A report from Dexter Realty tells everyone to prepare for a fascinating year.
“As the Metro Vancouver real estate market just enjoyed a year of record sales, we are entering what could be the most exciting 12 months this area has ever seen,” wrote Kevin Skipworth, senior executive.
Skipworth is a partner, management broker and economist at Vancouver Real Estate Company.
Skipworth released its latest report on the heels of 2021 annual recaps released by the Real Estate Board of Greater Vancouver (REBGV) and the Fraser Valley Real Estate Board (FVREB).
Both councils said last year’s sales set a new record in their respective jurisdictions.
In Metro Vancouver, residential sales totaled 43,999 in 2021, marking a 4% increase from the previous all-time high of 42,326 in 2015.
In the Fraser Valley, real estate agents made 27,692 sales in 2021, breaking the previous annual record of 23,974 in 2016.
Against this background, Skipworth lists three realities that he believes will define the housing market in 2022.
Canada does not have enough housing
To make matters worse, Skipworth said the government “does not … have the political savvy to provide the housing needed for the biggest increase in immigration this country has ever seen.”
“According to Statistics Canada, this country absorbed 123,000 immigrants in the third quarter of 2021 alone: the highest level of any quarter since 1946, at the end of World War II,” he wrote.
For the whole of 2021, Skipworth said Canada welcomed 403,000 new residents.
“If past immigration surges are any indication, up to 30% of newcomers to Canada will settle immediately or eventually – usually within two years – in British Columbia and 95% of them will come to Metro Vancouver, ”he explained.
However, “the housing supply in Metro Vancouver has fallen to record levels.”
This is “mainly due to local governments, the construction of new houses does not keep pace with the current population, let alone meet the needs of one hundred thousand newcomers each year.”
REBGV said in its January 5, 2022 report that the new year begins with 5,236 active registrations.
This level represents a decrease of 38.7% compared to December 2020 (8,538) and a decrease of 26.7% compared to November 2021 (7,144).
The board noted that this was the lowest level of registrations in over 30 years.
It is no different in the markets served by the FVREB.
The Fraser Valley Board of Directors reported on January 5 that at the end of December 2021 there were only 1,957 units for sale, the lowest in more than 40 years.
Skipworth said: “Criticize the supply talks as much as you like, but a fundamental flaw in Metro Vancouver and many other real estate markets we are experiencing today is a significant housing shortage.”
Federal government wants to tax homes more
What is the proof?
Skipworth cited a new report funded by Canada’s National Housing Agency, which calls for a new additional tax on homes.
The report was published by Generation Squeeze, with funding from the Canada Mortgage and Housing Corporation.
The newspaper recommended a 0.2% to 0.5% “surtax” for homes valued between $ 1 million and $ 1.5 million; 0.5% on homes from $ 1.5 million to $ 2 million; and one percent for homes valued at $ 2 million and over.
“Are they going to impose a capital gains tax on the sale of main residences then, despite his stubborn refusals? Skipworth asked.
Taxation is an example of a demand-side measure intended to curb activity in the market.
However, Skipworth argued that demand side measures “are clearly not the long-term answer.”
“At some point, you have to make a real effort to increase the supply and allow it to be increased significantly,” he wrote.
Houses will remain expensive
“The final reality that every buyer, seller and tenant in Metro Vancouver will face is that the cost of housing here will never go down,” Skipworth said.
This is happening “despite the demand barriers that all levels of government have erected over the past 10 years.”
“The price increases are fueled by the housing shortage, and the shortage is due to rising prices,” Skipworth said.
How is it?
As an illustration, Skipworth noted that the benchmark price for a single-family home in Vancouver, Richmond, West Vancouver and Whistler is now over $ 2 million.
It is over $ 1.8 million in North Vancouver, Port Moody and most of Burnaby.
“Homeowners shocked by the stickers are reluctant to list their home because they don’t know where they can afford to move,” Skipworth said.
In the Fraser Valley, the benchmark price for a single-family home has increased to $ 1.5 million, 3.6% from November 2021 and 39% higher from December 2020.
“It won’t be easy, but Metro Vancouver has never been an affordable market,” Skipworth said.
This shouldn’t come as a surprise, as there is “no better place to live in Canada”.
In December 2021, the Canadian Real Estate Association released a forecast indicating that the average price of a home in the country could show an annual increase of 7.6% in 2022.
The association said it was a “rather conservative” prediction.
It doesn’t look pretty for people who want to buy a house this year.
“Bottom line: Buyers will continue to struggle in 2022,” Skipworth said.
While there may be a “rush of new registrations in January and spring… it won’t be enough”.