Rob Smashnuk

The housing prices in and around Vancouver have surpassed expected peaks and many are not sure if there is a ceiling in sight.  The cost of an average detached home within the Vancouver city limits has reached over $1.5 million – the highest that the area has ever seen to date.  On average, homes in the Greater Vancouver Area have reached numbers close to a million dollars.  The number of properties sold in the area (as of February) rose, and the price of an average home is constantly rising unpredictably in sharp spikes. Mayor Gregor Robertson has shown great concern over the housing situation and has committed time and energy to a federal and provincial team who are working hard to discover exactly which factors are the causes of the consistently rising real estate prices.  

In an attempt to hold off the ever-increasing rise in housing prices, Vancouver recently imposed a 15% land transfer tax on foreign buyers as well as a more difficult qualification process for all buyers. These tougher qualifications have been brought into play to ensure that potential homeowners can manage their mortgage payments should interest rates go up.   The Canada Revenue Agency is auditing tax forms in the hopes of limiting foreign buyers by making sure that those claiming the principal residence tax exemption are, in fact, living in the residence and not using the home as a rental property or 2nd home.   

The outlook for most experts shows a continued rise in Vancouver’s housing prices, and the rapid rate is also expected to stay consistent.  With a limited number of homes on the market and available to hopeful buyers, the competition is fierce.  Combine that with low interest rates that the population has enjoyed and a steady stream of immigration, and you have a case of demand far exceeding the supply.  The situation could be helped by an increase in available homes for sale or with a surge in new home development; something which has been slow.  A significant increase in new home development is not guaranteed this year, and there is an increasing popularity for the suggestion that rules and regulations be eased so that new development becomes lucrative again for builders.  This may be a more important factor over attempting to restrict any purchases by foreign buyers.  Reconsidering land-use designations to allow several different varieties of types of homes, and smoothing the development approvals and permit processes would alleviate the restrictions that builders often face.

The dream of home ownership will vanish for many in light of the inflated prices on even the most average sized homes.  Families see their adult children staying longer in the family home and couples starting their lives together will most often be renting their accommodations and perhaps holding off for years in the hopes of being able to someday afford even a small starter home.  Only time will tell what the future holds for Vancouver’s rising housing market.