Hoping to buy a home in B.C.? Sorry, it's not likely to get much cheaper
Strict mortgage regulations may slow sales but prices likely to climb, according to UBC associate professor
If your New Year's dreams include buying a home in B.C., don't expect it to get much easier in 2018, according to one expert.
"The best guess for where prices are going to be a year from now is about where they are today," said Tom Davidoff, associate professor at the University of B.C.'s Sauder School of Business
Davidoff says there are some changes coming that could slow things down — stricter mortgage regulations that take effect Jan. 1, for one — but overall he predicts prices will keep climbing.
"Fifty years from now, I would be very surprised if Vancouver is anything other than an extremely, extremely difficult place to buy or to rent," he said.
"You have to think supply is pretty constrained by geography. We can build more condos, but it's hard to add land. We're hemmed in by oceans and mountains and those are beautiful oceans and mountains, and rich people all over the world keep getting richer and a lot of them want to come to Canada."
New units could bring some relief
In the short run, though, Davidoff says there could be a some relief.
"There's a lot of construction going on," he said.
"Some people believe it's international flippers buying these condos. They may not want to hold them once the building's complete. If we see the flippers actually flip these new units before they're completed, as they start to come online, that could create lower prices and lower rents as people move in."
He argues that communities around the Lower Mainland need to maintain such construction in a variety of neighbourhoods.
"Adding more townhomes and apartments in neighbourhoods where there's single family homes would really help in coming years," he said.
'Send the message — we want you to live and work here'
He'd also like to see the province make more of an effort on tax reform.
Although housing affordability was a key election issue, Premier John Horgan has admitted his new government hasn't made much movement on this — yet.
But Horgan is promising there will be progress with the government's budget in February.
Davidoff says the way people are taxed in B.C. needs to change if we want to become a more affordable place to live.
Property taxes are going up in Vancouver in 2018, but Davidoff says they're still much too low.
"Our property tax rate is something like four-tenths, maybe three-tenths of a per cent in the City of Vancouver. It would not be uncommon to see one-and-a-half or even two per cent in other big North American cities," he said.
- Over twenty per cent of new condos in Vancouver and Richmond owned by non-residents
- Vancouver real estate market unfazed by foreign buyers' tax one year later
Davidoff would like to see that reversed.
"Send the message — we want you to live and work here. So we're going to have high property taxes, low income and sales taxes. Hopefully the NDP moves in that direction," he said.
Buying in Vancouver risky but not 'crazy'
For any younger people considering trying to buy into the Vancouver market, Davidoff warns spending everything you have on a down payment for a highly leveraged asset is risky, but not not crazy — especially if you're very attached to the city.
"In the long run it'll probably work out, it might even be a great idea in the short run, but there's certainly a possibility that you're going to feel very stupid if prices fall 20 per cent right after you've bought," he said.
Still, he says, if you feel like your job prospects or quality of life might be better elsewhere, packing up might be the way to go.
"The option to leave is really an important option."