What's up with B.C. real estate? Sales are down but prices are dramatically up

It's a bit of a paradox in B.C.'s real estate market right now. Sales have fallen year-over-year in July but prices are substantially up. What's going on?

The answer is quite simple really. There are many buyers chasing very few listings, especially in outlying areas that saw a surge in demand last year as people sought more affordable areas to live and work from home.

"And those markets were already pretty undersupplied and that surge of demand meant that the already low level of supply absolutely plummeted and now we have a real supply drought, especially in small markets," said Brendon Ogmundson, B.C. Real Estate Association chief economist.

The B.C. Real Estate Association reports that overall provincial sales in July were down 7.2 per cent over the same time last year while the average price on all home types increased 17.1 per cent.

The biggest price increases occurred in places like Chilliwack (26.5 per cent), Kamloops (25.5 per cent), and Kootenay (21.8 per cent) and Fraser Valley (17.5 per cent). The price rose while the total number of sales fell.

The total active residential real estate listings province-wide were down 32.2 per cent year-over-year in July and continue to fall on a monthly seasonally adjusted basis.

The good properties sell quickly, sometimes with multiple offers, while the lower quality listings are harder to sell.

The average residential price in B.C. in July was $891,687 and the economic forecast is for prices to continue to rise. Greater Vancouver had an average residential price in July of $1,153,804, an increase over last year of 10.4 per cent.

Ogmundson expects B.C.'s economy to grow six per cent this year and four per cent next year. A robust economy combined with low mortgage rates and low housing inventory will likely push residential real estate prices even higher.