A new report forecasts the average price of B.C. home in 2025 at just over $1 million 91ÂãÁÄÊÓƵ” the highest in Canada, some $280,000 above the national average.
These figures appear in the latest forecast from the Canadian Real Estate Association released Wednesday morning. It paints British Columbia along with Ontario 91ÂãÁÄÊÓƵ” whose average forecast price is just under $882,000 91ÂãÁÄÊÓƵ” as outliers in the Canadian real estate market. Forecast prices range from a low of just under $320,000 in Saskatchewan to B.C.'s seven figures.
Shaun Cathcart, CREA director and senior economist for housing data and market analysis, said the markets in B.C. and Ontario are "way more expensive" than the rest of Canada. Cathcart said that means British Columbians are more interest-rate sensitive as sales fell "way more" in B.C. and Ontario and "inventories piled up way more" than anywhere else.
But not all markets in B.C. experienced the same trends.
"One little neat detail within that, is that Vancouver...held up better than most people thought (in terms of sales)," he said. "It just goes to show that in a market that expensive, people are buying with wealth, they are not buying with mortgages."
With prices already high, Cathcart does not expect significant price pressures in B.C. CREA predicts prices in B.C. to rise by two per cent, the second-lowest forecast in Canada behind Ontario with 1.8 per cent. With interest rates "expected to hit a bottom this year" following cuts last year and prices not expected to rise much relative to other jurisdictions, CREA expects B.C. to lead Canada with an uptick of 14.2 per cent in sales.
"The big assumption that we have is that there is a record amount of demand out there on the sidelines, waiting to back come in, waiting for those things, like lower rates and like inventory to be available for them," he said.
By comparison, prices in other provinces are expected to tick up faster than in B.C. with the proviso that other jurisdictions remain cheaper than B.C. For example, CREA forecasts Alberta to rise by 8.3 per cent. Yet the forecast price for the average home in Alberta 91ÂãÁÄÊÓƵ” $534,861 91ÂãÁÄÊÓƵ” is still almost half of B.C.'s forecast price.
But if B.C. is exceptional in some ways, British Columbians are not immune to the push and pull of housing prices. Just as residents of Greater Toronto have continued to look for cheaper real estate, first in southern Ontario, then elsewhere in Canada, including Alberta, British Columbians living in Metro Vancouver are looking for cheaper pastures elsewhere in B.C. and Alberta, Cathcart said.
"British Columbians are moving to Alberta as well, from the Lower Mainland for the same reasons (as Ontarians)," he said. "The Lower Mainland is facing the exact same sort of issues as the GTA, where young people can't afford (to live). They are saying, 'I'm never going to be able to afford a home here, so I'm out of here.'"
Cathcart also pointed to another phenomenon: prices have caught up to smaller B.C. communities that were once a release valve for Metro Vancouver residents looking for cheaper homes.
"Early in COVID, one of the big trends was people moving from all over Canada to Interior B.C.," he said. "Interior B.C. was not expensive before COVID. People went to live where they liked to vacation."
That has subsequently changed.
Bryan Yu, chief economist with Central 1, last year pointed to this change, when he noted communities such as Penticton, Kelowna, Vernon, Kamloops, Victoria, Nanaimo and Campbell River are more expensive than Calgary.
Cathcart, who delivered his presentation at the National Press Gallery in Ottawa, also touched on other issues.
They include the difficulties of raising families in condos with that housing type becoming increasingly less desirable, as well as the potential effects of cutting the GST on homes under $1 million, as suggested by the federal Conservatives.
"The idea of slashing the GST on homes under $1 million 91ÂãÁÄÊÓƵ” yes, that will have an effect," he said.
These discussions unfolded against the backdrop of Canada's housing crisis, "which has not gone anywhere," Cathcart said.
"(Canadian Mortgage and Housing Corporation) says we need 3.5 million more homes by 2030 over and above the maybe optimistically1.5 million homes we are on track to build," he said. "That's a lot."
He added that the magnitude of the problem confronts a worsening labour shortage, because of demographic changes. While immigration could help solve that problem, other changes in home construction are necessary, he said. They include mass timber and modular construction forms.
"You can build houses a lot faster, if we do it, the way we do cars," he said. That ultimately means the introduction of robots and other emerging technologies such as 3D-Printing in building homes in off-site factories freed from daylight and weather constraints.
"We need a technological revolution to solve this problem and it's right in front of us," he said. "We don't need to invent it. We just need to find the political will and money to make it happen."
He also touched on the potential effects on real estate of what he called the "elephant in the room" 91ÂãÁÄÊÓƵ” a potential trade war with the United States."
"Since it is not policy yet, it is filed under risks (for this forecast)," he said. "In terms of risks, these numbers could be very different, perhaps not so long from now, but we don't know that yet."
He added that a "major trade war with the United States" with "all its associated negative economic consequences" for Canada's economy would create uncertainty, which is a "huge housing market killer."
"If you are not sure about your employer next year, you are not going to go out and sign a contract for 25 years and borrow $500,000," he said.
