While the real estate market may be cooling off, detached house prices in Delta may now be too far out of reach for many who may have been able to purchase just a few years ago.
The British Columbia Real Estate Association (BCREA) last week released its 2022 Third Quarter Housing Forecast Update, which notes Multiple Listing Service residential sales in B.C. are forecast to decline 34.4 per cent from a record high 2021.
In 2023, MLS residential sales are forecast to fall an additional five per cent in Greater Vancouver and 9.7 per cent in the Fraser Valley.
“Mortgage rates have risen at a much faster rate and to a higher level than previously anticipated,” said BCREA Chief Economist Brendon Ogmundson in a news release. “Faced with a dramatic shift in the cost of borrowing, housing market activity is likely to fall well below normal over the next year,” he said.
Weaker sales and rising inventory mean that some regions, largely in more expensive markets, have tipped into buyers’ market territory, notes BCREA, adding that, consequently, average MLS home prices have come down from peak levels.
BCREA also notes that the downturn is unlikely to be long-lived as B.C.’s strong population growth, combined with extremely favourable demographics, means there will be no shortage of demand for housing in the province.
According to the latest numbers from the Real Estate Board of Greater Vancouver, the benchmark price this August for a single-detached house in Ladner was $1,423,800. That is down 2.5 per cent from the previous month.
The benchmark price for a detached house in Tsawwassen this August was $1,595,000, unchanged from this July.
Meanwhile, the Fraser Valley Real Estate Board said the benchmark price for a detached single-family house in North Delta was $1,345,700 this August, down 4.7 per cent from this July.
Going back, the benchmark price for a single-detached house in Ladner in August 2021 was $1,287,300, which was up over 28 per cent from the same time in 2020.
The benchmark for a Tsawwassen house was $1,406,200 in August 2021, up 22.7 per cent from August 2020.
The benchmark price for a North Delta house in August 2021 was $1,208,700, up 29.2 per cent from August 2020.
And while the current steady month-to-month declines are now reducing year-to-year price increases, house prices remain drastically higher than a few years ago.
For example, the benchmark price for a Ladner house in August 2019 was $938,800. At that time, it was over 47 per cent higher than five years earlier.
The benchmark for a Tsawwassen house in August 2019 was $1,162,900, up over 56 per cent from five years earlier.
The August 2022 benchmark for a North Delta house was almost $470,00 higher than the August 2019 benchmark.
The City of Delta’s Housing Needs Assessment report, which guided the formation of the city’s new Housing Action Plan, notes the housing stock is still mostly single-detached houses.
The report also notes the high proportion of single-detached housing is not meeting the needs of the community and that there is an expectation of dramatic changes in housing types.
Different types of density, such as infill housing, mid-rise buildings and high-rise towers, are appropriate in different areas of Delta, the report notes, adding some increases in density are needed to make home ownership more viable.
Approved last fall by city council, the action plan sets out eight strategies, each with short to long-term actions over the next five years, to address the needs identified in the assessment.
“Ultimately, while home ownership can offer both shelter and investment opportunities, the ability of local governments to influence sales price or mortgage structures is limited. Without provincial or federal intervention, market forces will continue to be the main driver of the affordability of home ownership,” the Delta Housing Action Plan final report notes.