The BC housing market may have had a slow recovery in the immediate aftermath of the first wave in the coronavirus pandemic, but since the summer of 2020, activity has been soaring. While Vancouver dominates the real estate news headlines, the entire region is performing remarkably well, with tremendous sales activity, immense price growth, and inventory that is on the rise again.
Still, while this type of market benefits homeowners and sellers, it leaves plenty of homebuyers sidelined without an opportunity to get into the market. As a result, some say Canada is experiencing a housing affordability crisis. Others argue that it is a regional problem that must be addressed. Whatever the case may be, it is clear that BC is home to plenty of municipalities experiencing affordability issues.
This became one of the most discussed topics of concern in the recent federal election. Now that the 44th election campaign is in the history books, it might be time for the political parties to collaborate and tackle the unaffordability hurdles that are challenging first-time homebuyers and young families, says one real estate association.
BCREA Calls for “Collaboration” to Tackle Unaffordability in BC Housing Market
The British Columbia Real Estate Association (BCREA) recently issued a call to action, pushing the country’s federal political parties – Liberals, New Democrats, Conservatives, and The Green Party alike – to make home ownership more achievable. Can Prime Minister Justin Trudeau find common ground with the opposition? For Canadians’ sake, Parliament Hill must make this a priority, notes BCREA Vice President of Government Relations and Stakeholder Engagement Trevor Hargreaves.
“During an election campaign it’s easy to get caught up in party politics,” Hargreaves said in a news release. “But we can’t lose sight of the fact that what makes a minority government function is collaboration. Our new government now needs to put politics aside and focus on creating long-lasting, evidence-based housing policies that help Canadians.”
One of the first steps the House of Commons can take is developing and adopting a comprehensive National Housing Strategy plan that manufactures a “framework that proactively encourages housing.”
But what does a nationwide housing initiative look like anyway? BCREA officials believe the federal government could facilitate greater supply by presenting these public policy tools:
- Producing all types of housing, from mixed development to triplexes.
- Partnering with provincial and municipal governments.
- Identifying barriers that cities face with development approvals.
- Incentivizing and rewarding federal and municipal housing targets.
“Supply-side measures take longer to implement and achieve, so they aren’t often a go-to policy option by politicians concerned with quick wins,” Hargreaves added. “But if you want to actually achieve forward movement in this housing market and truly help Canadians, it’s time to put optics aside, align the levels of government and vastly increase supply.”
But how critical is this recommendation? Considering how tight the B.C. housing market was in September, urgent action is needed.
How Record-Low Supply Tightened Market Conditions in British Columbia
In September, residential sales across British Columbia’s housing market declined 19.9% year-over-year, totalling 9,164 units. However, despite falling demand, the average residential price surged 14% to $913,471. Sliding inventory drove these conditions.
According to the BCREA, total active residential listings tumbled at an annualized rate of 36.8% in September. In certain provincial markets, such as Fraser Valley and Victoria, active residential listings fell more than 50% year-over-year in September.
“Home sales have settled at levels that are slightly above the long-term average,” said BCREA Chief Economist Brendon Ogmundson. “The main story in all markets continues to be a severe lack of listing supply, particularly in Fraser Valley, Vancouver Island and Interior markets.”
Some relief might be on its way, according to new Canada Mortgage and Housing Corporation (CMHC) data. In September, housing starts edged up from the same time a year ago: 20,692 compared to 20,612 in 2020. Year-to-date, however, housing starts have soared more than 32%.
Still, this comes after the BCREA published its latest Market Intelligence report, titled “Way Out of Balance: Housing Supply and Demand During the Pandemic.” The study authors noted that during the peak of market activity in March of this year, there were 67,000 buyers looking for properties, but there were only 24,000 listings.
“The conditions we saw at the peak of market activity earlier this year were unprecedented,” wrote Ogmundson, the report’s primary author. “Record-low mortgage rates and the work-from-home environment driving buyers into rural areas were both factors that fuelled demand disproportionately as it relates to supply. With sellers looking to stay put in an environment where space at home was at a premium, it made for quite the imbalance.”
Simply put, prospective homeowners outnumbered sellers three to one.
Is this a sustainable housing environment for working Canadians and low- and middle-income households? Can Ottawa work together to present some respite for citizens? Time will tell.
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