Although the most recent recession was somewhat brief, recessions have, on average, lasted between eight and 25 months, and have generally seen an approximate 4% contraction in Gross Domestic Product and a 4.5% increase in unemployment,Specific to BC, sales activity in the real estate sector usually begins to fall in the months leading up to recessions.
The 2020 recession was more of an outlier, however, as sales fell little leading up the onset of the recession, and then not only recovered quickly, but reached levelsHistorically, home sales decline by about 50-70% compared to pre-recession peaks, and then remain at that level for approximately one year before slowly recovering. And that is exactly where the real estate market in BC is at right now.
In a year-end report published earlier this month, BCREA statistics showed that home sales fell in December bycompared to 2021. That was, of course, a record year for the BC real estate market, but 2022’s numbers were below historical averages, too, the BCREA says. In terms of price, the BCREA says prices generally follow a similar pattern to unit sales in the lead-up to a recession. With both the 1990 and 2008 recession, home prices in BC plateaued for a year or two before continuing their ascent. With the 2020 recession, prices hit a bottom in May 2020, but then skyrocketed to 24% above pre-pandemic levels by March 2021, and 46% above pre-pandemic levels by Q1 2022.
Since then, however, average prices have declined around the province, as interest rates have been raised. According to year-end statistics published by the Real Estate Board of Greater Vancouver, home prices fell by about