Following year after year of dramatic increases in Vancouver real estate prices, the homes in the area are finally dropping in value. A longer-term analysis will be necessary to see what the full effect will be, but all signs point to truly affordable housing still being far off on the horizon.
Numbers Show 10% Price Drop for Single-Detached Family Homes
According to a recent report by BC Assessment Authority, some Greater Vancouver areas (North Shore, South Surrey, White Rock, South Delta and Richmond) can expect to see the cost of single-family homes drop between 5 and 10%.
Andy Yan, urban planner and director of Simone Fraser University’s City Program, says that it’s still too early to determine if the numerous measures intended to curb speculation have been paying off.
“It’s really showing you how real-estate prices, like the rest of the world, are in flux, particularly for single-detached homes. It goes back to the paradigm of cheap, fast global capital coming into Vancouver and shaping our real-estate markets, in particular, our residential markets,” Andy Yan told The Star.
Certain Areas of Vancouver Could See Even Bigger Declines
University Endowment Lands, Point Grey, and other areas on the west side of the city are bracing for drops as high as 12%. Consider that the most expensive home in the province, a mansion owned by Chip Wilson, has lost $5 million on its price tag in just a year. In total, experts believe that dropping property values could result in about $10 billion in lost equity.
Hard to Tell Which Measures Have Worked and Which Haven’t
Though it is clear there has been a decrease in the cost of Vancouver detached homes for sale, the jury is still out on which specific measures have had the biggest impact.
Several regulations—at least one from each of the three orders of government—have been put in place till now: a new school tax, an empty homes tax, short-term rental regulations, a foreign buyer tax, higher interest ratesand property taxes, stricter mortgage rules, as well as speculation taxes. These could all have contributed to the drop in prices. Some experts, like Andy Yan, believe even more should be done. He supports a flipping taxin which an owner who buys a home only to quickly resell it for a higher price could see a penalty.
Historically, real estate prices have been most impacted by changes in demand, uncertainty around tax levels, and new construction.
Commercial Real Estate Not Affected
Despite the drops in residential real estate, commercial and industry property values have increased between 10 and 20% across most of B.C. In the Greater Vancouver area, that was even higher—as much as 50%—in large part due to high demand.
Most companies did not see equal rises in their revenue, which means that it is not just homeowners who may be priced out of the market.
“That really shows how the speculated market has moved from residential into commercial and industrial. The consequences of this particular property market sadly can be seen on the streets of Vancouver, whether it’s the record homelessness or levels of empty storefronts,” Andy Yan said.
The Rest of BC Expected to See Boosts in Real Estate Prices
Though some of the measures designed to check the alarmingly high prices in Vancouver affected the province as a whole, other areas of B.C. are still expected to see an increase in the value of single-family homes anywhere from 5–15%. This includes Vancouver Island, Fraser Valley, and Okanagan Valley. Condo sales, in particular, could go up as much as 30%, according to Tina Ireland, a regional assessor with the BC Assessment Authority, as cited in The Star.