The British Columbia Real Estate Association (BCREA) recently published an shocking report about the province’s housing market in September. It found that home sales soared to $49.7 billion for the first nine months of 2020, up 25 per cent from the same period a year ago. Instead of enduring a COVID-19 pause, the province’s housing market was instead hyperactive over the course of 2020.
BCREA data also highlighted that homebuyers acquired more than 65,000 properties from January to September, a 12.5 per cent jump year-over-year. The average price year-to-date swelled 11.2 per cent to $764,298.
But how could this be happening? The association published a separate report, titled “The Unusual World of Pandemic Economics.” It assessed how the province’s real estate market is booming, citing higher savings rates, government income support, a tight housing supply, uneven job losses, and historically low interest rates.
“One thing we know for sure is that pandemic economics are very unusual and in these unprecedented times, history may not be as strong a guide,” the report stated.
Put simply, although the Canadian economy is in a recession, this economic downturn is anything but normal.
While the impressive resilience and recovery of the Vancouver real estate market has made national headlines, what about other cities that are in proximity to the nation’s third-largest city? While recovery within these municipalities has also been strong, prices have yet to swell to unattainable levels, making them viable destinations for homebuyers with sights set upon the Vancouver area. We have compiled a list of five the top 5 real estate markets that have managed to strike the balance between desirability and affordability a little better than neighboring Vancouver.
5 Affordable Markets to Buy Real Estate Close to Vancouver
Okanagan Mainline Real Estate Board (OMREB) reported that 21.79 per cent more homes were sold in the Kelowna region in September compared to the same time last year. The numbers pointed to rising property valuations, with single-family homes, townhomes, and apartment condos booming. OMREB President Kim Heizmann noted that the COVID-19 public health crisis had forced homebuyers to assess things differently, including their living space. Kelowna sees some properties still reasonably priced as you could scoop up a condominium for as low as $244,400.
According to the Victoria Real Estate Board (VREB), 60.6 per cent more properties were sold in September 2020 than September 2019. It should be noted, however, that on a month-to-month basis, home sales were up just one per cent. The Multiple Listing Service® Home Price Index benchmark value for a single-family home in the Victoria Core increased year-over-year by 3.5 per cent to $879,200. But the benchmark value for the same home slipped by 1.1 per cent in August.
What was the reason for the monthly decline? New supply entered the market, says Victoria Real Estate Board President Sandi-Jo Ayers.
“We had some much-needed new inventory enter the market over the course of September,” stated Ayers in a news release. ”But the supply has not been sufficient to outstrip the heightened demand. We continue to see multiple offers and pressure on pricing across many neighbourhoods. Looking forward, it is impossible to determine what our fall market will look like, but if the past couple of months are an indication, we may see higher seasonal numbers than we would have expected in a more predictable year. That said, since our situation can change in a blink, we cannot look at the past months as the start of a trend, but instead as a moment in our market during an unpredictable time.”
Local Victoria real estate agents are hopeful that prices (and some of the fierce competition) may ease in the coming months amid these new stocks arriving on the market.
Kamloops is one of the most beautiful cities in Canada, so it’s not surprising that this riverside city is drawing homebuyers from the Vancouver Core as well as from across the country. Although demand is strengthening, the average residential price remains reasonable for new market entrants.
New data from the Kamloops and District Real Estate Association (KADREA) found that the average home price rose 15.3 per cent year-over-year in September to $493.597. Home sales advanced 23.8 per cent from the same time a year ago.
KADREA President Wendy Runge thinks it could be hard to forecast the short- or medium-term future of the Kamloops real estate market.
“Real estate sales numbers for last month have once again shown us that the impact of the pandemic on the market has been more positive than originally predicted,” Runge explained in a statement. “For the fourth month running, the number of units sold has been setting records that not many would have contemplated at the beginning of the pandemic. While sales usually dip in September and then pick up again during the fall months until winter, the trend we are seeing right now is unlike anything that we have seen before.”
Real estate agents are describing the housing situation in Surrey and the broader Fraser Valley region with one word: historic. For the fourth consecutive month, the housing market experienced robust growth as the Fraser Valley Real Estate Board recorded a 9.4 per cent increase in September from August.
The benchmark price for a single-family detached house rose 1.3 per cent month-over-month to $1.032 million. But how would this be affordable?
The first factor is that interest rates are near zero; more homebuyers are taking advantage of these historically low rates, borrowing greater amounts to snatch up real estate that may have previously been out of reach. Plus, the Bank of Canada (BoC) has signaled that it is not raising rates for a few more years, meaning that homebuyers can lock in these extremely low rates.
The second aspect is that new supply is coming to market, which could alleviate the upward trend and allow newcomers to scoop up properties. In September, the number of new listings climbed 6.2 per cent from August.
“For many existing homeowners and first-time buyers, their buying power is greater than it’s been in a long time. Interest rates are very low, people have saved money over the last few months, and they’re choosing to invest it in their most important asset. Sellers are also recognizing that with lower than normal inventory, this is a smart time to list,” said Fraser Valley Real Estate Board President Chris Shields in a news release.
Burnaby Now recently sported a headline that accurately summarized the city’s housing market: “COVID can’t stop Burnaby real estate as Metrotown project nearly sells out in 2 weeks.”
The Real Estate Board of Greater Vancouver (REBGV), which covers Burnaby, reported that residential home sales in the region surged 36.6 per cent in August 2020 from the previous year. But for people who are considering relocating to Burnaby, the numbers suggest that new supply is coming. There was a 55.1 per cent increase in newly listed properties – detached, attached, and condominiums – for sale in August. This was 34.8 per cent above the ten-year August new listings average.
Put simply, the demand is strong, but supply is beginning to keep up, which should slow down price growth.
Is Affordability Gone from British Columbia Real Estate?
For people who have been sitting on the sidelines and wanting to finally submit an offer on a property, the rising prices across the province and the rest of the country can seem rather intimidating. While the fleeting COVID-19 discount is unlikely to return, many cities near Vancouver do offer affordability if you know where to look. Remember, it might not seem like it, but 75 per cent of Canada’s regions are “undervalued,” and this includes some parts of B.C. Many B.C. cities are beginning to witness new inventory come to market, which could relieve some of the higher prices seen this year.