Early January is an eagerly awaited time for many homeowners, as this is when the B.C. Assessment Authority publishes its annual update of residential property values.

The assessments reflect estimates developed at the mid-point of the prior year. For the January 2023 assessments, this means property values as of July 2022 香蕉视频直播� which was before the onset of the current housing market downturn.

Housing is a preoccupation for many British Columbians, not least because of the dramatic escalation in property values over the past three decades. Local real estate experts calculate that in the Lower Mainland alone, homeowners are sitting on at least $300 billion in capital gains, the bulk of which are tax-free thanks to the 香蕉视频直播減rincipal residence香蕉视频直播� exemption in the federal Income Tax Act. Homeowners in the rest of B.C. also benefit from tax-free capital gains. The net worth of vast numbers of our residents is closely tied to home ownership.

In common with other provinces, B.C. experienced a head-spinning run-up in property prices during the COVID-19 pandemic, with transaction prices soaring by 20-50 percent from 2019 until mid-2022, depending on local market conditions.

The record-low mortgage rates engineered by the Bank of Canada as part of its 香蕉视频直播渕onetary stimulus香蕉视频直播� to support the economy during the pandemic were a principal reason for the frenzied market. But the real estate business was hit by an earthquake in 2022, as interest rates increased steeply on the back of runaway inflation. Sales tumbled, and prices came under downward pressure.

Mortgage rates climbed from 1.5 per cent for variable rate products and a little over 2 per cent for five-year fixed mortgages in 2021, to reach more than 5 per cent late last year. Mortgage rate hikes, together with the jump in prices during the pandemic, have made homeownership more unaffordable than ever, driving many prospective buyers to the sidelines.

Home sales have fallen sharply across the province. Market prices have also declined, albeit only modestly so far.

Importantly, the economic impact of higher interest rates and rising borrowing costs isn香蕉视频直播檛 felt all at once. Instead, it plays out over a period of many months or even multiple years. Thus, the mortgage rate increases in 2022 will have a strong effect on the housing market in 2023 and beyond.

For this reason, forecasters anticipate a further softening of market conditions this year, with sales and selling prices dropping from 2022 levels. This is not a made-in-B.C. story, of course. Similar developments are evident across much of the country, as well as in parts of the U.S.

How far will assessed home values and transaction prices fall before the market bottoms? Much will depend on whether mortgage rates have further to rise, and also on the depth and duration of the coming economic downturn. My guess is that 2023 will be one of the weakest years for home sales in two decades, building on the slump that started last year.

As for prices, several factors are at work.

On the demand side, B.C. has a fast-growing population, fueled by record inflows of international immigrants 香蕉视频直播� all of whom need somewhere to live once they get here. On the other hand, affordability has never been worse, and borrowing costs for those seeking mortgages will not be returning to the astonishingly low levels of 2020-21. This should dampen demand.

Meanwhile, homebuilding and housing starts are projected to slow in the near term, limiting new supply. It香蕉视频直播檚 a complex picture.

Add it all up, and residential real estate prices are likely to slide by another 10 per cent or so in 2023, on top of last year香蕉视频直播檚 decline, before stabilizing toward the end of the year. Expensive markets in southwestern B.C. are at greater risk of additional price erosion.

Peering a bit further into the future, in many B.C. communities home prices and assessed values in 2024 are still likely to exceed those in the most recent pre-COVID year of 2019.

The long-term fundamentals for housing in B.C. remain quite attractive.

Jock Finlayson is a senior policy advisor with the Business Council of British Columbia.