A look at the rapidly changing Lower Mainland real estate market and what 2022 holds in-store
The Million Dollar Question (Or Rather Multi-million Dollar Question!)
With 2021 in the rear view mirror, the current state of the real estate market in the Lower Mainland and beyond is changing at a break next speed. Skyrocketing prices are a culmination of a multitude of factors including low interest rates, environmental disasters, job uncertainty and working from home. Whatever the motivations are, a low inventory coupled with high demand creates increased home prices.
The average Vancouver detached home sold for over $1.9 million(!) and average townhome for over $1 million(!) in December which is a 22% increase from just last year (source: Real Estate Board of Greater Vancouver). BC Assessment just recently updated homes across the Lower Mainland increased from 16% in Vancouver home to 40% in cities like Abbotsford, Chilliwack and Langley! (Source: CBC News) The continual trend upwards does not seem to have an end in sight. So when will the *bubble* finally burst? Or will owning real estate become, if not already, an ultimate luxury that fewer and fewer people can afford? The multi-million dollar question that inevitably everyone must answer.
How We Got Here
Vancouver has been voted the most unaffordable city in all of North America, according to the latest Housing Affordability Indices published by Oxford Economics – beating out Toronto, Los Angeles and New York City.
Many blame the foreign buyers (especially money from China) but even with measures like the Foreign Buyer Tax and Empty Home Tax has not slowed the rising prices. Other factors that contribute to record breaking housing costs:
- Property investors
- Record low interest rates
- Land scarcity
- Construction cost
- Increased soft costs (insurance, permits, municiple fees, property taxes, etc)
- Record low inventory
- High demand
Looking Ahead – What’s Next?
Unless you are getting out of home ownership and renting (although Vancouver is the most expansive place to rent in Canada!) or plan on moving away from BC altogether, the local real estate market is something everyone needs to continually monitor.
The 2022 forecast for BC real estate still predicts increasing home prices, but not quite at the record breaking levels of last year. Royal LePage and Re/Max are predicting 10.5% and 9.2% home price increasing respectively in 2022. Others like Royal Bank of Canada and Toronto Dominion are not as bullish, but still are predicting 3% and 7% increases respectively. Sighting factors such as possible rising interest rates and environmental issues to not having double digit increases.
So with the high value of real estate in Vancouver and the surrounding area not about to change anytime soon, what really are your options for home ownership? Consider:
- Changing what your idea of home really is to you. Maybe it’s not the 4 bedroom/3 bathroom house with a big yard surrounded by a white picket fence but knowing you will be just as happy in a 2 bedroom apartment in a beautiful high rise.
- While living in the new condo downtown might be out of reach financially, the townhome in the Fraser Valley or apartment within a major transit hub and amenities like Burquitlam might just fit the bill.
- Having a plan of home ownership can get you that house you wanted by strategically moving up from presale, to condo, to townhome and finally to the dream house in stages. Using increasing home equity and increased income over time will help in achieving home owning goals.
While the dream of owning a home seems to be moving at a breakneck speed away from you, the key may actually lie in the path to a slightly different goal – owning a home that will make you just as happy as that one in your dreams.
M. Andrew Ohara