The British Columbia Real Estate Association (BCREA) is sounding the alarm, warning that the province's housing market could be on a path to repeat the affordability challenges seen in the 2010s. A recent BCREA Market Intelligence report highlights concerning similarities to the post-Global Financial Crisis housing cycle, suggesting that current trends could lead to severe undersupply and a dramatic increase in home prices by the end of the decade if immediate government action is not taken.
Key Takeaways
- BC risks a repeat of the post-Global Financial Crisis housing cycle, leading to severe undersupply and worsening affordability.
- Unsold new inventory is at a 30-year high, particularly in the apartment sector, hindering new construction.
- BCREA simulations predict potential home price increases of up to 27% (inflation-adjusted) by 2032.
- Urgent policy interventions are needed on both demand and supply sides.
Warning Signs Mirroring the 2010s
The BCREA report draws parallels between the current market conditions and the housing cycle of the 2010s. During that period, weak demand initially led to increased inventories and a slowdown in construction. However, when demand eventually rebounded, the province was left with a significant undersupply, triggering rapid price escalations and a severe deterioration in housing affordability.
Surging Inventory and Stalled Development
Currently, unsold new inventory in British Columbia has reached a 30-year high, with a notable concentration in the apartment segment. This surge is making it exceedingly difficult for developers to secure financing due to weak pre-sales. Consequently, many developers are delaying or canceling projects, a situation that BCREA warns threatens a future supply crunch.
Projected Price Increases and Affordability Crisis
Model simulations conducted by BCREA indicate a significant upside risk to home prices. The report projects that by 2032, home prices could rise by as much as 27 percent, adjusted for inflation. This potential surge is attributed to the collision of current construction shortfalls with recovering demand later in the decade. Without timely policy interventions, British Columbia is likely to face another prolonged affordability crisis.
Call for Immediate Policy Action
BCREA Chief Economist Brendon Ogmundson emphasized the urgency of the situation. "Unsold inventory of new homes is rising to levels not seen since the late 1990s, which, along with crippling taxes, is discouraging future development," Ogmundson stated. "This puts BC at risk of chronic undersupply when demand inevitably returns and a repeat of the 2010s cycle of accelerating home prices."
The association is calling for immediate government policy action on both the demand and supply sides. Recommended measures include strategies to strengthen pre-sales, a reconsideration of foreign buyer participation in new construction, and efforts to reduce development costs. The report concludes that expanding housing supply remains the most critical factor for sustainable development and moderated price growth, alongside the need to reduce the existing excess of unsold new inventory as quickly as possible.
