Spring is slowly melting its way into the northern most parts of British Columbia. Across the province, agricultural landowners are engaged in calving, feeding, cultivating and seeding and commercial tourism operators are readying their establishments for summer guests. BC’s economic climate is adversely echoing springs arrival with the Alberta energy sector in turmoil and we have yet to see the longer term effects that the federal carbon tax increase will have on individual households in B.C.
One segment of those households are hard working rural agricultural and commercial land owners that are aging to retirement, and seeking their exit strategy to do so. Finding the right buyers for their now extremely valuable landholdings has become increasingly challenging, forcing some to continue to operate well past their own retirement timelines.
Statistical data collected in March 2019 is now showing ‘average days on market’ numbers for single detached homes have increased as well. Real estate regions across the province are continuing to report low inventory counts, which in turn is driving up prices. The BC Northern Real Estate Board covers 72% of the province, an area covering over 600,000 square kilometers. Their published March data show sustained market activity with record low inventory and forecasts further price growth in 2019 as a result.
March 2019 statistics published by the Okanagan Mainline Real Estate Board which serves the Okanagan, Shuswap and Revelstoke regions shows that the ‘average days on market’, rose to 92 days, up from February’s 88 days, and last March’s 79 days. OMREB’s President Marv Beer, stated in their March report that, “Usually, when activity increases we see the average days indicator shorten, yet here we’re seeing the opposite.” The report went on to confirm that despite an almost 45% increase in new listings in the Okanagn region that the home inventory count decreased by 12% over last month.1.
We are seeing this variance in the market because both domestic and foreign buyers are facing stricter regulatory hurdles to borrowing and ownership. The telling effects of the B20 Mortgage Stress Testing that qualifies buyers, has taken many would be purchasers out of the realm of ownership all together. Even long time property owners don’t have the upgrade options they once would have had, even with a substantial income and existing home equity. This has created an even larger gap in the affordability of ownership across the province. In order for the real estate market to maintain a healthy count of correctly priced inventory, it must have enough qualified buyers for those listings. Where will these buyers come from?
Compounding the issue, is the Foreign Buyers Speculation Tax, meant to correct the lower mainland and Okanagan’s affordability issues. Since implementation it has slightly reduced housing prices, spurring some new activity in the Fraser Valley and Chilliwack Regions in March. But the Speculation Tax has had a pronounced contrary effect on foreign real estate investment in the rest of the province. In allot of circumstances, foreign buyers are the only buyers interested, willing, and financially capable of purchasing and running commercial tourism and large agricultural operations. Immigrant Canadian and land investors from the USA and Europe bring a much needed influx of capital to the BC Economy. There is allot of money leaving European countries right now seeking a safe haven, but Europeans are are taking their capital elsewhere as the B.C. NDP’s shortsighted policies have soured the investment climate, putting B.C. at the bottom of the list. There are still a handful of brave, nature loving European investors who are seeking B.C. properties, and this trend will continue with the looming European elections, but without serious interest from foreign investors, many commercial owners, ranchers and farmers will be listing their nest egg investment into a severely reduced pool of qualified buyers.
The BC Real Estate Board is forecasting a reduction in mortgage interest rates for 2019, which would help to qualify more domestic buyers, although a total correction of the imbalanced market lies with well thought out changes that are needed within government policy. The shortsighted speculation tax on foreign ownership aimed at reducing the housing costs in the lower mainland has not taken into consideration the effect it would have on the other 90% of the province. Patience and an experienced realtor will continues to be a sellers best assets, and buyers will need to leverage their best financial overview to reach their estate goals as we head into uncharted market territory in May.