The Chartered Professional Accountants (CPA) of Canada say the country is unlikely to experience the same housing market crash experienced by the U.S. a decade ago given the credit quality of today’s Canadian homebuyers. However, homebuyers who may be unable to qualify under the new mortgage stress tests are turning to private lenders, making it harder for regulators to monitor risk in the market as a whole. Demand for commercial real estate for warehouse, greenhouse and retail space is expected to increase to meet the needs of the growing cannabis industry in Canada, while B.C.’s northern region is set to see increased housing demands over the next few years as the LNG Project ramps up.

IN THE NEWS

The CPA says that the Canadian housing market is likely not subject to the same housing market bubble (and crash) experienced in the U.S. in 2008/2009. The noted difference from the situation in the U.S. 10 years ago is the credit quality of today’s Canadian homebuyers.

Home sales in Vancouver and Victoria are down to more typical historical levels, across all property types. At this time last year, the government announced the new lending criteria which resulted in buyers rushing to avoid the new rules coming into effect in January 2018 resulting in an increase in transactions over historical levels.

Borrowers who do not qualify under the new mortgage stress tests may be turning more to private lenders not subject to the same rules, making it more difficult for regulators to monitor risk in the market as a whole.

The approval of the LNG project in northern BC, Canada’s largest ever infrastructure project, is anticipated to spark an economic boom in the region. Residential home prices in the North Coast are anticipated to rise faster than any other region in the province as the LNG project is set to provide as many as 7,500 jobs over the next few years.

The cannabis industry in Canada requires warehouse, greenhouse and retail space to meet the demand of a growing market, which is anticipated to result in increased demand for commercial real estate. The Financial Post reports that cannabis-related facilities have taken up 8.7 million square feet of space up to the end of September 2018, with a need for another six-plus-million square feet of commercial space.

STATS AT-A-GLANCE

BC UNEMPLOYMENT RATES

Regions Rate from December to January 2019 Rate from November to December 2018
Northern B.C. 9.3% 9.3%
Southern Coastal 5.7% 6.2%
Southern Interior 6.4% 7.2%
Vancouver 4.2% 4.4%
Victoria 4.7% 4.7%

Table source: http://srv129.services.gc.ca/ei_regions/eng/rates_cur.aspx

REAL ESTATE ACTIVITY BY REGION

Greater Vancouver

  • Units sold: 42.5% decrease from Nov, 2017
  • Active listings: 40.7% increase from Nov, 2017
  • New listings: 15.8% decrease from Nov, 2017
  • Benchmark price: $1,042,100.00 (1.4% decrease from Nov, 2017)*

Victoria 

  • Units sold: 25.8% decrease from Nov, 2017
  • Active listings: 32.8% increase from Nov, 2017
  • Benchmark price: $865,200 (3.9% increase from Nov, 2017)*

Fraser Valley

  • Units sold: 41% decrease from Nov, 2017
  • Active listings: 43.4% increase from Nov, 2017
  • New listings: 10.6% increase from Nov, 2017
  • Benchmark price: $976,200 (same as Nov, 2017)*

Okanagan/Shuswap/Revelstoke

  • Units sold: 22.4% decrease from Nov, 2017
  • Active listings: 29.6% increase from Nov, 2017
  • New listings: 4.82% increase from Nov, 2017
  • Average residential price: $575,222 (6.49% increase from Nov. 2017) Please Note: This average is an estimate based on the information available on the OMREB site at time of writing

Northern BC

  • Units sold: 11.1% increase from Oct, 2017
  • Active listings: 9.5% decrease from Sept, 2017
  • New listings: 25.8% increase from Oct, 2017
  • Average residential price: $ 308,356 (23.5% decrease from Oct, 2017)

*Benchmark based on the MLS HPI® benchmark for single family detached homes.

Sources:

  1. https://www.newswire.ca/news-releases/housing-collapse-in-canada-unlikely-cpa-canada-study-701246271.html
  2. https://www.cbc.ca/news/canada/british-columbia/buyers-wait-and-see-approach-responsible-in-part-for-lower-prices-1.4932042
  3. https://www.vreb.org/pdf/VREBNewsReleaseAndSummary.pdf
  4. https://www.cbc.ca/news/business/mortgage-stress-lenders-unregulated-1.4909617
  5. https://business.financialpost.com/real-estate/goodbye-vancouver-canadas-great-housing-boom-is-shifting-north
  6. https://business.financialpost.com/real-estate/dont-forget-real-estate-when-assessing-the-impact-of-marijuanas-green-rush
  7. https://www.rebgv.org/monthly-reports/november-2018
  8. https://www.vreb.org/current-statistics
  9. http://www.fvreb.bc.ca/stats/
  10. https://www.omreb.com/market-stats/
  11. http://creastats.crea.ca/cari/index.html

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