Optimism surrounds the housing market heading into 2025, but experts warn of challenges on the horizon.
Close to 100 real estate and development professionals gathered Wednesday, Jan. 15 at the Gorge Vale Golf Club for the Victoria Residential Builders Association (VRBA) annual Crystal Ball Housing Forecast. Together they hoped to gain some insight into how the housing market may perform in the coming year.
鈥淲e picked up a good amount of momentum coming into this year,鈥� said Dirk Vanderwal, chair of Victoria Real Estate Board. 鈥淎 couple of rate cuts really saw people coming back into the market.鈥�
Vanderwal added that further rate cuts are forecast for 2025, though there is little consensus on how far rates could fall. He said he remains optimistic that affordability will improve due to changing interest rates and a tighter housing market.
He also acknowledged that regulatory and zoning changes could help first-time homebuyers. While the outlook for homebuyers is improving, challenges remain.
鈥淭he cost of construction is spiraling out of control,鈥� said VRBA executive director Casey Edge, noting that development cost charges (DCCs) are at historic highs. 鈥淭he City of Victoria just increased their DCCs by 258 per cent.
鈥淚f the province can rein in the cost of construction for things like DCCs, then we鈥檇 be pretty optimistic, given declining interest rates and the potential for greater affordability.鈥�
Increasing costs to develop along with increasing regulations were frequenlty cited as preventing the province from achieving its housing goals
鈥淧rovincially mandated housing targets are not being met anywhere in B.C.,鈥� Vanderwal said.
He highlighted the upcoming federal election as a potential turning point, saying a shift in government in 2025 could generate long-term benefits for the housing market.
Canadian immigration policy was another key topic of discussion, following the federal government鈥檚 decision to lower immigration targets.
鈥淭he bigger story is that they鈥檙e going to try to engineer a net outflow of close to 900,000 non-permanent residents over the next two years 鈥� that鈥檚 international students and temporary foreign workers,鈥� said Brendon Ogmundson, chief economist for the British Columbia Real Estate Association.
Victoria welcomes close to 10,000 international students annually. Ogmundson said the federal plan, if successful, could contribute to a 鈥渟ofter鈥� rental market in the region.
But Canadian politics wasn't the only thing on people's minds. President-elect Donald Trump's proposed economic plans were a frequent topic of discussion throughout the afternoon.
鈥淲e鈥檙e all sort of sitting on eggshells waiting to see what鈥檚 going to happen,鈥� Vanderwal said, describing Trump鈥檚 proposed 鈥淎merica First鈥� economic policies as a wild card for the market.
Ogmundson agreed, attributing recent fluctuations in mortgage rates and bond prices to uncertainty around Trump鈥檚 administration.
Trump鈥檚 proposed tariffs could significantly impact B.C., Ogmundson said. While he explained the province has less exposure to American tariffs than other parts of Canada, he noted that past U.S. trade policies have hurt industries such as forestry before. Increased tariffs on exports to the United States across industries could be far more impactful.
鈥淲e could be losing one to two per cent of GDP at a time when we are only growing by about two per cent, so probably enough to push the B.C. economy into a recession,鈥� Ogmundson said.
Despite these challenges, Ogmundson expressed optimism about Victoria and Vancouver Island鈥檚 local economy.
鈥淚n Victoria, we鈥檝e seen double-digit growth in private-sector employment over the past year, and that鈥檚 actually held up over the last few months, even as government employment has started to slow,鈥� he said.
鈥淭he Island economy is heating up, and we have home sales in the Victoria area that are kind of back to normal-ish levels.鈥�
