B.C.’s housing market is gaining traction.
MLS sales in the province rose to 6,054 units in January, up 4.5 per cent month-to-month, albeit decelerating from December’s gain. This was also 23.6 per cent above January 2023. Softening mortgage rates and expectations for further rate reductions, along with strong population growth over the past year, likely contributed to the increased activity.
Home values increased during the month by one per cent to $975,270.
MLS home sales increased in several real estate board areas, with the Greater Vancouver region reporting a 6.7-per-cent uptick in sales during the month. This marks an acceleration in sales growth in the area. In Chilliwack, home sales jumped by 33.2 per cent, adding to the near 15-per-cent increase in the prior month. The Fraser Valley Real Estate Board recorded a 15.9-per-cent rise in sales while the Kootenays saw a third consecutive monthly rise, with sales up 2.8 per cent. The story was different in the Okanagan-Mainline and South Okanagan, where sales dipped 5.4 per cent and 13.5 per cent, respectively. On Vancouver Island, home sales fell by five per cent.
Home prices continued their erratic pattern and remained 2.6 per cent lower than a year ago and nearly nine per cent below 2022’s record high. Greater Vancouver home values increased by 0.6 per cent. In the Fraser Valley, they rose by 2.8 per cent, reversing a dip of equal magnitude observed in December. The average home price in the Kootenays also saw an increase of 1.8 per cent, while prices in the South Okanagan were up 7.9 per cent. However, prices in Chilliwack declined by 7.7 percent in January, erasing gains from the prior month. The Kamloops and Vancouver Island real estate boards saw home prices fall by 5.1 per cent and 4.9 per cent, respectively. Okanagan Mainline recorded a 6.3-per-cent downtick in prices during the month.
Though it’s strengthening, B.C.’s housing market broadly remains balanced in early 2024. We expect sales to pick up in coming quarters as interest rates decline, but prices will be held in check by affordability challenges.
While resale housing activity perked up, provincial housing starts started the year off slow. On a seasonally adjusted annualized basis, housing starts in B.C. fell to 28,948 for January 2024. This is a decline of 51.7 per cent compared to the previous month and is the slowest pace since March 2022. It also pushed the six-month trailing average for this figure down for the fifth consecutive month (50,162 in August 2023 to 44,435 in January 2024). Multifamily starts declined 56.2 per cent to 24,206 while single-family starts increased 3.3 per cent to 4,742. The sharp decline is consistent with our expectations for fewer housing starts this year.
Among the seven metro areas listed in B.C., five of them reported lower housing starts in January. This is not surprising given the size of the provincial decline. Vancouver saw a 55-per-cent decline to a seasonally adjusted annualized rate of 18,296 starts — the lowest level since February 2023. It is possible that wintery weather contributed to the decline. Victoria only had 2,235 housing starts — its lowest number since May 2023. In a year-over-year comparison, unadjusted housing starts in B.C. fell by 39 per cent, dropping from 3,726 in January 2023 to 2,264 in January 2024.
Bryan Yu is chief economist at Central 1.
