Living in BC Canada Affordibility is on the Rise

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The red hot pace of home sales in BC is still on fire. It all began in late fall of 2020 and has continued into 2021. Markets all across the province are experiencing record price increases. Sales are exploding eclipsing previous monthly sales records by wide margins.

Early in the recovery, that record pace was led by markets outside of large metropolitan areas. Buyers flocked to less populated markets looking for single-detached homes driving up prices. The economic recovery is now in full Monster Mode swing and mortgage rates are still near record lows. Sales in large markets in BC have now started to move up.
Further house price and sales are on track for a record year. This is expected to keep driving prices even higher.

Outlook for 2022

No one can tell the future and that is for sure. Last year there were dire predictions of house crashes of 30% and more that never came true. So what lies ahead for BC and Canada as a whole when it comes to house prices? One thing that will drive demand is the massive influx of cash rich immigrants that are about to flow into the country.

Many of these new comers will be coming with cash. Ones that do come and don’t have a lot of money to buy a new home will be renting. Renting demand also drives house prices. Supply and demand the rule of thumb for all markets drive prices.

Home sales for 2022 will be determined on the rise or fall of Canadian mortgage rates. Being a political agenda as well as an economic one interest rates are hard to predict. A lot of factors will come into play over the coming months to decide the course of action governments will take. Regardless demand is going to get higher and supply is limited.

Living in BC Canada Affordibility is on the Rise
Living in BC Canada Affordibility is on the Rise

Supply and Demand for BC Housing

BC Canada is projected to be one of the hottest destinations for new business and high tech workers. Many high tech companies are migrating to BC. Along with these new business are going to come high tech workers who will be looking for homes that are close to their jobs.

These homes are going to be in high demand and depending on where the new business cycle unfolds prices for these homes will rise.

Businesses will be spread out through out the lower mainland and the Fraser Valley but many high tech companies will moving to the downtown core. Close to transportation routes and Air Port Access is important for these multi billion dollar companies. Vancouver is a choice for many with low taxes and a great climate. Expect Condos in the downtown core to rise in price over the coming decade. Supply in short in the condo market and demand will surge.

BC Economic Outlook

BC’s economic recovery is well underway and recovering quickly from the pandemic of 2020. Tourism is starting to show signs of recovering as the vaccines take hold and cruise ships start to arrive. GPD is anticipated to
expand by 5.5 per cent this year in 2021. In 2022 it is estimated to expand at a 4% rate. Elevated rate of growth will be fueled by many things including pent up demand and tourism coming back.

Household savings, new business activity will also add fuel to the economic fire that is about to spread throughout BC in the coming years. All this economic activity will fuel the housing construction industry as well. Many high paying trades people will be needed and these people will also need housing.

A lot of economists predict the biggest boom in many years is coming to BC. Don’t expect housing prices to crash any time soon as the borders open up and rich Americans come searching for investments.

Growth in the BC economy bottomed out in the early months of the COVID-19 pandemic before
a gradual recovery began to take hold. The BC economy has now posted five consecutive months
of positive year-over-year real GDP growth as measured by our BCREA Nowcast and is set to take
off in the coming months.

Household consumption of retail goods is already rising at a double-digit rate and with a strong progression of vaccinations. The service side of the economy should begin to reopen, bringing continued but more balanced
growth in household consumption. Much of the increase in pent-up spending is expected to be driven by a record accumulation of household savings.

Government Stimulus Checks

Due to a generous fiscal response by the federal and provincial governments, as well as
a build-up of precautionary savings, Canadians saved more in 2020 than in the previous six years

As that money begins to move out of bank accounts and into the economy, expect that spending on retail goods, home renovations, vacations and recreational spending will benefit. Much of that savings is already being funneled into the red-hot BC housing market.

Home sales across nearly all regions of the province are on a recordsetting pace. The impact of the pandemic is still
motivating homebuyers toward increased space. Low interest rates are making the cost of acquiring that space more affordable for now.

Rapidly rising prices and extremely competitive markets are quickly eroding that affordability.
Mortgage rates have moved modestly higher since the middle of February. Recognizing the much
brighter economic outlook, we expect the Bank of Canada will begin tapering its current purchases of
Government of Canada bonds.

Policy rates will most likely stay on hold. This will mean some additional upward pressure on housing prices in the coming months. In my opinion it will be very difficult at this point to dramatically raise interest rates. An interest rate hike of any significance would derail the recovery in short order.

Expect Prices to Rise in Everything

With no choice but to keep interest rates low or crater the economy in a flash expect higher prices ahead for everything. As costs rise for homes then wage growth will surely follow. Workers will not come to the high paying tech jobs that are predicted if they can’t afford to live there.

Already in high tech industries in cities like San Francisco you can see this. House prices are soaring and many locals are getting priced out of the cities. Only the high flying tech people and professionals with huge salaries are living in the core close to their jobs.

Expect prices to rise in Vancouver in the same way. Only the so called rich and famous will be living in the downtown area. That is of course not including the huge homeless population that is about to unfold. Why I say this is the climate. Migrations of homeless who don’t want to freeze will be coming to Vancouver.

After all a homeless person doesn’t pay rent and his food cost’s are low feeding off the kitchens and handouts provided by the government. Sadly there is just no room to build housing for these people and quite frankly not profitable for builders. Expect homelessness to rise as prices surge in the cost of living.