June 21, 2018
                   No. 222
What’s happening in real estate, anyway?
Real estate activity in the Lower mainland seems to have cooled off a little, now that federal and provincial policies have put the screws to both foreign investors and deserving local families who want to get into the market.

Most of the Lower Mainland and Fraser Valley experienced no growth or even a slight decline last month, except Abbotsford, where there was still a bit of growth, especially in the apartment and townhouse sector.

But that doesn’t return real estate to the affordability level for most families; it just cauterizes the hemorrhage.

As per usual, governmental policies had some unintended consequences. Putting the boots to the high-end properties meant that the well-heeled (many foreign) investors who were using real estate strictly as an investment vehicle, saw an end to their “can’t lose” high-priced investments.

“If single family homes have gotten out of reach of the average citizen who simply wants a property for their family,” they reasoned, “those people will be forced into the townhome and condo market. This will put upward pressure on that market. I think I should move my money there.”

They were right. So, investors dove into that market, too, further feeding price escalation in townhomes and condos. Because the land itself is not a part of a strata-property purchase, escalation of their prices usually lags that of free-hold properties, not only in timing but also in total percentage gain.

But not with this added incentive. Anyone who has gone shopping for a townhome or condo lately has seen crazy price escalation. We saw a 54% increase in one of our properties in just over a year’s time.

What is the average family left to do? Remain renters forever? Some are accepting that reality. So rental rates are also soaring. And rental properties becoming tough to find.

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The other alternative: find a cheaper area, and move.
That’s happening, too—in droves. Hope has become a hotbed, and people are looking beyond that: to Merritt, Kamloops, Logan Lake, the Shuswap, the North Okanagan (the rest of the Okanagan is already too expensive), and even the Cariboo country.
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Since we expanded our Program to include these areas, we’ve had more applications from them than from the Fraser Valley. Or from Fraser Valley residents wanting to move to these regions. 
It feels like the Lower Mainland is emptying out into the interior of BC. Only, we know that’s not the case; if it were, prices would come down here.

It means, though, that prices in those areas are also beginning to soar. Before long, they may also be unaffordable. The ones who get there quickly will be the winners. Those who wait may be facing a repeat of what they are now facing in BC’s southwest corner, and will feel head-smacked a second time.The options may then be . . . Saskatchewan.

At least, that’s how I see it . . .