Housing inventory has been a critical issue for the BC real estate market and the broader Canadian housing market. From a paucity of property listings to record-low months of inventory, it has become increasingly challenging for homebuyers to achieve the Canadian dream of home ownership. Even if young families and first-time buyers find the perfect place listed within their budget – be it a detached home in Kelowna or a one-bedroom condominium in Vancouver – these properties can end up selling for hundreds of thousands of dollars over the listed price.
This issue made its way to the federal election campaign, with the leading political parties promising to restore housing affordability. Whether this will come to fruition or not remains to be seen. Many industry experts share the same opinion: the current hot-button issue in the Canadian real estate market is housing supply.
In British Columbia, real estate inventory is at or near all-time lows in many jurisdictions across the province, from Greater Victoria to Greater Vancouver. It is unclear if homebuyers will get any relief, or if they should brace themselves for more of the same over the next 12 months.
BC Real Estate: Housing Supply Remains Hot-Button Issue
In August, residential sales tumbled 7.1 per cent year-over-year, totalling more than 9,500 transactions, according to the British Columbia Real Estate Association (BCREA). The average residential price in British Columbia advanced at an annualized rate of 17.2 per cent to $901,712. Total active residential listings slumped 37.9 per cent year-over-year in August, and tracked 42 per cent below normal levels for the month of August.
New data from Canada Mortgage and Housing Corporation (CMHC) suggests that fresh supply could be coming to the western province. In August, housing starts surged to 3,623, up from 3,512 the same time a year ago. Year-to-date, housing starts have reached close to 31,000, up from 22,696 in the first eight months of 2020.
“Home sales around the province have essentially returned to normal after a record setting spring,” said BCREA Chief Economist Brendon Ogmundson in a news release. “However, we continue to see a drought in the total supply of listings as well as downward trend in new listings activity.”
Here is a look at residential listings among some of B.C.’s areas in August year-over-year:
- C. Northern: -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% at 120 units
- Vancouver Island: -51% to 1,504 units
- Victoria: -57.8% to 867
Not everyone is confident that the 44th general election will elicit any relief for the B.C. real estate market, the province’s chief real estate association warned. In fact, according to BCREA, many of the campaign proposals “will lead to municipal bottlenecks, failed policy and disappointed homebuyers,” adding that “it is important for our new government to make creating a comprehensive housing strategy focused on increasing supply an immediate top priority.”
The other upcoming challenge for the current crop of Canadian households could be the injection of fresh buyers due to immigration levels possibly normalizing over the next three years. Ottawa will be welcoming approximately 400,000 newcomers every year until 2024, which would weigh on the tight resale and rental markets.
Proposals from industry leaders that counter what the party leaders have recommended: streamline the home building process, speed up development approvals, and offer consumers greater flexibility. This, they say, could allow fresh supply to come online.
Still, some hold that this election has resulted in all of the parties putting forward a thorough approach to resolving the housing affordability crisis. The Liberal Party suggested a home renovation tax and a “Home Buyers Bill of Rights.” The Conservatives presented “federal infrastructure investments,” while the New Democrats want to provide “resources to facilitate co-housing and ease of access to financing” by having CMHC-supported co-ownership mortgages. Whether these ideas will offer actionable and positive results or not remains to be seen for homeowners, homebuyers, and renters.
A Busy B.C. Real Estate Market
Whatever the case, busy conditions in the B.C. housing industry will stay 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 little inventory to choose from in this hectic market. With interest rates anticipated to be parked at all-time lows for another year, there will be a lot of money out there for property-hungry homebuyers to snatch up the most expensive homes in British Columbia. Of course, mortgage stress tests could limit the number of buyers and potentially residential prices, but it is difficult to see valuations fall to pre-pandemic levels.