Will millennials achieve the Canadian dream of homeownership? For many young first-time homebuyers in the British Columbia real estate markets – and broader national housing market – it is becoming increasingly challenging to find a home within a conservative budget, or even accumulate a sizable down payment amid these soaring prices. Moreover, the housing affordability crisis is creating a situation whereby homeownership is perhaps a dream that may not become a reality for a large number of young Canadians.
British Columbia’s housing market has burned red-hot throughout the coronavirus pandemic. Across most of the province, sales activity has spiked, and valuations have surged amid strong fundamentals: low supply and high demand. Unfortunately, it is a situation that is common throughout the Great White North today, and it is unclear if young households can ever afford to purchase a single-family home in the Greater Vancouver Area, or a townhouse in Victoria.
The best hope for millennials is if the Canadian real estate market experiences a correction. However, industry experts say that it is inevitable that this ultra-bull market in housing will soon transition into a bearish one, citing a combination of factors, from monetary policy normalisation to new supply coming to market.
For now, to understand just how much growth has occurred in the BC real estate market, let’s take a look at the figures posted over the month of April.
Millennial Homebuyers Pushed Out of BC Real Estate Markets
According to the British Columbia Real Estate Association (BCREA), residential sales spiked 312.9 per cent year-over-year in April to 13,683 units. But while this number appears tremendously high, it is slightly skewed because of how inactive the housing market was in the immediate aftermath of the first wave of the COVID-19 public health crisis.
Housing prices also enjoyed a substantial gain as the average residential price in the province surged at an annualised rate of 29.1 per cent to $946,606.
Here is a look at jurisdictions across the province and how they performed year-over-year in April, in terms of prices and sales:
- Average Price: +22.1% to $385,964
- Residential Sales: +237.6% to 530
- Average Price: +43.4% to $749,158
- Residential Sales: +255.7% to 562
- Average Price: +35.5% to $1,042,709
- Residential Sales: +338.7% to 2,878
- Average Price: +17.4% to $1,211,223
- Residential Sales: +347.7% to 5,010
- Average Price: +31.2% to $546,106
- Residential Sales: +218.3% to 382
- Average Price: +34.8% to $443,274
- Residential Sales: +236.3% to 417
South Peace River
- Average Price: +29.4% to $305,961
- Residential Sales: +233.3% to 50
- Average Price: +62.0% to $531,664
- Residential Sales: +325% to 51
- Average Price: +28% to $668,493
- Residential Sales: +269.6% to 1,120
- Average Price: +25.9% to $883,139
- Residential Sales: +282.6% to 1,056
Despite the eye-popping numbers, industry observers say that the trendline is pointing to a slight easing, which could be the opportunity that homebuyers have been waiting for.
“Although provincial home sales were down slightly from an all-time high in March, sales activity was the highest on record for April,” said BCREA Chief Economist Brendon Ogmundson in a news release. “Home sales continue on a record pace, though we do see a calming environment compared to the frenzied activity of recent months.”
The Fundamentals of the BC Real Estate Market
The best way to gauge the state of the BC real estate market in the coming months could be through listings and starts.
In April, total active residential listings tumbled 14.5 per cent year-over-year. But new listings activity advanced for the second consecutive month on a seasonally adjusted basis.
Meanwhile, according to the Canada Mortgage and Housing Corporation, housing starts declined 47 per cent month-over-month to 35,736 in April. The province saw fewer housing starts for single-detached houses and all other types of properties, including townhomes and multiple urban dwellings. But the disappointing figure was comparable Canada-wide, with housing starts dropping 17 per cent to 268,631.
Will Millennials Be Forced to Take a Gamble?
In the end, desperate millennial homebuyers might be forced to take a gamble to purchase a new house. A recent real estate survey commissioned by TD Bank found that more than half (51 per cent) of young Canadians under 35 are ready to submit an offer above the asking price. This is in comparison to one-third of adults between 35 and 54 and 18 per cent of those 55 and older.
Indeed, in British Columbia and across the country, bidding wars are more common than ever before. They are no longer associated with just the major urban centres as these fierce bidding battles have effectively seeped into the housing markets of small towns and rural communities.
Millennials may feel discouraged by the inaccessibility of the BC housing market at present, but this industry is all about timing and opportunity. Working with a trusted REALTOR® can ensure that you find a home that suits your need and budget, when the time is right. Our advice is to manage your expectations if navigating the current market as a first-time buyer, even if it means making some concessions – whether it is one less bedroom, or no basement, or perhaps a little outside of your targeted neighborhood.