July statistics showed record highs in average house prices in many regions. Of note, Nanaimo is now at $410,000, Victoria $741,000 and Vancouver $1,500,000 for a single detached home.
Gradually rising prices do not create the scenario that we are seeing with this rapid escalation in property values. When values rise quickly it invariably affects rents, creating issues for those working in those communities. Those saving towards owning their own home may find it is now out of reach. It is highly unlikely that wages will rise in the short term so that the employees can afford to be in a reasonable commute to and from work but this may have to change in the long term to retain and/or attract workers. This can create a ripple effect down the line for consumers.
For those in the lower wage brackets, they may have to move to outlying areas or another community creating a demand for housing in those areas. Although it may be to a lesser degree, it nonetheless puts a pressure on the resources within those communities. In some communities we already have the working homeless, those who are working but cannot find or afford housing so they are couch surfing, spending time in hostels, of sleeping in their vehicle. This is likely to increase.
Victoria and Nanaimo are seeing an influx of new residents who are selling their expensive real estate in Vancouver and retiring to, or working from, these communities with a nice home and cash in their pockets. These and other island cities have seen unprecedented growth in new building. Both have extremely low vacancy rates currently and new housing is sold before it is out of the ground. This rapid growth has resulted in labour shortages in the construction industry, shortages in housing, especially affordable housing, and increased traffic.
It certainly is not all bad. Construction had been lagging on Vancouver Island so it is nice to see opportunities for those wishing to get into the trades. It also feeds the suppliers to the industry and puts more money into circulation in the communities.
When the economy is good, everyone benefits…….don’t they?
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