Last week we had looked at the make up of the market in terms of inventory and how it will look as we head into fall, in a nutshell barring any uncommon circumstances we likely are at the highest amount of inventory we will see until 2024, as the seasonal inventory decreases are about to set in. This week we are going to see where demand is and where it might come from to see if we can get a sense of if more or less buyers will be in the market in the fall or early parts of 2024.
With the seasonal supply component of the market a bit easier to predict than the demand side, we are going to look at BC’s population as an indicator to see the coming and goings. To start this we do have to also recall the Government of Canada’s immigration targets, In the 2023–2025 Immigration Levels Plan, Canada aims towel come from 410,000 to 505,000 new permanent residents in 2023, from 430,000to 542,500 in 2024 and from 442,500 to 550,000 in 2025
It is tough to know how many exactly BC will get out of the immigration targets but if every province gets their equal share based on overall population BC should be getting around 13% of those numbers, using the 500,000 as a baseline BC should be getting a 65,000 permanent residents in 2023. Looking at the true numbers for Q1 as Q2 is not available yet “BC witnessed a net international migration of 40,840 individuals, representing a new record for the first quarter of any year. Notably, 19,221 of these individuals constituted net non-permanent residents (NPRs). This represents the highest gain of NPRs during any first quarter since this data has been collected.” With record breaking numbers in Q1 for population growth the demand for housing of both rentals and homes to own appears it will be getting worse as we progress through 2023 as BC has added two thirds of the yearly projected target of population growth in Q1alone.
When looking at the interprovincial the numbers are a bit different “B.C. saw a net outflow of 712 individuals during this period in interprovincial migration, marking the third consecutive quarter of net loss. However, this quarter's net loss was less than the previous two quarters (4,799and 1,830).”
With high housing costs it seems that some residents have been choosing to move to other affordable provinces with the outflow. “Among provinces, B.C. ranked fourth in terms of interprovincial net loss, with Ontario (-14,732), Manitoba (-2,687), and Saskatchewan (-2,386) taking the top three spots. Overall, Alberta (15,786) and Nova Scotia (2,690) had the highest interprovincial net gains. Most of the outmigration from B.C. was directed towards Alberta (10,006) and Ontario (3,708). Similarly, B.C. had the most in-migration from Alberta (6,506) and Ontario (5,299).” Keeping in mind these are just Q1 numbers and not taking into account people who have decided to move to BC/ Okanagan in the summer and warmer months. The Q2 numbers should be a more telling story for the interprovincial flow.
We obviously cannot predict the interest rates increases or decreases with exact certainty but to use a professional economists prediction we are going to review Central 1 Credit Union interest rate forecast.
Looking at the current forecast for the overnight rate second from the bottom of the chart they are not predicting any more increases in 2023.Heading into 2024 they are expecting interest rates to drop by 2%. These might be some pretty aggressive predictions, however, one to note if it does come true what the buyers sentiment will look like as we start to see some interest rates declining, buyers will likely come out of the woodworks.
I cannot predict the future just like we cannot predict the interest rates, but based on what we are seeing with population growth, and the thoughts that rates are the highest they will be. The next 60 days will likely be the best time for home buyers to get in the market. Buyers will have to come to terms with paying a bit higher interest rate but lower overall purchase price than if they were to purchase in 2024 with more competition and lower interest rates. The increase competition of buyers likely will drive prices up.
But these are just my two cents, let me know your thoughts and opinions I would love to hear them
Mark and Maddie