The British Columbia real estate market has become one of the most expensive in Canada. While it had been hot prior to the once-in-a-century global health crisis, the coronavirus pandemic helped the province turn up the heat. And this went beyond the Vancouver real estate market.
According to the British Columbia Real Estate Association (BCREA), the average residential price advanced at an annualized rate of 17.2 per cent, to close to $902,000 in August 2021. The total sales dollar volume climbed 8.9 per cent year-over-year, to $8.6 billion. Total active residential listings were down 37.9 per cent year-over-year, while the supply of homes declined to a new low in August.
Simply put, it’s been difficult for young families and first-time buyers to find and purchase a home in the BC housing market. But the challenge of achieving home ownership may ease, as a new survey revealed that homeowners are considering leaving BC and moving elsewhere.
Survey Reveals that Homeowners are Leaving the BC Housing Market
According to a new study by Insights West, 17 per cent of BC homeowners are thinking of selling their home in the next two years, and 29 per cent are considering hammering a for sale on their front lawn in the next five years.
According to the same study, the reasons vary among these homeowners. Ten per cent of BC homeowners are contemplating selling their property to downsize to something smaller. Eleven per cent say they want to relocate somewhere else in British Columbia, while nine per cent are looking into moving to another province to either afford a better home or purchase a property for a less expensive price tag. For those who are cashing out, eight per cent plan on travelling, six per cent want to rent, and six per cent are retiring.
But why now? A little more than one-third (36 per cent) of homeowners who are mulling over selling their homes revealed that the COVID-19 public health crisis weighed on their decision. The pandemic even impacted renters, with one-quarter thinking of buying a property in BC or somewhere else that is a lot more affordable.
“The relentless climb of real-estate prices in BC and in Metro Vancouver in particular has resulted in many homeowners weighing their options for cashing out,” said Steve Mossop, President of Insights West, in a news release. “The option to downsize or move to a different location in BC in order to take advantage of the equity in their existing home has many weighing the alternatives.”
The poll also revealed some other assumptions about the state of the BC housing market.
Seventy-two per cent of respondents believe housing prices will continue to rise over the next 12 months, with about the same number also anticipating higher real estate valuations over the next two and five years. This view is shared between renters and homeowners. It is also in line with a recent report that found millennials are being pushed out of the BC real estate market.
The likelihood of higher interest rates is also prevalent among BC residents. Close to two-thirds think interest rates will go up in the next year, but there is some disagreement by how much. The survey noted that 48 per cent believe rates will go up by a little, while nearly one-fifth concede it will jump by a lot. Either way, most survey participants agree that rates will continue to rise in two and five years.
The online survey was conducted between June 23 and June 27 among 808 residents. The study contains a margin of error of +/- 3.4 percentage points.
Is New Supply Coming to the BC Real Estate Market?
With more homeowners exiting the provincial real estate market, does this mean more supply could come online and offer some much-needed relief for hopeful homebuyers? Indeed, the BC housing market is suffering from record-low inventories. Furthermore, housing starts have shown tepid easing this past summer, according to Canada Mortgage and Housing Corporation (CMHC), totalling 3,623 in August 2021, compared to 3,512 the same time last year. With that being said, it could be some time before homebuyers see a noticeable drop in prices, even if the Bank of Canada (BoC) pulls the trigger on a rate hike and the increased mortgage stress test reduces the pool of buyers.
Like the polled homeowners, homebuyers are facing a broad array of challenges to achieve home ownership. Supply is extremely tight, and prices have skyrocketed throughout the pandemic across the entire BC real estate landscape.
But, if homeowners choose to sell, where would they go? It is not only British Columbia that is facing a housing affordability crisis. From the Prairies to the Maritimes, more residential properties nationwide are beyond the budgets of average Canadian households. As is the story told in markets from coast to coast, a substantial influx of supply is desperately needed to help ease these tight markets, increase the affordability of real estate, and hopefully prevent more BC residents from having to leave their home province to settle in the home of their dreams.
Sources:
