The housing stock has been a critical issue for the British Columbia real estate market and for the Canadian housing market in general. From a scarcity of real estate listings to months of record inventory, it has become increasingly difficult for homebuyers to achieve the Canadian dream of home ownership. Even if young families and first-time buyers find the perfect spot within their budget – whether it’s a single-family home in Kelowna or a one-bedroom condominium in Vancouver – these properties may end up selling hundreds of thousands of dollars above the listed price. .
This issue made its way into the federal election campaign, with major political parties promising to restore housing affordability. Whether or not that will materialize remains to be seen. Many industry experts share the same opinion: the current burning issue in the Canadian real estate market is housing offer.
In British Columbia, real estate inventories are at or near historic lows in many jurisdictions across the province, from Greater Victoria to Greater Vancouver. It’s unclear if homebuyers will get relief or if they should prepare for the same over the next 12 months.
Real estate in British Columbia: housing supply remains a burning issue
In August, home sales fell 7.1% year-over-year, totaling more than 9,500 transactions, according to the British Columbia Real Estate Association (BCREA). The average home price in British Columbia rose at an annualized rate of 17.2% to $901,712. Total active residential listings fell 37.9% year over year in August and remained 42% below normal levels for the month of August.
New data from the Canada Mortgage and Housing Corporation (CMHC) suggests that new supplies may be coming to the Western Province. In August, housing starts jumped to 3,623 from 3,512 in the same period a year ago. Year-to-date housing starts have reached nearly 31,000, up from 22,696 in the first eight months of 2020.
“Home sales in the province are essentially back to normal after a record spring,” BCREA chief economist Brendon Ogmundson said in a news release. “However, we continue to see a drought in the total supply of listings as well as the downward trend in new listing activity.
Here’s a look at residential listings in select areas of British Columbia in August year-over-year:
- C. North: -14% to 1,799 units
- Chilliwack: -46.9% to 531 units
- Fraser Valley: -46.8% to 3,286 units
- Greater Vancouver: -29.7% to 9,494 units
- Kamloops: -33% to 697 units
- Kootenay: -28.1% to 1,127 units
- Interior: -48.9% to 2,479 units
- Powell River: 0% to 120 units
- Vancouver Island: -51% to 1,504 units
- Victoria: -57.8% to 867
Not everyone is convinced the 44th general election will bring relief to BC’s real estate market, the province’s leading real estate association has warned. In fact, according to BCREA, many of the campaign proposals “will lead to municipal bottlenecks, failed policy and disappointed buyers“, adding that “it is important for our new government to make the creation of a comprehensive housing strategy focused on increasing supply an immediate top priority.”
The other challenge ahead for the current crop of Canadian households could be the injection of new buyers due to the possible normalization of immigration levels over the next three years. Ottawa will welcome about 400,000 newcomers each year through 2024, which would weigh on tight resale and rental markets.
Proposals from industry leaders that go against what party leaders recommended: streamlining the home building process, speeding up development approvals and providing consumers with greater flexibility. This, they say, could allow new supplies to come online.
Yet some argue that this election caused all parties to propose a comprehensive approach to solving the housing affordability crisis. The Liberal Party has suggested a home renovation tax and a “homebuyers’ bill of rights.” The Conservatives introduced “federal investments in infrastructure,” while the New Democrats want to provide “resources to facilitate cohabitation and ease of access to financing” by having CMHC-backed condominium mortgages. It remains to be seen whether or not these ideas will offer concrete and positive results for owners, buyers and renters.
A busy real estate market in British Columbia
Either way, the conditions for doing business in the housing industry in British Columbia will remain the same. According to local real estate agents, homebuyers will visit open houses at any time of the day to get their hands on the very small inventory to choose from in this fast-paced market. With interest rates expected to be parked at historic lows for another year, there will be plenty of cash for eager property buyers to snap up BC’s most expensive homes. Sure, mortgage stress tests could limit the number of buyers and potentially home prices, but it’s hard to see valuations falling to pre-pandemic levels.