Finance Minister Carole James has put a positive spin on the B.C. housing market
The provincial government may tout the return of lower prices to the B.C. housing market, but it looks like stability will have to wait
No matter where you stand on the debate over housing prices, it’s a safe bet that the B.C. property market will keep delivering a bumpy ride for the rest of 2019. There was no shortage of turbulence in June, which saw home sales sink to a seven-year low for the month. That weakness forced sellers to settle for less, pushing the provincial average sale price down 4 percent year-over-year, to $687,326, according to the Canadian Real Estate Association.
While some observers have warned that the recent decline could turn into a slippery slope that triggers catastrophic wealth destruction, others argue that it marks a welcome return to more normal conditions, given extreme unaffordability throughout the province. That’s certainly the angle that Finance Minister Carole James has taken.
Following the announcement of the June housing figures, the deputy premier took to Twitter, opting for a positive spin. “After years of skyrocketing prices we’re finally starting to see more balance in the housing market,” James said. “We’re seeing moderation in the cost of condos, townhomes and detached homes, while housing supply is at a five-year high.”
James added, “We’re leading the country in our work to ensure that housing is used for people, rather than a haven for speculation or worse, money laundering. I’ll continue to watch the housing trends closely but am cautiously optimistic that the housing market is returning to balance.”
Returning to balance may be putting it politely, though. There’s been nothing balanced about the B.C. market over the past half decade. The unprecedented housing boom turbo-charged sales, which hit all-time highs in 2016, inflating prices by double digits for several years. Since then, the market has taken a drastic turn in the opposite direction.
Through the first half of this year, cumulative sales plummeted to their lowest six-month total since 2013. Prices for luxury properties have also nosedived, prompting concern—or elation, depending on your point of view—that it could spread to the everyday part of the market. As of June, Metro Vancouver condo prices had already slipped 8.9 percent since last year, the Real Estate Board of Greater Vancouver reports.
And so the future of B.C. real estate hangs in the balance. Developers have pulled back amid the uncertainty, but the record number of housing units under construction will soon go up for sale. Meanwhile, the provincial government is holding firm: “Homes should be for people, not speculative investment.” For the first fiscal year of its speculation and vacancy tax, Victoria expects a haul of $115 million from what James calls foreign owners, satellite families and those with empty homes. At least somebody’s making money in this market.
Sources: Canadian Real Estate Association, Steve Saretsky