It’s shaping up to be a slower summer in BC’s once red hot housing market. Home sales for the month of June ticked in at 7884, a 33% decline year over year, this marked a five year low.
This appears to be more than just a summer doldrum. Total sales for 2018 appear to be heading back to pre housing boom levels. Through the first six moths of this year home sales are down 20% compared to the same time period a year ago.
As sales fell 33%, inventory simultaneously increased. Inventory for sale jumped 21% from June of 2017. This was the first year over increase since June of 2012. However, inventory remains below historic norms for this time of year. Although, the addition of a record high 55,000 units under construction should help in the months ahead.
The average sales priced dipped 2% year over year in May, and continued that trend in June, recording a 1.3% decline on a year over year basis.
The slowdown raised concerns about stricter borrowing conditions. Brendon Ogmundson, BCREA Deputy Chief Economist, summarized the month as “The impact of the B20 stress test is still being felt across the province, Lower demand as the result of higher mortgage rates and stringent mortgage qualification rules are bringing most markets around the province back into balanced conditions.”
Tighter financial conditions look ripe to continue. Following the Bank of Canada’s most recent interest rate hike, Governor Stephen Poloz, suggested the Bank may be more aggressive in following the United States Federal Reserve. “We’re behind. We’re behind what a Taylor Rule would say (about when the Bank of Canada should raise interest rates). We’re also behind the United States.”