2.1 per cent in 2022. As buyers compete for space outside of Greater Vancouver, the Fraser Valley area will see a 17.4 per cent growth in

26 BCREA Housing Forecast May 2021

Lower Mainland-Southwest

MLS® Unit Sales 2020 % 2021F % 2022F % Real Estate Board of Greater Vancouver 31,611 23.1 44,500 40.8 36,000 -19.1 Single Detached 10,665 30.4 14,500 36 11,500 -20.7 Apartment 14,096 13.1 21,400 51.8 18,000 -15.9 Townhouse 6,140 31.6 8,000 30.3 6,300 -21.2

Fraser Valley Real Estate Board 18,871 28.5 24,000 27.2 20,000 -16.7 Single Detached 8,786 43.2 10,700 21.8 9,300 -13.1 Apartment 4,365 6.4 5,600 28.3 5,000 -10.7 Townhouse 5,387 32.3 7,300 35.5 5,400 -26

Chilliwack and District Real Estate Board 3,497 25.4 5,300 51.6 3,800 -28.3 Single Detached 2,050 28.4 3,200 56.1 2,200 -31.3 Apartment 452 13.6 700 54.8 500 -28.6 Townhouse 900 30.1 1,300 44.5 1,000 -23.1 MLS® Average Price 2020 % 2021F % 2022F % Real Estate Board of Greater Vancouver $ 1,066,199 8 $ 1,174,300 10.1 $ 1,198,500 2.1 Single Detached $ 1,680,000 6.3 $ 1,960,000 16.7 $ 1,980,000 1 Apartment $ 677,538 2.4 $ 725,000 7 $ 754,000 4 Townhouse $ 914,583 4.7 $ 1,040,000 13.7 $ 1,080,000 3.8

Fraser Valley Real Estate Board $ 826,005 14.4 $ 969,400 17.4 $ 994,700 2.6 Single Detached $ 1,170,000 10.4 $ 1,441,000 23.2 $ 1,455,000 1 Apartment $ 407,280 4.1 $ 464,000 13.9 $ 479,000 3.2 Townhouse $ 608,935 5.4 $ 719,000 18.1 $ 734,900 2.2

Chilliwack and District Real Estate Board $ 577,279 10.3 $ 692,900 20 $ 716,400 3.4 Single Detached $ 695,423 7.3 $ 872,000 25.4 $ 900,000 3.2 Apartment $ 280,969 4.6 $ 317,000 12.8 $ 326,000 2.8 Townhouse $ 462,837 7.8 $ 540,000 16.7 $ 560,000 3.7 Housing Starts 2020 % 2021F % 2022F % Vancouver CMA 21,565 -23.4 26,000 20.6 22,000 -15.4 Single 3,085 -10 4,000 29.7 4,000 0 Multiple 18,480 -25.2 22,000 19 18,000 -18.2

Abbotsford CMA 1,110 -34.5 1,230 10.8 1,190 -3.3 Single 333 -5.9 430 29.1 440 2.3 Multiple 777 -42 800 3 750 -6.3

Chilliwack CA 674 -45.9 1,220 81 1,080 -11.5 Single 305 -22.4 520 70.5 490 -5.8 Multiple 369 -56.7 700 89.7 590 -15.7 17 BCREA Housing Forecast May 2021

THOMPSON-OKANAGAN (ASSOCIATION OF INTERIOR REALTORS® / & DISTRICT REAL ESTATE ASSOCIATION)

Housing markets across the Thompson-Okanagan region to be relieved anytime soon. We are forecasting the MLS® are seeing an unprecedented level of activity as the average price will rise 15 per cent in the Okanagan and COVID-19 pandemic accelerated retirement plans and made 17.3 per cent in Kamloops in 2021. remote working a long-term possibility. As retirees and young workers compete for limited space throughout the Interior, the resulting surge in demand has put significant pressure on the limited inventory of homes for sale in the region, driving prices higher.

Strong interprovincial migration paired with increased migration from the Lower Mainland will continue to propel demand in the Thompson-Okanagan region over the next year. While the regional labour market has largely recovered from the initial shock of COVID-19. Employment in the Thompson-Okanagan is back to its pre-COVID-19 level, but the region’s vital tourism sector will take longer to recover. However, with the provincial vaccination program ramping up considerably, the timeline for a return to normal is improving. Those factors and continued low mortgage rates have MLS® unit sales on a record pace through the region so far in 2021. Although we expect some moderation in sales to occur in the second half of the year, we are forecasting that home sales will reach a record 15,000 units this year in the Okanagan. Kamloops home sales are forecast to increase by 28.1 per cent this year to a record 3,900 units.

The extraordinary recovery in home sales activity in the Thompson-Okanagan has not been met with a similar increase in supply. The inventory of homes for sale was already low as the COVID-19 pandemic began, and the resulting measures to mitigate the spread of the virus prompted a further pull-back in listings activity. Consequently, as demand recovered, total active listings have become severely depleted with record-low levels across the Okanagan and Kamloops. This scarcity means that MLS® average prices have been rising considerably as buyers enter the frenzied competition. These outsized increases in average prices have been skewed higher still by a shift in buyers’ preferences toward extra space, meaning more expensive single-detached homes on large properties are a higher share of total sales. Even still, price measures that adjust for sales composition, like the HPI for the Okanagan Valley, are showing home prices rising 15 per cent compared to last year.

With the level of supply so low and home sales expected to remain at a record pace for the next several months, price pressure across the Thompson-Okanagan region is unlikely

28 BCREA Housing Forecast May 2021

Thompson-Okanagan

MLS® Unit Sales 2020 % 2021F % 2022F % Association of Interior REALTORS®1 11,371 24.2 15,000 31.9 11,500 -23.3 Single Detached 5,863 24.9 7,950 35.6 6,200 -22 Apartment 2,018 15.8 2,850 41.2 2,050 -28.1 Townhouse 2,727 33.5 3,600 32 2,770 -23.1

Kamloops & District Real Estate Assoc. 3,044 6.4 3,900 28.1 3,100 -20.5 Single Detached 1,837 1.7 2,400 30.6 1,960 -18.4 Apartment 370 29.4 470 27.1 310 -34.1 Townhouse 614 13.7 730 18.8 600 -17.7 MLS® Average Price 2020 % 2021F % 2022F % Association of Interior REALTORS®1 $ 588,195 16.1 $ 676,600 15 $ 696,000 2.9 Single Detached $ 730,629 16 $ 865,000 18.4 $ 882,100 2 Apartment $ 340,544 2.2 $ 385,000 13.1 $ 393,900 2.3 Townhouse $ 516,037 9.6 $ 604,000 17 $ 623,700 3.3

Kamloops & District Real Estate Assoc. $ 458,827 9.6 $ 538,100 17.3 $ 552,700 2.7 Single Detached $ 538,778 10.8 $ 646,000 19.9 $ 666,000 3.1 Apartment $ 273,869 0 $ 328,000 19.8 $ 337,000 2.7 Townhouse $ 472,510 12.9 $ 540,000 14.3 $ 558,000 3.3 Housing Starts 2020 % 2021F % 2022F % CMA 1,794 -19.4 2,050 14.3 2,250 9.8 Single 383 -22.5 600 56.7 550 -8.3 Multiple 1,411 -18.5 1,450 2.8 1,700 17.2

Penticton CMA 119 -58.7 155 30.3 190 22.6 Single 73 -18 75 2.7 90 20 Multiple 46 -76.9 80 73.9 100 25.0

Kamloops CA 793 20.7 855 7.8 750 -12.3 Single 196 -14.4 325 65.8 350 7.7 Multiple 597 39.5 530 -11.2 400 -24.5

1. The Okanagan Mainline Real Estate Board (OMREB) amalgamated with the Real Estate Board (SOREB) on January 1, 2021, to form the Association of Interior REALTORS©.

19 BCREA Housing Forecast May 2021

NORTHERN BC (BC NORTHERN REAL ESTATE BOARD / SOUTH PEACE RIVER REGION)

BC’s economic recovery from the COVID-19-induced the province are setting new records, MLS® home recession of 2020 is well underway, and economic sales in that region have recovered, but only back to growth in the province is expected to reach a 25-year historically average levels. high of 5 per cent in 2021, followed by nearly 4 per cent in 2022. That elevated rate of growth will be fueled by pent-up consumer spending and aided by record household savings, as well as a recovering global economy and strong non-residential construction. Much of the increase in non-residential construction is due to activity occurring throughout Northern BC. An increase in spending and activity related to LNG projects and pipelines, along with strong commodity prices spurred by a recovery in global demand, is providing a boost to employment growth and housing demand in the North.

Employment in the and North Coast regions has already surpassed its pre-pandemic level, largely driven by a recovery in commodity sectors, and especially employment in the mining and oil and gas sectors. Soaring global lumber prices have helped the forestry sector post a significant rebound. Employment in that sector has recovered back to its highest point since mid-2019.

Employment recovery, along with record-low mortgage rates, has produced a surge in home sales, with sales in the first quarter of 2021 on a record pace. Total MLS® unit sales in the region covered by the BC Northern Real Estate Board were up 83 per cent year-over-year in the first quarter and up 21 per cent from the fourth quarter of 2020 on a seasonally-adjusted basis. We expect 2021 MLS® sales to approach and likely surpass the region’s previous annual record of 5,564 units set in 2006, ultimately rising 31.1 per cent this year to 5,600 units.

Northern markets continue to be undersupplied in terms of total active listings. The average level of active listings finished the first quarter down 28 per cent year- over-year and fell 7 per cent on a seasonally-adjusted basis from the end of 2020. With the supply of listings near record lows and sales at a record high, home prices continue to rise at an accelerated rate. As such, BCREA forecasts MLS® average prices will rise by 17.8 per cent in 2021 and 3.3 per cent in 2022.

Markets in the South Peace Region of Northeast BC remain somewhat of an outlier in the province. While home sales and prices in the majority of markets around

210 BCREA Housing Forecast May 2021

Northern BC

MLS® Unit Sales 2020 % 2021F % 2022F % BC Northern Real Estate Board 4,273 4.1 5,600 31.1 4,600 -17.9 Single Detached 3,170 3.4 4,300 35.6 3,500 -18.6 South Peace River1 332 -7.8 425 28 350 -17.6 Single Detached 300 -0.7 360 20 295 -18 MLS® Average Price 2020 % 2021F % 2022F % BC Northern Real Estate Board $ 332,890 7.1 $ 392,000 17.8 $ 405,000 3.3 Single Detached $ 367,403 5.4 $ 420,600 14.5 $ 430,300 2.3 South Peace River1 $ 258,122 -0.1 $ 291,000 12.7 $ 295,800 1.6 Single Detached $ 291,440 6.1 $ 305,000 4.7 $ 310,000 1.6 Housing Starts 2020 % 2021F % 2022F % Prince George CMA 452 8.4 325 -28.1 405 24.6 Single 173 -7 125 -27.7 180 44 Multiple 279 20.8 200 -28.3 225 12.5 CMA 37 184.6 30 -18.9 35 16.7 Single 5 -54.5 15 200 15 0 Multiple 32 1500 15 -53 20 33 1. The former Northern Lights Real Estate Board has been renamed the South Peace River Region of the Association of Interior REALTORS®

111 BCREA Housing Forecast May 2021

KOOTENAY (KOOTENAY ASSOCIATION OF REALTORS®)

Home sales in the Kootenay region have surged through 2021 to about 70 per cent above their pre- pandemic trend. Home sales in the region are on a record-setting pace in the first quarter, but while demand is unprecedented, the supply of listings in the Kootenay region has fallen to a record low. Active listings fell by 44 per cent year-over-year in March to under 1,000 total active listings for the entire Kootenay area.

The severe imbalance of supply and demand will take quite some time to return to normal. As the BC economy recovers and the provincial vaccination program continues to gain momentum, demand will remain strong. Employment in the Kootenay has regained its Pre-COVID-19 level and the unemployment rate in the region has returned to normal following a pandemic-induced spike to above 15 per cent last summer.

While rising mortgage rates and slightly more stringent mortgage stress test rules may slow home sales over the second half of 2021, the pace of home sales over the first half of the year have the Kootenay region on track to surpass the record level of home sales set just last year. We forecast that home sales will rise in the Kootenay region by 23.6 per cent this year to 4,300 units before moderating to a strong but more historically normal level of 3,200 unit sales in 2022.

New home construction in the region has been very strong, particularly in the multiple-unit sector in Cranbrook, however, homes currently under construction will buffer only a small portion of the steep fall in supply. As such, prices across the Kootenay are expected to feel significant upward pressure over the next two years. We forecast MLS® average prices will rise by 19.7 per cent in 2021 to $459,700 and increase a further 4.3 per cent in 2022 to $479,400.

212 BCREA Housing Forecast May 2021

Kootenay

MLS® Unit Sales 2020 % 2021F % 2022F % Kootenay Association of REALTORS® 3,480 17.4 4,300 23.6 3,200 -25.6 Single Detached 2,510 16.4 3,100 23.5 2,300 -25.8 Apartment 402 23.3 530 31.8 400 -24.6 Townhouse 387 19.8 480 24.1 360 -25 MLS® Average Price 2020 % 2021F % 2022F % Kootenay Association of REALTORS® $ 383,924 11.3 $ 459,700 19.7 $ 479,400 4.3 Single Detached $ 430,293 10.6 $ 517,000 20.2 $ 540,000 4.4 Apartment $ 189,685 -0.1 $ 220,000 16 $ 234,000 6.4 Townhouse $ 313,572 6.2 $ 354,000 12.9 $ 365,000 3.1 Housing Starts 2020 % 2021F % 2022F % Cranbrook CMA 330 155.8 140 -57.6 100 -28.6 Single 83 33.9 100 20.5 75 -25 Multiple 247 268.7 40 -83.8 25 -37.5

113 BCREA Housing Forecast May 2021

BC Housing Outlook 2018 2019 2020 2021F 2022F

MLS® Unit Sales 78,524 77,350 94,010 125,600 100,150 % change -24.5 -1.5 21.5 33.6 -20.3

MLS® Average Price $711,379 $700,378 $781,765 $893,800 $921,800 % change 0.4 -1.5 11.6 14.3 3.1

MLS® Dollar Volume ($billions) $55.86 $54.17 $73.49 $112.26 $92.32 % change -24.2 -3 35.7 52.7 -17.8

Housing Starts 40,857 44,932 37,734 44,700 39,000 % change -6.4 1 -16 18.5 -12.8

Single 11,163 8,792 8,519 10,800 10,700 % change -9.6 -21.2 -3.1 26.8

Multiple 29,694 36,140 29,215 33,900 28,300 % change -5.2 21.7 -19.2 16 -16.5

Total Net Migration 74,034 79,887 20,395 50,000 85,000 % change 5.1 7.9 -74.5 145.2 70

Net International Migration 61,311 65,961 (599) 35,000 70,000 % change 11.2 7.6 -100.9 n/a 100

Net Interprovincial Migration 12,723 13,926 20,994 15,000 15,000 % change -16.8 9.5 50.8 -28.6 0

Range of Posted 5-year Fixed Mortgage Rate 3.37-3.72 2.77-3.71 1.80-2.99 1.80-2.30 2.30-2.6 (%)

BC Economic Outlook1 2018 2019 2020 2021F 2022F

Real GDP Growth (%) 2.7% 2.7% -3.8% 5.5% 4%

Employment (millions) 2.59 2.67 2.49 2.64 2.72

Employment Growth (%) 1.4% 2.9% -6.5% 5.8% 3%

Unemployment Rate (%) 4.8% 4.7% 9% 7.2% 5.5%

Personal Disposable Income ($billions) 190 200 192 201 210.4

Personal Disposable Income Growth (%) 2.9% 5% -4% 5% 4.5%

Average Weekly Wage 974 1,000 1,081 1,090 1,117

Weekly Wage Growth (%) 3.9% 2.7% 8.1% 0.8% 2.5%

Retail Sales ($billions) 85.9 86.4 88.7 97.5 102.4

Retails Sales Growth (%) 1.9% 0.6% 2.6% 10% 5%

Sources: BCREA Economics, Statistics Canada 214 1. Values have been estimated where data has not yet been released. BCREA Housing Forecast May 2021

Housing Forecast Summary – Second Quarter Unit Sales Average MLS® Price ($) Board Area 2020 2021F 2022F 2020 2021F 2022F 8,060 10,500 8,300 777,993 866,200 880,000 Victoria 16.9% 30.3% -21% 13% 11.3% 1.6% 9,055 11,500 8,900 531,086 622,000 655,300 Vancouver Island 20.1% 27% -22.6% 8.6% 17.1% 5.4% 416 575 400 420,586 490,000 500,000 Powell River Sunshine Coast 29.6% 38.2% -30.4% 15.8% 16.5% 2% 31,611 44,500 36,000 1,066,199 1,174,300 1,198,500 Greater Vancouver 23.1% 40.8% -19.1% 8% 10.1% 2.1% 18,871 24,000 20,000 826,005 969,400 994,700 Fraser Valley 28.5% 27.2% -16.7% 14.4% 17.4% 2.6% 3,497 5,300 3,800 577,279 692,900 716,400 Chilliwack and District 25.4% 51.6% -28.3% 10.3% 20% 3.4% 3,044 3,900 3,100 458,827 538,100 552,700 Kamloops and District 6.4% 28.1% -20.5% 9.6% 17.3% 2.7% 11,371 15,000 11,500 588,195 676,600 696,000 Interior* 24.2% 31.9% -23.3% 16.1% 15% 2.9% 332 425 350 258,122 291,000 295,800 South Peace River** -7.8% 28% -17.6% -0.1% 12.7% 1.6% 3,480 4,300 3,200 383,924 459,700 479,400 Kootenay 17.4% 23.6% -25.6% 11.3% 19.7% 4.3% 4,273 5,600 4,600 332,890 392,000 405,000 BC Northern 4.1% 31.1% -17.9% 7.1% 17.8% 3.3% 94,013 125,600 100,150 781,765 893,800 921,800 BC Total 21.5% 33.6% -20.3% 11.6% 14.3% 3.1%

*NOTE: The Okanagan Mainline Real Estate Board (OMREB) amalgamated with the South Okanagan Real Estate Board (SOREB) on January 1, 2021, to form the Association of Interior REALTORS®. **The former Northern Lights Board, which was merged with SOREB in 2011, will now be called the South Peace River Region and is part of the new Association of Interior REALTORS®.

BCREA Economics provides timely research, analysis and information on economic factors affecting and its housing markets.

Send questions and comments about the Housing Forecast to: The British Columbia Real Estate Association (BCREA) is the professional association for more than 23,000 Brendon Ogmundson, Chief Economist, REALTORS® in BC, focusing on provincial issues that [email protected]; 604.742.2796 impact real estate. Working with the province’s ten real estate boards, BCREA offers continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.

To demonstrate the profession’s commitment Additional economics information is available on to improving Quality of Life in BC communities, BCREA’s website at: www. bcrea.bc.ca. BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the To sign up for BCREA news releases by email visit: environment, protect property owners and build www.bcrea.bc.ca/subscribe. better communities with good schools and safe neighbourhoods.

Housing Forecast is published quarterly by the British Columbia Real Estate Association. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.

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