The weather forecast has not looked too great this past week, but how does the housing Forecast look for the real estate market heading into 2023? Let's hope it looks better.
Taking a look at BCREA's Housing Forecast for the Fourth Quarter which came out on November 8th, and can be viewed here , we will dive into a few different aspects including the overall economy.
Knowing that roughly around 30% of the reported buyers in the Okanagan are buyers from other areas in British Columbia, first, we are looking at the province of British Columbia as a whole, as it is a significant driver in our market.
The number of sales for 2022 is estimated to finish down 34% from last year's record of 82,345 and drop another 11% in 2023 to 72,960. With the slower sales, the inventory is rising which in turn they are estimating a provincial decline in housing prices 5 per cent heading into 2023 despite having a positive annual price growth for 2022 due to the strong start in sales in 2022.
In my opinion, looking at a 5% decline in 2023 doesn't seem too bad given the price growth we have seen over the last 2-3 years for homeowners that appears to be some relatively positive news, given the situation.
The one question is where are all the buyers coming from and who can afford these homes?! To try to grasp the overall health of the real estate market the economy is important that we look at it. To not dive too much into the economy, the chart below highlights the past, present, and future. Real GDP growth is set to increase in 2022 by 3.5% and 0.8%, the total growth projection being positive for next year is definitely a positive aspect, but we do not know what inflation rate they are using for their calculations which is the world's biggest hurdle to overcome.
Now for the local market, BCREA is is expecting sales in the Okanagan region to be down 33.1 per cent to 9,500 in 2022 and a further 8.4 per cent to 8,700 in 2023. Again, take these numbers with a grain of salt as we saw a record number of sales in the past 2 years if you use the longer-term average the drop will be much lower.
As sales moderate, active listings have been partially recovering. Listings have nearly doubled across Okanagan region since January 2022, although they remain below historically normal levels. Both the Okanagan and Kamloops remain in seller’s market territory, despite falling sales and rising listings. MLS® average price in the Okanagan is expected to average $780,400 in 2022 before declining to 742,300 in 2023 but still predicting 5% growth over 2021.
Predictions, just like the weather forecast it might not be worth the paper it was written on. No one has a crystal ball, but looking at the predictions it is relatively positive news considering the current marketplace. As you consider your real estate needs now and in the future, feel free to reach out to discuss your options. Planning ahead is what I recommend. That way when the time does come you are prepared and will be less stressed.
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