Vancouver Island Real Estate Price Forecast to 2025

'Buy the Dip' is unlikely.

• 
• By Nancy Smith
• Qualicum Beach REALTOR®
• Published: Sep 26th, 2021 at 5:01 pm

Briefly speaking, real estate valuation strongly depends on location. This is not news, and neither are our current mortgage rates.

We offer a few quick thoughts on the future of Vancouver Island real estate.

In 2012, 2013 and 2014 there were numerous Foreclosure properties on the market, and in our family, we bought one in each consecutive year. Now this might be a coincidence, but Harper and the Conservatives were then voted out of power in November 2015, and the foreclosure properties dried up, interest rates (worldwide) were dropping and home prices began increasing until the 2020 Pandemic, then prices skyrocketed(worldwide).

Well, it might be another coincidence, but the Liberal Trudeau government just won another election and interest rates (USA) are predicted to rise. A recent US article suggested mortgage rates will increase by 0.28% in 2022, and increase further to 1% in 2025.

UPDATE:  February 2023,  Mortgage rates now range between 5 - 6% - - -  ouch 

The correlation of interest rates has historically been a 1% decrease in mortgage interest rates results in a 5-10% increase in home prices. The opposite is also true.

So, theoretically we could see an accumulated drop in prices by 2025 in the range of 15-20%.

A fun fact though, Vancouver Island prices increased in the range of 30% in the past year, with no real change in interest rates.

A potentially scarey possibility exists for people who have qualified for 2-3% mortgages, where their interest payments, if floating or up for renewal, could increase by 50-100% by 2025.

In many areas of North America, if mortgage rate increases happen as predicted, would only seriouly affect a small number of people, as many homes sold in the past year, especially on Vancouver Island, were cash sales, and/or subject-free. Higher interest rates may have less effect on this demographic.

In previous decades, Vancouver Island property has easily weathered the extreme price fluctuations found elsewhere in North America. Vancouver Island is Canada's most desirable place to live, to retire and to enjoy year-round outdoor activities.

The past year has been difficult for Realtors and Buyers, because of lack of inventory. Buyers line up, get disappointed and withdraw from buying, upgrading or investing. Realtors are running around submitting numerous Offers to Purchase for their clients, only to enter an arena with many other hopeful buyers. Only one can buy, and the rest get sidelined.

In our opinion, Vancouver Island will remain a popular place to live, especially since there will be a twenty year wave of prosperous buyers looking to retire. Another overlooked demographic, are the children of Baby-Boomer era, many reaping the financial benefits of their aging parents. Vancouver Island real estate prices and the market will stabilize, but there is very little hope of any major price decrease adjustments.