The housing market in British Columbia has been a hot topic of discussion and concern for residents and people hoping to own a home. Depending on whether you already own property or not, you might want house prices to skyrocket by 30 per cent this year or completely crash.
There have been many predictions and calls for a housing crash over the years, but it often goes like this:
- 2019: Real estate is going to crash!
- 2020: It's the end! Pandemic!
- 2021: The property market is about to collapse!
- 2022: The Vancouver housing market is finished.
- 2023: Cheap Vancouver houses are coming soon!
I have a friend who takes it a step further and keeps telling me to sell my real estate and buy Bitcoin.
Real estate prices in the province have soared to insane levels, making it extremely challenging for many people to own a home. Amidst all the frenzy and anxiety in the B.C. housing market, it's important to stay hopeful.
Short-term fluctuations in property prices are normal. Yes, housing prices have seen significant growth recently, but we need to take a broader view. The housing market is influenced by various factors like supply and demand, the economy, government policies, and global trends.
Understanding these complexities helps us avoid getting caught up in short-term ups and downs and gain a more comprehensive understanding of the situation. The housing market is not going to crash.
Over the years, British Columbia’s housing market has shown resilience. Despite occasional downturns, it has consistently grown and remained stable in the long run. Panicking over temporary fluctuations is unnecessary. We should remember that the housing market operates in cycles, and historical evidence proves that BC has always bounced back and continued to rise.
Robust economic fundamentals
B.C. has a strong foundation supported by a strong economy. The province has a thriving tech sector, a vibrant tourism industry, and substantial international investment. These factors contribute to the continuous demand for housing in BC, creating a stable environment. As BC continues to attract businesses, talent, and investment, the long-term prospects for the housing market are bright.
Government intervention has also played a significant role in trying to address housing affordability.
Both the national and provincial governments have implemented measures to try and balance the market and provide more accessible housing options. It hasn’t worked as of yet, and it might never work.
While the impact of these policies is not apparent, they demonstrate a commitment to tackling the housing pricing issue and fostering a sustainable housing market.
Real estate is a reliable long-term investment
Jova Xu from Jovi Realty said that real estate has always been a reliable long-term investment, and B.C. is a testament to this fact. Despite temporary fluctuations, property values have consistently appreciated over time.
This is why it’s important to take a long-term perspective when approaching the market, knowing that real estate can provide substantial returns on investment in the years to come.
Viewing home ownership as a significant commitment rather than a quick financial gain helps alleviate anxieties and allows individuals to focus on the bigger picture. Buying real estate is something between a one-night stand and a marriage in terms of commitment.
B.C. house price statistics
The price of homes in British Columbia has been steadily increasing from 2018 to 2022. In 2018, the average home price was around $700,000, but within four years, it shot up to an astonishing $1.1 million, an increase of nearly 57 per cent. This significant surge can be attributed to factors such as a growing population, low-interest rates, and a limited supply of homes.
If we focus on different regions within British Columbia, Vancouver stands out as by far the most expensive city.
In 2018, the average home price in Vancouver was approximately $1.2 million, and by 2022, it had risen even further to a staggering $1.8 million. The average house price on the North Shore is now over $2 million.
This makes metro Vancouver not only one of the priciest cities in British Columbia but in all of Canada. However, other regions like Victoria BC have also experienced substantial price increases during this period.
As housing prices soared, it became increasingly difficult for aspiring homeowners to afford a home. The price-to-income ratio, which measures the affordability of housing based on household income, worsened over the past five years. In 2018, it was 8.5, meaning it would take the median household 8.5 years of income to afford an average-priced home. By 2022, this ratio had risen to 11.5, highlighting the mounting challenges faced by individuals and families hoping to own a home.
The composition of buyers in the British Columbia housing market has also undergone significant changes. Foreign investment, particularly from China and India, has played a major role. Recent data shows that about 7 per cent of residential properties in British Columbia are purchased by foreign buyers.
In Vancouver alone, this figure jumps to a remarkable 20 per cent. The presence of foreign buyers has added pressure to an already strained housing market, driving up prices and further reducing the availability of affordable housing.
Despite the continuous rise in housing prices, there have been moments when the market has cooled down. In 2019, the provincial government implemented measures to curb speculative practices and foreign investments.
These included a foreign buyer tax and increased property transfer tax for high-priced homes. As a result, the market experienced temporary relief, with prices stabilizing or even declining in certain areas. But it didn’t last long.
Regardless of what happens with interest rates or government intervention, expect the B.C. housing market to keep going up in a big way.
Alistair Vigier, CEO of ClearwayLaw, leads an innovative online legal community that empowers the public to rate lawyers across Canada.