The August 2022 statistical release from the BC Real Estate Association (BCREA), reported British Columbia’s markets are stabilizing and showing a healthier balance compared to 2021. The provinces sales to inventory ratios are back to what is historically rated as balanced market territory, meaning that, the number of homes on offer in our regional markets have increased to levels that support 4-6 months of inventory.
Brendon Ogmundson, Chief Economist from the BCREA also stated in his September 8th update, “While the housing market is currently feeling the weight of higher interest rates, the downturn is unlikely to be long-lived as BC’s strong population growth combined with extremely favourable demographics means there will be no shortage of demand for housing in the province.”
The return to a normalized pace and inventory is to everyone’s advantage, but, if you feel like you missed out by not selling during the market peak of 2022, take this to heart, and to the bank. Even with this summers correction in home prices, your property’s value has increased from pre-pandemic prices, some by as much as 35%, and you should not be discouraged from listing and selling at current market values. The BCREA is predicting the largest price reductions in 2023 to be a 5% decrease in the Chilliwack and District Real Estate Region, which equates to a modest $40K reduction off the peak median price of $789,200 posted march 2022.
Using the historically high 2021 & spring 2022 figures as a benchmark for where market values should aim to be is misleading to potential buyers, investors and home owners. Your home is only worth what someone is willing to pay for it, at the time you are ready to sell it. And you should only buy or sell a home or property when it makes sense for you, and not just when the market is at the lowest or highest point. Yes, it is financially advantageous when you can time the purchase or sale of your property to coincide with the beginning or end of a cycle, but the real return on investment in owning your own home is received while you are living in it and still paying for it. Somewhere along the line we have forgotten that.
The extraordinary circumstances of the last three years spurred enormous demand for the security of homeownership, at a time when there were very few homeowners who wanted to sell. The writing on the wall in the rearview mirror now tells a story of economic leadership facilitating the commodification of our housing, allowing short term financial returns to become more important than the long term well being of society and future generations.
Canadians are vocal supporters of fundamental human rights as pillars of our western democracy, and at the same time, we have allowed housing to become a vehicle for the rapid accumulation of wealth, a commodity first, rather than a beneficial human right. It begs the question, was housing and future homeownership sacrificed to keep our economy and municipal coffers from completely failing during the pandemic? If home ownership is such a long standing public policy goal for our elected officials, why did they facilitate corporate REITs and investors into the housing market instead of protecting it?
Stakeholders like The Canadian Real Estate Association (CREA) are speaking out about the “unnamed voices” questioning whether public policy should continue to support homeownership.
The executive summary of the CREA’s authoritative report on home ownership titled: The Home Ownership Dividend for Canadians states: “Homeownership is shown to contribute both financial and non-financial benefits to homeowners themselves and the broader society. These benefits extend across income levels, ages, and regions. In fact, the data and research show many of these benefits are most pronounced for low- and middle-income households. Consider, for instance, that housing represents nearly 50% of the total net worth for the Canadian households with incomes below $56,495.”
The report went on to site Stats Canada’s 2019, Canadian Survey of Financial Security Report that declared “A significant financial advantage from homeownership across age groups.” “Canadian homeowners reported a higher median net worth ($685,400) than renters ($24,000). The gap is the largest for those nearing retirement age (ages 55 to 64) where the median net worth of homeowners was $952,100, compared to $40,000 for renters. But it is not just limited to older Canadians. The median net worth of homeowners under the age of 35 was $272,100, while the median net worth of renters was $14,500 for the same age group.”
The big take away being, the benefits of home ownership have a direct positive correlation to our health and well being. All stakeholders need to understand that if you price the fundamental societal building block of housing out of reach from citizens with lower incomes, you weaken communities and there are long lasting negative effects that are beginning to show.
This is not someone else’s problem! As a homeowner, ask yourself, how much will my home be worth in 10 years, if the neighbourhood or city that surrounds it has become unsafe and unliveable? The consequences of impoverishment through homelessness can be seen in the large tent city encampments erected throughout the provinces cities and towns that now report a marked increase in theft and violent crime. For those most vulnerable, once you no longer have an address, accessing services and getting back on your feet is even harder.
A massive change in perspective and policy is needed to bring back true market balance, which has to include more affordable housing choices. Canada’s GDP during, and post pandemic is now heavily dependant on the residential housing industry, and that needs to change. Just because stakeholders are still making profits off of fewer homes, selling at higher prices, does not mean that trend is sustainable, good for the industry, or for British Columbian’s.
Our elected officials have the capability to release crown land for affordable social and private housing developments, waive fees and density payments and expedite construction of thousands of needed homes. Now, more than any time in history, our resource rich nation must have policy that supports the production of our own energy, food, manufacturing and most importantly, housing.
Freddy & Linda Marks, 3A®Group RE/MAX Nyda Realty