The second year of the pandemic isn’t slowing down the real estate market.
In fact, home sales reached a new annual record in November, and the year’s not even over.
“Home sales have already surpassed the previous annual record of 112,425 units set in 2016,” said Brendon Ogmundson, chief economist for the BC Real Estate Association.
With the rise in sales came a spike in prices for November.
The average cost of a home jumped to $993,992. That’s a 22 per cent increase from November 2020.
“Even amid the pandemic-induced recession, we’ve continued to lose control over housing prices,” said UBC’s Paul Kershaw, also the founder of Generation Squeeze.
Another record for November is a dramatic 39 per cent drop in property listings in B.C.
“While the numbers of people looking have gone through the roof, the number of units available have not,” explained Tsur Somerville of the UBC Saunder School of Business.
“If you think about a lot of people chasing a small number of units, that’s really going to drive up house prices.”
Kershaw says you need only look back in history to see the dramatic shift in housing affordability.
He says 45 years ago, a typical 25-to-34-year-old worked five years to save for a 20 per cent down payment on the average home.
“It now takes 20 years of savings, on average, in British Columbia and the best part of 28 years of saving in Metro Vancouver,” he said.
Tsur says B.C.’s foreign buyers tax – along with the speculation and vacancy tax – has helped with affordability, but other factors remain outside the province’s control.
“Interest rates are not in the control of the province of British Columbia. Migration in the country is not a B.C. issue. Immigration … that’s not a B.C. issue,” Tsur explained.
He believes more, higher density housing is needed, but admits it presents challenges.
“You want to build a six-storey building instead of a four-storey building and you’d think you’d dug a hole and filled it with toxic sludge based on some people’s reactions,” he said. “I don’t see the demand magically going away, which means we either build a wall to keep people out or we need to be a whole lot more aggressive than we’ve been.”
Meanwhile, Kershaw says B.C. needs to change its way of thinking if it’s going to tackle the housing affordability issue.
“The big problem we have is not the policy tools available to us,” he said. “It’s a lack of clarity about what we want from housing. Is it a place to call home or a way to get rich?”
“Right now, we’ve been wanting both, and in the middle of that tension, we just watch home prices rise year over year over year. And the collateral damage for affordability is just numbing at this stage.”
Source: CTV News