Last week I travelled to British Columbia - I toured through the Okanagan Valley (which includes Kelowna, Vernon and Penticton), Vancouver and Vancouver Island (Victoria, Sidney, Comox Valley etc.). This has to be the most picturesque part of Canada! While there I spent some time experiencing the local real estate markets and learned how important it is to verify the scope of information you base your decisions upon.
Keep in mind this examples presented in this entry are time and date sensitive, I am including specific numbers in order to illustrate the concept.
Comparison of the Markets
The real estate market in B.C. right now appears to be on a downward trend. Based on the British Columbia Real Estate Association’s website the dollar volume for B.C. real estate sales were down by 38% in July 2008 vs. July 2007. Units sold volume was similar with a 37% drop. Interestingly though, the average price only fell by 0.5%. In 2008, with yearly unit sales falling 24% province wide, the average sale price was up compared to 2007 by 8.2%.
These figures indicate to me that the average prices in this market have a strong possibility of trending downwards or at least leveling out. When the demand lessens (number of sales, increased active listings, decreased unit volume) the market tends to shift towards the buyer’s favour. In a buyer’s market there is a more competitive landscape for sellers leading to lower prices.
London in contrast had a strong July, not a record breaking year, but the second best on record. While year to date unit sales are still down 9.1% in comparison to 2007, the market is robust and healthy. Another factor I consider contributing to the strength of London is the affordability. Below is a summary of average home prices in a few different cities across Canada since January 2008:
London & Area: $213,603
Calgary $416,109
Greater Vancouver $615,012
Toronto $ 390,289
Edmonton: $339,147
Hamilton: $285,666
British Columbia has been outpacing other provinces in average sale prices for some time now. This makes me wonder what is driving the prices. I see the draw of the province with it’s beautiful environment, picturesque cities and wide range of world class outdoor activities. Conversely, there are a lot of financial opportunities and population centers in other provinces that should appeal to people’s financial sensibilities.
Affordability
What makes a market affordable? It is largely indicated by the ratio of income to housing prices. According to the Frontier Centre for Public Policy’s Housing Affordability Survey, the following Canadian cities ranked in the most affordable and least affordable cities:
Affordable in Order: Thunderbay, Saguenay, Saint John, St. John’s, Regina, Windsor, Quebec City, Trois-Rivieres, Winnipeg, Sudbury, London, Oshawa, Ottawa.
Least Affordable in Order: Kelowna, Vancouver, Victoria.
The fact that these three B.C. cities are the only ones that rank amongst major US, Australian, UK and Canadian cities shows just how much they have outpaced the other areas of Canada. Knowing all the information in this entry, I will say I would still consider making B.C. a place to live - there really is no other place like it!
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