Everywhere you turn these days, there’s another story about skyrocketing house prices. To succeed in today’s superheated market, buyers need the mental and financial agility to make split-second decisions, offer more than the asking price, and waive all conditions on their offers to purchase. The current market seems to be flooded with wealthy buyers, including some from offshore, who apparently will pay anything for a place to park their money. Many dwellings are selling at tens or hundreds of thousands above the asking price. Sadly, a good number of them will probably sit empty as they wait to be resold for even more.
Vancouver homeowners, many of whom already enjoy more than sufficient means, are watching the escalating bidding wars and holding out for the highest offer. In some cases, this means choosing to sell to an absentee investor instead of a family seeking a home. What are they doing with all that extra cash? Some are relocating to the (temporarily) more affordable communities on the Island, sinking their profits into spacious waterfront homes or second homes. Some even continue to commute daily or semi-weekly from Nanaimo or Victoria to their jobs in the Big Smoke, replacing the hours spent in mainland traffic gridlock with just as many hours in the air or on water. This makes no sense when the opportunity exists to embrace a simpler and more sustainable lifestyle.
Meanwhile, as prices artificially soar, Millennials find themselves sidelined right out of the market. Even young professionals in two-income households are unable to buy homes in the city where they work and want to live. They’re moving elsewhere, and that exodus is creating a skills gap that can only hurt the local economy. A year ago, the National Post reported that
“Wage growth has lagged behind real estate prices since at least the turn of the century. Average housing costs in Metro Vancouver increased by 63 per cent between 2001 and 2014, while hourly wage rates rose by just 36.2 per cent, according to the report. In Vancouver proper during the same time period, average home resale values have jumped by a whopping 211 per cent.” (May 21, 2015)
It’s no wonder that Vancouver Island looks promising to real estate refugees. Unfortunately, the same conditions are beginning to infect the market here. In this month’s bulletin, the Vancouver Island Real Estate Board reports that buyer demand is exceeding the supply of homes across the island. Here in the Comox Valley, the benchmark price of homes sold in April increased 10.34% over the same month last year, and this trend only promises to continue until the bubble inevitably bursts.
What’s to be done? It would help if wages could at least keep up with home-price inflation. At the same time, maybe sellers need to embrace the notion that enough really is enough, instead of helping to drive housing prices into the stratosphere. Realtors may find it hard to voluntarily cap their earnings, but need to recognize the consequences of abetting this goldrush. Participants in this feeding frenzy may be helping to create the very conditions that will ultimately wreck local economies and make it impossible for their children to stay in their own communities.
In our culture we have come to see our homes as an almost sure-fire vehicle to increase our personal net worth. In the process our houses are losing their sense of home, our neighbourhoods are losing their sense of community and the housing market is turning into one big Ponzi scheme that leaves the next generation holding the bag. The organization Gen Squeeze says that young Canadians have to save 2-4.5 times longer to save up for a 20% down payment than we Boomers did. This simply isn’t fair. If you agree, or would like to know more, have a look at their link: http://www.gensqueeze.ca/