The BC real estate market, along with other areas in Canada, continues to show signs of recovering from the changes early in 2018 in government regulations with respect to stress testing and foreign buyers. The approval of the LNG terminal in Kitimat, BC means that the $6 billion Coastal GasLink pipeline will also be built, along with a myriad of upgrades in support of the larger LNG Canada project. Overall, as much as $10 billion is estimated to be spent within BC over the next three years.
IN THE NEWS
The outlook for the BC economy remains bright. Real GDP growth, though down from 2017’s near 4 per cent mark, remains strong. The housing sector, bruised by the mortgage stress test and rising mortgage rates, appears to be recovering, the trade sector is finally out from under the cloud of uncertainty that was NAFTA and the economy of northern BC is about to be reshaped for generations by the largest private sector investment in Canadian history
OSFI said in its October newsletter that there are signs “that fewer mortgages are being approved for highly indebted or over-leveraged individuals.” According to the regulator, the amount of uninsured mortgage originations with loan amounts greater than 4.5 times the borrower’s income has dropped from 20 per cent from April to July of 2017 to 14 per cent for the same period of 2018.
But even though OSFI said the new rules “are having the desired effect of helping to keep Canada’s financial system strong and resilient,” the regulator claims more work is needed to address mortgage approvals that over rely on the equity in the property and OSFI will be taking steps to ensure this sort of equity lending ceases.
Lines of credit secured by homes were initially marketed by banks as a way of obtaining cheap and easy access to funds to pay for home renovations that would help maintain or increase the value of the home. But the funds are not limited to home improvements and rising interest rates and efforts by policymakers to tame climbing residential real estate prices are prompting concerns from the Bank of Canada, Moody’s Investors Services and the Financial Consumer Agency about the ability of Canadian to manage home equity lines of credit.
With a new cannabis laws in Canada, a recent survey of approximately 1380 people by real estate website Zoocasa revealed concerns about the potential for reduced property values. The survey asked respondents questions around smoking and growing pot in a residential property, as well as the impact of retail outlets in the neighbourhood. 64% of respondents believe that a home where the owners smoked pots would see a decreased value. And 57 per cent of respondents said they think that even growing a legal amount of cannabis at home would reduce their desire to buy that property. Some 42 per cent of both respondents agreed that a legal cannabis store opening nearby would be a problem for homes values. 34 per cent disagreed, and 23 per cent were neutral.
BC UNEMPLOYMENT RATES
||Rate from October to November 2018
||Rate from September to October 2018
Table source: http://srv129.services.gc.ca/ei_regions/eng/rates_cur.aspx
REAL ESTATE ACTIVITY BY REGION
- Units sold: 34.9% decrease from Oct, 2017
- Active listings: 42.1% increase from Oct, 2017
- New listings: 7.4% decrease from Oct, 2017
- Benchmark price: $1,524,000.00 (3.9% decrease over last 3 months)*
- Units sold: 9.9% decrease from Oct, 2017
- Active listings: 31.8% increase from Oct, 2017
- Benchmark price: $881,000 (6.1% increase from Oct, 2017)*
- Units sold: 10% decrease from Oct, 2017
- Active listings: no change from Oct, 2017
- New listings: .5% decrease from Oct, 2017
- Average residential price: $447,000.00 (1% increase from Oct, 2017)*
- Units sold: 36.1% decrease from Oct, 2017
- Active listings: 33% increase from Oct, 2017
- New listings: 14% increase from Oct, 2017
- Benchmark price: $986,700.00 (1.1% increase from Oct, 2017)*
- Units sold: 13% decrease from Sept, 2017
- Active listings: 29% increase from Sept, 2017
- New listings: 1.5% decrease from Sept, 2017
- Average residential price: $ 508,195.00 (5% decrease from Oct, 2017)*
*Benchmark based on the MLS HPI® benchmark for single family detached homes.