A recent shift in interest rates is driving a resurgence in the local housing market
Home sales in British Columbia are showing signs of recovery following interest rate cuts by the Bank of Canada last year.
The BC Real Estate Association (BCREA) reports that the market has shifted into a balanced state, marking its healthiest position in nearly a decade. A CTV News report highlighted that this optimism comes after a period of slower activity, during which inventory levels rose from historically low numbers to more stable levels.
BCREA’s First Quarter Housing Forecast for 2025 predicts a 14.3% increase in Multiple Listing Service (MLS) residential sales, reaching 85,140 units. Sales are projected to rise even further in 2026, nearing 88,000 units. By comparison, 74,000 homes were sold in 2024, slightly higher than the previous year, but still below the long-term average.
“We had two years of fairly slow activity, and that allowed inventory to come up from an all-time low to something that’s been, you know, the healthiest kind of position we’ve seen in close to a decade,” said Brendon Ogmundson, chief economist at BCREA.
Interest rate cuts drive surge
The drop in mortgage rates played a significant role in the market rebound, enticing sellers who had been hesitant to list their properties during the rising interest rate environment of 2023. With the Bank of Canada lowering its overnight rate, fixed mortgage rates saw a notable decline, contributing to an uptick in new listings.
The BCREA expects the Bank of Canada will continue to reduce rates, with cuts potentially stabilizing around 2.5% by the end of the year. Five-year fixed mortgage rates are expected to stabilize at approximately 4.5%.
While some markets saw price drops when the central bank raised rates in 2023, Vancouver hit an all-time high for its average price in mid-2024. Ogmundson predicts that prices in the region will increase at the rate of inflation, with buyers likely to see a 2% rise in Vancouver this year.
Despite the rebound, the BCREA notes that 2024’s increase in listings was largely a result of a prolonged slump in home sales. However, experts believe that the market will absorb the anticipated rise in sales activity without triggering a sharp price increase. The average price in BC is projected to rise by 4.5% to $1,025,900 in 2025.
Experts expect more
Real estate professionals are seeing heightened activity, particularly in the Tri-Cities area. Realtor Jordan Macnab noted an increase in multiple offer situations in recent weeks, a sign that competition is heating up as more buyers re-enter the market. Macnab expects this trend to continue into the spring.
“For the first time in a while, we’ve seen multiple offers in the last week,” noted Macnab. “Activity is way up, and there’s just not a lot of listings coming yet.”
Buyers are being urged to get pre-approved for mortgages now, as the market is expected to become more competitive in the coming months.
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