Canadian house prices are expected to increase again. We are seeing both first time home buyers and investors scrambling to buy before the interest rates increase. The Bank of Canada has issued a warning that there is a high risk of a sudden price drop but people are ignoring this and looking to buy now.
We can see renewed investor activity and market frothiness in a number of cities. So homeowners are considering if it is a good time to buy or not. These conditions are known to have the ability to expose the market to a higher chance of correction.
The Bank of Canada in October 2021 signaled that the overnight rate was at an all time low of 0.25%. They also predict that this could begin rising in the middle quarters of 2022. Analysts note that another rush to buy may have already started.
It is common for people to jump into the market when interest rates start rising again. This includes investors who want to make most of their money and of the market. This is why an acceleration is expected within the next couple months.
A Little History – Canadian Housing Market in 2021
In March of 2021, Canadian house prices increased 31.6% year over year. We hit a record high before prices softened a bit in the summer of 2021. We are now seeing a price just below this peak in October 2021.
The rating agencies are taking notice with estimates of Toronto’s housing market being overvalued at 32% and Vancouver’s housing market being overvalued at 23%. Toronto is Canada’s largest city and the average home price there hit 1.2 million CAD in October. This is an increase of 19.3% from the previous year. This, while the average cost of a detached home is CAD $1.5 million.
While the Prime Minister promises to act on the market, many are criticizing him about the 77% increase nationwide since he came into office in 2015.
Mortgage brokers everywhere are seeing an increase in clients that are motivated to buy, as they fear the prices will only keep going up. While fear is never a good motivator, this is the current reality of the Canadian housing market.
Canada’s largest port located in Vancouver is currently stranded with no access to rail cars and trucks. These are what move goods, including lumber, out of the region. Many roads have been washed out and rail tracks are locked in the westernmost province. As such, key lumber supplies are at risk of being stuck. This while many home builders were just piling-up materials to ensure supply. This not only affects us here, but also affects the entire North America, which gets approximately 14% of their lumber from British Columbia.
With the risk of no movement for lumber many mills are increasing their prices. What is worse is, it is not the first time that rail tracks have been blocked in British Columbia in the past five months. Previous damage caused by wildfires and a record heat wave during the summer months of 2021.
This time of year usually sees lumber prices rising as builders start to accrue materials for spring season building. This is usually their peak season. The market saw a strong start to the week but with the rail issue there is now a frenzy. On Thursday, the B.C government closed all Forest Service roads.
What Is Being Done to Remedy the Situation?
While crews are working to clear the roadways after mudslides the railway tracks are being repaired. There may be the option to transport lumber and supplies through Albreta but this all depends on where the lumber company is located.
The current housing market in Vancouver is unbalanced, to say the least. As such, it is our opinion that the government needs to be more inventive with their policies. We need to now, more than ever, tackle the problem of housing affordability head-on. It’s not just about increasing the supply of housing, it is also about ensuring that the supply of houses is also affordable.
Negative Impacts of an Unbalanced Housing Market
The main problem with an unbalanced housing market is that it will destabilize the economy. Housing prices have a huge impact on residential investment. With a disruption in the global supply chain, materials have become harder to source and delivery times have become longer. Companies are having to find alternatives which are often more expensive. This is also causing an increase in prices for building a new home.
What Needs to Be Done
Upcoming housing developments should include a full range of homes for different income groups. While there is no silver bullet, this can make a big enough difference. Building from the ground up can be done to ensure that people from every income bracket have a fair chance to access homeownership. This is where Silverbeam Homes comes in. We can help you create a home that meets your needs while keeping you within the budget you can afford. It is important to come with an open mind. Contact us and let us sit down and work something out. Your dream of homeownership may not be so far fetched. Give us a call today!
After we build your home it’s time for you to add those finishing touches to make the inside “homey”. You want your home to be tailored to your lifestyle and that’s why you decided to build your home from the ground up. You want to look at how you live currently and how you want to grow in your home. This will ensure that your choice of design elements will make your life comfortable now and for years to come as your lifestyle and family needs change.
Things to Consider
You will have some things you need to consider before you even start building. Or if you already reside in your forever home you will need to consider these before your planned renovation. What are the needs of your family? Here are some questions you can ask yourself to help create your home haven.
Two person showers?
How many sinks are needed in each bathroom?
Will you need large closets?
Do you need a lot of storage space in your kitchen?
Do you like to entertain and need room for that?
With the global disruption of supply chains across industries the prices of materials and furniture have increased and continue to do so. When you do find items priced within your budget you may find yourself waiting quite some time for these items to arrive.
All in all you can create a haven at home whether you build your own home or buy a home. By taking the above considerations into mind, creating and striking a budget you can achieve your goals for a lovely home that meets your needs now and in the future.
We can help you build that home from the ground up. Give us a call today and let our team of experts get started working for you.