Housing the biggest pocketbook issue in provincial election
The pocketbook issue which may prove to have the biggest
influence on how people vote in the May 9 provincial election is housing.
When looking back at the cost and availability of housing in
2013, when the last election was held, there is no comparison with the multiplicity
of challenges on that front today. While the cost of detached houses had
already risen substantially in some areas, sale prices were nowhere near what they are today.
Townhouses and apartments were definitely affordable for most working people.
Interest rates were low, as they are today, but the monthly payments were
significantly less, simply because the initial cost was less.
I took a close look at the Surrey, North Delta, White Rock and Langley markets in 2013 and 2017, based on Fraser Valley Real Estate Board sales statistics. In the markets other than Langley, prices were on the rise four years ago, but the rise was still modest. In Langley, prices had actually been flat for the past five years.
In May 2013, the average sale price for a detached house in
North and Central Surrey and Cloverdale was between $540,000 and $588,000. In South
Surrey and White Rock, always a desirable area to live, the average sale price
was already beginning to rise to more stratospheric levels. Average sale price
in that month for a detached house was $1.142 million. In North Delta, the
average sale price was $570,000.
The average sale price for townhouses in Surrey was between
$283,000 and $356,000, depending on the area. In White Rock and South Surrey,
it was $475,000, while in North Delta it was $342,000. Apartment sale prices
averaged from a high of $315,000 in White Rock/South Surrey to a low of
$175,000 in North Delta.
Prices had gone up about 10 to 11 per cent in the previous
three years, although they had risen by a slightly higher percentage in that
period in South Surrey/White Rock. It was not an unstable market.
In March 2017, the average sale price for detached houses in
all of Surrey (including high-priced South Surrey) was over $1 million - $1,020,561
to be exact. The lowest-priced area for detached homes was in North Surrey,
where the average sale price was $846,000. The North Delta average sale price
was $889,713, while the average sale price in White Rock/South Surrey was
$1,439,693.
Townhouses and apartments had also gone up, although not as
much. In all of Surrey, the average sale price was $518,137. In North Delta, it
was $655,977 while in White Rock/South Surrey, it was $629,834. Apartment average
sale prices were $260,190 in North Delta, $402,260 in White Rock/South Surrey
and an average of $305,020 in all areas of Surrey.
In May 2013 in Langley, the average sale price for a detached house in Langley
was $567,433. This was actually down from the average price a year earlier of
$582,907.
The average sale price for townhouses in Langley was $328,941,
while the apartment sale price average was $204,289.
Prices had actually been on a plateau for more than five
years, with barely any change in that time. There had been some decline in
2008-09 as a result of the financial crisis, but it had little lasting effect
on the Canadian real estate market.
Contrast that with the real estate board’s March 2017
statistics. They show that the benchmark price for all types of housing in
Langley had risen to $642,000, up 49.6 per cent in three years and 53.6 per
cent in five years.
The average sale price for detached houses this March was
$975,860 – a change of 8.3 per cent from a year earlier. The benchmark price
for detached houses in Langley, which provides a broader market view, actually
rose by 17 per cent from March 2016 to March 2017.
Townhouses and apartments had also gone up, by even higher
percentages. In Langley, the average sale price was $506,437 in March 2017 – up
23.6 per cent in one year. The average sale price for apartments was $309,893,
up 32.2 per cent in one year. In March 2016, the average sale price had been
$234,380.
The real estate board has also noted that the inventory
levels of townhouses and apartments for sale is low, putting even more pressure
on sale prices. Due to the skyrocketing prices for detached housing, more than
half of all sales in the total board area, which includes Surrey, North Delta, White Rock, Langley,
Abbotsford and Mission, are townhouses and apartments. This has occurred for
seven straight months. Total sales in the board area in March were 2,213.
The
"flip factor" is also significant in condo sales, particularly in new
towers being built close to transit hobs. In the South Fraser region,
this would apply most obviously to the towers being built in Whalley
along the SkyTrain line. This excellent story
from The Globe and Mail outlines just how much distortion presales and
assignments cause, before a condo is finally sold to someone who either
rents it out or lives there. Even "condo king" Bob Rennie has expressed
concern about the completely unregulated practice of assigning the
presale contract to another party.
Dramatic price increases have a huge impact on everyone
in the housing market, not just buyers and sellers. People who rent may think
this does not affect them, but it does. Higher sales prices for houses, whether
detached or attached, put significant upward pressure on the rental market. Landlords
are supposed to keep rent increases to a modest annual level, but there are
many ways around that restriction. There are already stories, particularly in Vancouver, of landlords trying to get 25 to
30 per cent rent increases approved, based on what the "marketplace" around them is doing. That practice will migrate to Surrey and Langley before long, if it isn't here already.
Boosting rents is particularly easy
for owners of basement suites or carriage houses, where there is often a higher
than usual turnover of tenants. In addition, few purpose-built rentals are
coming onto the market, because there is such a strong demand from potential
buyers.
In Langley City, where 35 per cent of the housing stock is
rentals, and much of it is very affordable by most standards, there is terrific
pressure to convert rental properties to stratas, or tear down older units and
replace them with new ones.
High housing prices even add to homelessness numbers, which
are at record levels. Some people who are homeless are working, and
simply cannot find a place to rent within their budget. Some of them sleep in
their vehicles. Others are not officially homeless, but are living in travel
trailers and other accommodation which is meant to be short-term and temporary.
The three contending parties in the election have released
various ideas about housing as part of their platforms. Those who are concerned
about housing affordability and availability, and are planning to vote, will
find it worthwhile to go over the plans each party has to deal with housing
issues.
Housing is a crucial part of our daily lives, and it’s
something that every one of us needs. Given the stagnant incomes of many working people, and increasing costs everywhere we turn, there needs to be a concerted effort to bring some sanity to the housing market.
Comments
Post a Comment