I received tremendous response to my recent newsletter regarding sprialling home costs here in Greater Vancouver. It's reproduced below.
Polls released this week suggest that almost ¾ of Vancouverites are concerned about the effect of foreign buyers on Greater Vancouver home prices. What was once conjecture seems more and more difficult to deny. The debate is no longer "are foreign buyers contributing to our increasingly unaffordable home prices" but rather "to what extent is this a problem? Should we take action? How?"
And it's not just the Vancouver market that's affected. The insatiable demand for Vancouver homes has led to a dramatic trickle-down effect throughout Greater Vancouver and into the Fraser Valley. Many home values in even the distant suburbs are seeing double digit increases as more buyers travel further afield to find affordable homes. Trickle-down is not often spoken of, but here's the reality: The property value of every single-family home west of Hope has been affected by the huge demand for Vancouver homes. And look for this to continue, as local home buyers are inexorably priced out of one market, then the next, and the next, and the next.
Of course, the phenomenon of moving further afield for less expensive homes has existed for many years – just not on such a dramatic scale as we're seeing now. (And note that we're talking about single-family detached homes here. Condo prices have not risen to the same extent, likely due to the ever-increasing supply of condo new-builds.)
The perception, and I believe the reality, is that quickly rising home values are being driven to a large extent by foreign buyers – both those that chose to move here permanently, and those who remain as non-residents. As a Realtor in the trenches here, I see it first-hand. Many local residents looking to buy a home are, well, financially muscled out of the communities where they work and live and play. Many of my buyer clients are disappointed, over and over again, as they continue to lower their expectations. I do feel for all those looking to buy a home. Especially when I'm reminded that local residents contribute to our communities in so many ways. We pay local taxes, provincial taxes, federal taxes, road taxes, environmental taxes. We create jobs here, work here, volunteer, support businesses employing other residents, make friends, and raise children that we hope to be happy and contributing members of our local communities.
On the other side, the immediate winners are those who currently own a single-family home in the Vancouver area. If you've owned your home for a while and are currently sitting on the figurative winning lottery ticket, you have to ask yourself at what point will the low rumble of dissent force our lawmakers to take action. As more and more local residents are priced out of the local market, it's not inconceivable that the force for change will be too much to ignore.
The way things are currently trending, imagine the situation when today's 10-year-old wants to buy their first home here. What will their community be like? Given the way things are going, I envision by that time Vancouver and other parts of the Lower Mainland will be hollowed out of local home owners, with most locals in tall towers, renting from landlords residing in other parts of the world. I can't see today's young people accepting that this is the way it must be. At some point, sufficient numbers will feel disaffected enough to force a change to government policy.
I feel the winds of change are in the air. It's just a light breeze now, but storms can arise quickly. If you're a local home owner counting on the significant increased equity in your home, at what point do you make a move? At what point do you lock in your gains, preserving your tax-free equity growth for you as well as your family?
Interesting questions indeed.
Feel free to contact me anytime to add to the conversation, or if you'd like to receive my monthly e-newsletter.