In a report issued by the Bank of Montreal on Wednesday, the bank assured industry professionals the housing market in British Columbia has achieved a soft landing following a concerning sales drop early in the year.
“Since bottoming in February, sales in the province have jumped nearly 40% through September, and were more than 50% above year-a go levels in Vancouver,” the report said. “That, plus a falloff in new listings, has all but quashed concerns of a hard landing.”
For his part, BC broker Jessi Johnson attributes the bounce back to clients getting acclimated to the market following the lending rule changes of 2012. And, more interestingly perhaps, the end of a historically beautiful summer.
“Because of the new rules, it was hard for people to qualify and it took people about a year to realize this is the new norm and became more realistic about what they can afford,” Johnson told MortgageBrokerNews.ca. “We noticed business slowed down because the weather was so amazing in the summer. That had a big impact as well but now it is very, very, very busy.”
Factoring in the normalization of pricing in the area, the bank believes the province has stabilized prices.
“British Columbia’s housing market has been in sharp focus recently, as stricter mortgage rules implemented in July 2012 and lofty valuations (particularly in Vancouver) sent sales sliding early in the year,” the report said. “Fortunately, the market appears to have carved out a soft landing, with sales volumes across the province rebounding more than 30% from their February low to near the 10-year average.”
Looking forward, sales are expected to slow slightly due to the rising interest rates.
“With mortgage rates expected to drift gradually higher, housing is expected to be a modest drag on growth through 2014—look for housing starts in the 22,000 range next year, versus this year’s 26,500 pace.”