Real estate prices in Chilliwack are hitting all-time highs as residential listings are at an all-time low. (Greg Laychak/Black Press file)

High Chilliwack home prices, sales forecast to moderate

2018 sales should be lower than 2017 and 2016, which was the hottest year on record

As house prices rise and supply dwindles, a cooling may be on the horizon thanks to mortgage changes in the new year.

The B.C. Real Estate Association’s (BCREA) fourth quarter housing forecast calls for a drop in sales for 2018 in the Chilliwack and District Real Estate Board (CADREB) along with just a 4.3 per cent increase in price.

Provincewide, the BCREA forecast calls for an 8.8 per cent decrease in sales by the end of 2017 and a further 10.4 per cent drop in 2018.

• READ MORE: Chilliwack real estate sales and prices remain hot

For CADREB, the BCREA forecasts a 13.1 per cent drop in sales below the record 4,306 in 2016.

“Housing demand across the province will face increasing headwinds in 2018,” according to Cameron Muir, BCREA’s chief economist. “A rising interest rate environment combined with more stringent mortgage stress tests will reduce household purchasing power and erode housing affordability.”

Muir says the five-year qualifying rate is forecast to rise 20 basis points to 5.15 per cent by the end of 2018. Add that to an estimated 20 per cent decrease in purchasing power thanks to new qualification rules for conventional mortgages means the market should cool.

• RELATED: Chilliwack among top 10 B.C. cities to buy real estate

As for prices, the average price of a home in CADREB area — which includes Chilliwack, Agassiz, Harrison Hot Springs, Hope, Boston Bar and in between — was $397,911 in 2016.

The BCREA forecasts the average MLS price in CADREB to average $469,400 for the entire 2017 up 18 per cent, the highest increase of the 11 real estate boards in the province.

That compares to the average sale price last month locally of $484,753. With a BCREA forecast average sale price in 2018 of $489,900, that would require a stability in the local market unprecedented over the last decade.

Indeed, BCREA forecast just a 4.3 per cent price increase year-over-year, close to the B.C.-wide prediction of 4.6 per cent from $712,300 in 2017 to $745,300 for 2018.

And while the fewer sales for 2017 and 2018 are just that, fewer sales, these numbers will still be the second and third highest years on record.

What analysts will be paying particular attention to in 2018 is the much-needed increase in supply. Supply is at near decade lows, which, coupled with increasing demand has led to the rapid rise in home prices.

BCREA says the combination of new demand coming on line along with decreased consumer demand due to the new rules should make for a more balanced market in 2018.


@PeeJayAitch
paul.henderson@theprogress.com

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