During the entire coronavirus pandemic, the overall BC housing market seemingly defied the impacts of the COVID-19 public health crisis, averting the economic hit that occurred in the aftermath of the once-in-a-century event. From Vancouver to Victoria to Vernon, the western province’s housing sector enjoyed incredible gains throughout the entire area. This included Northern BC, too.
Since the beginning of the year, housing analysts had anticipated that Northern BC would continue to post higher prices and home transactions. Like the rest of the Canadian real estate market, Northern BC has seen demand outstrip supply, allowing prices to pick up significantly as a result.
But there is another factor that has contributed to the region’s tremendous growth: major economic investors, including the multi-billion-dollar liquid natural gas (LNG) project. With natural gas prices trading at around $4 per million British thermal units (btu), this component of the energy industry is creating high-paying jobs, which is seeping into the broader economy.
Can Northern B.C. sustain this trend-defying growth, or will it fall in line with the rest of the national housing sector’s slowdown? July might offer some insight into what is currently transpiring on the western seaboard.
Northern BC Housing Market Continues to Enjoy Strong Activity
According to the BC Northern Real Estate Board, residential sales declined 7.4 per cent year-over-year, totalling 502 units in July. In the first seven months of 2021, home sales advanced at an annualized rate of 65.5 per cent, coming in at a record 3,379 units.
On a long-term basis, residential property transactions were 8.5 per cent above the five-year average and 8.7 per cent above the decade-long average for this time of the year.
Although sales appear to have peaked, price growth continues to be strong. In July, the average price of homes sold in the British Columbia Northern real estate market added 8.5 per cent from July 2020, climbing to $385,883. Year-to-date, which industry observers posit is more comprehensive, increased 15.4 per cent to $375,966.
On the supply front, listings and months of inventory each tumbled to kick off the third quarter of 2021. The number of new residential listings fell 7.6 per cent to 635, while active residential listings dropped 25 per cent to 1,856 units. New listings were 9.1 per cent below the five-year average, and active listings were 23.5 per cent below the five-year average. It should be noted that active listings have not been this low in more than a quarter-century.
The months of supply slipped from four months in July 2020 to 3.7 at the end of July 2021. This is also under the long-run average of 6.2 months. Market analysts note that this is a crucial measurement to determine the number of months it would take to exhaust demand at the current rate of sales activity.
“Home sales may have come in lower compared to last July but still managed to be in the top five July months of all time and just squeaked in over 500 units,” said Sandra Hinchliffe, President of the BC Northern Real Estate Board, in a news release. “Home sales were down from year-ago levels, but new listings declined even more, which means that overall supply levels are still at record lows and falling. With an ever-shrinking pool of available listings on the market it’s no surprise that average price levels nearly set another record and continue to rise.”
While it is not clear if the province’s northern region will witness an injection of new supply, the latest Canada Mortgage and Housing Corporation (CMHC) data suggest housing starts in the broader province have increased by more than 4,000 in July compared to the roughly 3,300 last year. Year-to-date, housing starts have topped 27,000, up from nearly 20,000 in the first seven months of last year.
Is Patience the New Normal in Housing?
Industry observers have warned that British Columbia, which has some of Canada’s most expensive local housing markets, is ostensibly “comin’ down the mountain” as conditions begin to stabilize and normalize. But the tremendous price growth over the last 18 months has prompted some to rethink their BC residency and seek more affordable options elsewhere. But is this feasible given the trend of rising property prices from coast to coast?
The country’s housing affordability crisis is no secret. From the Prairies to the Maritimes, every housing market has soared since the beginning of the coronavirus pandemic, resulting in record-setting numbers. So, where can young families and first-time buyers go to make their home-ownership goals a reality?
Whether it is rising borrowing costs or the possible new normal in the post-pandemic economy, there is still plenty of uncertainty in the air, making the direction of the Canadian housing market challenging to predict. Some are suggesting that many Canadian markets have reached their zenith, and a gentle cooling is just around the corner. Either way, the dust will eventually settle, and as long as hopeful homebuyers remain patient, informed, and guided by an experienced REALTOR®, opportunities will emerge.