A Vancouver real estate and property tax expert believes Vancouver’s real estate market is entering a downturn that could last up to two years.
The comments come after a prediction by the Royal Bank of Canada that the country, British Columbia and Ontario in particular, will see steep price declines next year.
“We expect downward pressure on prices to be most intense in Vancouver, Toronto and other expensive markets,” Deputy Chief Economist Robert Hogue wrote in RBC’s latest housing outlook. .
“By comparison, we expect activity and prices to be more resilient in Alberta, where local markets have more catching up to do after a prolonged pre-pandemic slump.”
The overall BC price is expected to fall 3.8% in 2023, to around $1.02 million. This is the largest decline expected in the country, ahead of the 2.3% decline expected in Ontario.
Paul Sullivan is a British Columbia property tax expert and director of Ryan LLC which leads the Business Tax Alliance, a partnership with the BC Business Improvement Associations. He said the market was changing in a near-perfect storm of circumstances.
“You couldn’t have much worse in the world – you’ve got war, we’ve got interest rates, we’ve got a supply chain crisis,” Sullivan said. “It’s kind of set up for a pretty bad scenario.”
Sullivan said even if housing prices go down, it won’t help affordability. Record inflation and rising interest rates mean buyers can afford less, and it’s getting harder and harder to build.
“We have incredibly high prices on materials with all the transportation issues and we have a labor shortage,” he said. “The price of delivering new homes on the market is skyrocketing right now.”
RBC’s forecast predicts that “prices will peak this spring as market sentiment deteriorates” and then come back down.
“I would disagree with that comment,” Sullivan said. “I think prices have already gone up in the last quarter or even at the end of last year. The level of demand has already gone down and interest rates are going to exacerbate that.
As for how long the downturn will last, Sullivan said Vancouver typically has short real estate cycles, but thinks this time it will last longer.
“I think values are going to be down for more than 6 or 12 months this time – we’re going to be down for maybe as long as two years,” he said.
With files from Andrew Weichel of CTV