The housing market certainly is not what it used to be. I remember buying our first house for $19,700 with a mortgage payment of $330 per month and thinking, “How will we ever pay for this!” Homes today certainly have changed. Lots have become smaller, houses bigger and more luxurious, to follow fashion and function. The price of land has been driven up by development charges and environmental regulations. Add to this the rising taxation rate as the need arises for upgrading old infrastructure and extending services to new areas.
Large centres like Vancouver and Victoria have become very expensive due to lack of new land base. Perfectly good single-family dwellings are being demolished to develop multi-level condominiums. While this creates more accommodation, it does not necessarily create affordable accommodation. This is the challenge for the economy of these centres as people, especially young people starting out, can no longer afford to live and work in them. In many areas we have the working homeless. There are no vacancies and even if there were, their wages would not cover the rent.
In the case of Victoria, we are seeing Langford, Sooke, Mill Bay, Shawnigan Lake and Duncan becoming the bedroom communities for those working there. This means more commuter traffic creating other issues. Nanaimo has become a bedroom community for Vancouver. While housing has increased dramatically in price over the past five years, it is about a third of the Vancouver prices. Harbour to harbour it is only 20 minutes away. With technology being what it is, many work from their homes in Nanaimo and only commute to their office in Vancouver once a week or every other week.
Ladysmith, Chemainus, Parksville, Qualicum Beach, Courtenay, Comox, and Port Alberni are all benefiting from the high cost of housing in the major centres. These are nice retirement communities and those selling in the high market can have a nice ‘nest egg’ to bring to the island and live comfortably. This is evident in the economic growth that is happening in these communities.
Will it continue? Personally, I think it might slow down, but I don’t think prices in the major centres are going to drop to a point where young people will be able to afford to live there and raise families so they will continue to leave to work in other communities. We live in a very special part of the world and we have been discovered so people will continue to relocate here from other parts of Canada.
Can it crash? Absolutely! In 1981 we were living the high life, and some of us got a reality check in 1982 when the bottom fell out of the economy. The personal debt load in Canada is too high according to economists so a 1% rise in interest rates can be devastating for some. In 1982, mortgage interest rates hit 21%!
There are no crystal balls, only economists that can tell you what happened yesterday. Be careful out there!
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