The Vancouver Island real estate market is comparable to the rest of the province: defined by low supply, rising prices and easing sales activity.

It is unclear as to when the market will see some relief. Will it be when interest rates begin to increase? Will it be when the provincial government implements public policy aimed at prompting a cooling-off period? Will it be when demand is exhausted? What about new supply?

Finance Minister Selina Robinson says legislation is coming that could help slow down the province’s housing market.

“People looking to buy a home need to know they are protected as they make one of the biggest financial decisions of their lives,” Robinson said recently in a statement. “With this step, we’re moving ahead to protect people and their interests in the real estate market by bringing in a cooling off period for homebuyers and looking at additional measures to ensure effective safeguards are in place.”

The real estate debate unfolding right now is all about affordability. British Columbia is largely experiencing a housing affordability crisis, predominantly affecting young families and first-time homebuyers. The Vancouver Island real estate market’s price problem is due in part to historically low inventories. Here are some of the recent figures coming out of the Vancouver Island Housing Market:

The Vancouver Island Housing Market Comes Full Circle!

According to the Vancouver Island Real Estate Board (VIREB), single-family home sales tumbled 23 per cent year-over-year in October, while apartment and townhouse transactions declined six per cent and 10 per cent, respectively.

Although sales activity appears to be subsiding, Vancouver Island real estate prices are still climbing. The benchmark price for a single-family home rose at an annualized rate of 31 per cent to $757,300 in October. Apartments and townhouses reported 30 per cent and 34 per cent increases, respectively.

Within the Vancouver Island real estate market, here is how the various jurisdictions performed on a year-over-year basis in October for single-family homes:

  • Campbell River: +29% to $663,000
  • Comox Valley: +31% to $779,000
  • Cowichan Valley: +30% to $756,900
  • Nanaimo: +28% to $755,500
  • Parksville-Qualicum: +34% to $887,300
  • North Island: +55% to $418,800 (September)

The main issue for Vancouver Island has been historically low inventories. The consensus among VIREB analysts is that there is little relief in sight across all property categories.

Here is a snapshot of active listings year-over-year for the three primary types of residential units in Vancouver Island:

  • Single-Family Homes: -46%
  • Apartments: -63%
  • Townhomes: -39%

Unless demand drops significantly or more inventory comes online through new construction, VIREB’s inventory situation likely won’t improve,” said Ian Mackay, 2021 VIREB President, in a news release. “Real estate is all about supply and demand. New construction isn’t a quick solution, but it’s the only one that can address the housing shortage, and, hopefully, temper prices.”

The one positive aspect is that new housing construction is gradually rising in the region. According to Canada Mortgage and Housing Corporation (CMHC), housing starts soared 155 per cent in September to 416 unit starts, up from 193 at the same time a year ago. Year-to-date, housing starts have surged 48 per cent to 3,488 units, up from 2,347 in the first nine months of 2020.

Inventory Problems in the British Columbia Real Estate Market

It is not only Vancouver Island that is witnessing record low housing stockpiles. The entire British Columbia housing market is enduring supply levels hovering at all-time lows, says the B.C. Real Estate Association (BCREA) in a new report.

From Fraser Valley to Metro Vancouver to Chilliwack, nearly every segment of the province’s real estate market is reporting declining supply levels. Although new housing construction stagnated in September from a year ago, housing starts have increased in 2021, rising 32 per cent in the first nine months of the year. Evidently, the provincial real estate market is attempting to catch up.

Still, overall, BCREA warns that the crux of the debate is that housing supply is not satisfying demand.

“We put out some research a while ago showing…how many buyers there were for every seller. Markets on the island, in some places we had, we were estimating nine buyers per seller. In the Fraser Valley, it’s like seven buyers per seller,” said Brendon Ogmundson, chief economist at the BCREA, in an interview with CBC News. “So no surprise — you get a lot of multiple offer situations, and in those situations you’re going to get rising prices.”

Until new supply comes to the market, price appreciation is likely to swell in the coming months. According to the 2022 Canadian Housing Market Outlook Report, many British Columbia housing markets are projected to see pricing gains in 2022.