Known for beautiful beaches, mountains, lakes and a picturesque coastline — it's no surprise that British Columbia real estate is the most expensive market in the country.
According to a new survey by Century 21 Canada, B.C. takes the top spot, particularly in detached houses on Vancouver's West Side, despite interest rate hikes.
"We recognize the concerns that some might have because of interest rates, but the first half of 2022 showed growth in nearly every regional market in the country," says Brian Rushton, Chief Operating Officer of CENTURY 21 Canada.
The nationwide study compared the price per square foot of properties sold between Jan. 1 and June 30, 2022, with the same period last year and the previous year.
Some markets cooled after the boom during the COVID-19 pandemic, but overall, prices have remained elevated since the start of the year.
"The trend is still towards higher prices, especially in suburbs where younger and first-time home buyers are looking to escape competitive metropolitan areas now that remote work has become more common. What will be interesting is to compare the data we've received from the first half of this year with the data we gather in 2023 to see how the rising rates impact the market for the next six months," says Rushton.
In B.C., the survey points to high prices making buyers look outside the downtown core. Kelowna and Chilliwack, for example, saw sharp price increases. Condos in those two cities saw a 28 per cent and 35 per cent increase in price, respectively, in the first half of the year, according to the release.
Brendon Ogmundson, the Chief Economist at B.C. Real Estate Association, says the market is very different than the first half of the year.
"Five-year fixed mortgage rates have more than doubled since the start of this year. That means borrowers that have a five-year fixed rate and like five per cent need to qualify with the stress test at like seven per cent. No surprise that, given how fast rates have gone up, we've seen market activity slow pretty substantially," he says.
Ogmudson says prices are still up in every region in B.C. year-over-year, as they went up 30 to 40 per cent in the last 12 months.
"There are some markets like Victoria still rising month over month, some of the markets in the north or the Interior are still you know, basically, flat or slightly up," he says. "Then we have some markets, like Chilliwack, or other parts of the Fraser Valley that saw the most kind of excessive run up especially at the end of 2021 and the start of 2022 that are starting to see prices come down a bit."
During the pandemic, he says Vancouver was not the only region that saw prices rising the most. Instead, places like Surrey, Langley, Chilliwack, Kelowna and parts of Vancouver Island saw the most significant uptick.
"[It was] where people were trying to get away from more densely populated areas," he says.
If someone is looking to buy, he suggests ensuring you're comfortable with the price tag.
"Don't try and time the market. Don't try and, you know, wait out whether or not prices are going to fall or trying to get in because prices are rising. Find something that you're really comfortable with and that you can afford. That's the most important thing," he says. "Don't try to time the market."
Inventory will rise, and he believes the market will not be "as tight" over the next couple of years.
"Once we're back into another kind of cycle where demand picks up and it just normalizes back to kind of long on average levels, we're going to start to see inventories deplete again. We haven't really fixed a lot of the structural supply-side problems that have plagued this market for the past decade or more," he says.
In the next 12 to 18 months he projects that the market will be slow.
"I think what we're seeing right now is going to be a short-term phenomenon," he says. "It's gonna be a lot like 2018 and 2019 when we saw very slow activity, some softening in prices, but longer term, I think rates are going to come down, and there's all that demographic demand,"
Ogmudson calls for the market to be in good shape two years from now "once we get past this patch."