The following is an opinion I provided in response to a question about the 2018 year in Residential Housing:
Thank you for the opportunity to provide my opinion in regards to the residential real estate market in 2017. My opinion is certainly based on observations on how 2016 unfolded and feedback from several other realtors operating within our local Real Estate Board and other Real Estate Boards in B.C.. I have included statistics provided our chief economist from British Columbia Real Estate Association, Cameron Muir.
Powell River Sunshine Coast Real Estate Boards service the market area from Saltery Bay in the south to Desolation Sound in the north and a number of Gulf Islands particularly, Texada Island and Savary Island. Housing demand across this area has reached record levels this year. Robust demand has created some challenges around the supply of homes for sale, leading to some erosion of affordability.
Generally speaking, strong economic growth in the province has translated into rising employment levels and increased consumer confidence. After several years of relative weakness. Powell River & region were the beneficiaries of a very strong market particularly in the Lower Mainland market as evident by a high percentage of our buyers coming from that region at almost 50%. There may be some camouflaging of data here where some of the local buyers were in fact from relocated from out of town and opted to rent for a period of time before purchasing. It is my opinion the out of town buyers percentage is higher.
The (not quite) year end statistics show unit sales up by 20% in 2016 over 2015 year end. November was showing the Average Residential Selling price at $326,705, up by 43.1% and even the Median Residential Selling Price at 39.3%.
This matches up with the overall B.C. numbers where we have record level of consumer demand this year, with a total of 10,600 unit transactions, up 27 per cent from 2015.
Our typical purchaser comes in two categories;
Firstly, A growing number of retirees from the Lower Mainland and beyond are also choosing to cash-out and relocate to Powell River where their dollar goes further and they can enjoy a more comfortable quality of life in their later years.
Secondly, The trend of young people relocating out of the Lower Mainland to allow a residential purchase that matches their ability for affordability. They have either already started a family or have plans to do so. The question that is always asked is’ What about jobs?. This demographic have put a premium on home ownership for quality of life and secondary to this is the added commuting time to where they earn such as Ft. St. John or Ft. MacMurray. Or alternatively they become underemployed locally which allows them to live here.
The government intervention that took place when the foreign buyers tax of 15% did affect our market. Our buyers that were coming up from the Lower Mainland from a very energetic market to buy in Powell River changed steadily after the tax was brought in. I’ve communicated with Vancouver Realtors that spoke of up to 37% reduction on list prices since this took place. We certainly saw a marked decline in the numbers of anxious buyers ready to act but we are still an affordable alternative to downtown Vancouver and the surrounding area. As the last quarter progressed we saw a natural seasonal reduction in unit sales but a major factor in the tapering off units sold was simply inventory.
Strong consumer demand has drawn down the inventory of homes for sale and the lack of supply has become a significant impediment for home buyers in many areas. Total active listings on the market are down 45 per cent in Victoria and 37 per cent across the rest of Vancouver Island. Powell River is currently carrying 183 residential listings where it is normal to carry between 380 to 425. As a result, the imbalance between supply and demand has created strong sellers’ market conditions and pushed home prices notably higher. I don’t see this trend changing and without the introduction of more new construction on single family or multi family, this trend will weigh strongly in the 2017 market.
I am in agreement with our economist, Mr. Muir’s predictions across the Board. Unit Sales forecast for 2017 shall reduce 14.3% to a total of 390. In my opinion, the reduction shall be caused by a very energetic 2016, lowered inventory, the continued 15% foreign tax in the Lower Mainland and the raised pricing will make us less competitive than prior to 2016. The average MLS Price is forecast to be $288,000 which is only 1.1% above 2016 average price. Although there are two other real estate regions that have a lower average price than our region, the holding pattern again is caused by the 8.8 % reduction of average price in the Vancouver region.
Supporter of the
Powell River Community Foundation