A B.C. credit union is predicting a weak, slow recovery for home sales across the province this year.
"The year-long correction in home sales is likely to bottom out in the first quarter of 2013 and we'll see a slow recovery through the rest of the year," said Central 1 Credit Union economist Bryan Yu.
"But the gains will be modest."
The credit union said sluggish employment, static population growth and new, tighter mortgage requirements introduced by the federal government in July 2012 were all factors.
Median home prices in Vancouver are expected to dip 4% to $474,000, but to rise slightly at the end of 2013.
Home prices in Lower Mainland suburbs, which accounts for 60% of all provincial sales, will also fall 4%. The new mortgage insurance rules have hit this region particularly hard, said the credit union.
Outside the Vancouver area, house sales in the Okanagan, Kootenays and Vancouver Island are staying at "recessionary levels" because of weak demand and too much supply. But the credit union also expects sales to rise for this region in 2013.
"Stopping the price slide will require cuts in the housing supply and an upturn in demand," said Yu. "We are already seeing supply changes with fewer houses coming onto the market as potential sellers choose to wait for better market conditions."
Housing starts slowed down in late 2012 in response to the slowing market, a trend Central 1 expects to continue in 2013. But new housing projects that were started in 2010 and 2011 are coming on line now, leading to a sharp rise in new home transactions.
