British Columbia basks in the impact of past growth and continued demand

by Editorial Team18 Mar 2011
But that strong start isn't likely to crash and burn anytime soon. The exposure effect of the 2010 Olympics will continue to give a boost to Vancouver, Canada's most expensive city. The overall economic picture looks stable as well, and real estate supply has remained limited.

"The demand has been met, so we're going to see a more stabilized market through 2010," says Elton Ash, regional executive vice-president of Re/Max of Western Canada.

While he says the Olympics have been a major positive for Vancouver, it should skew the coming February sales figures in the short term negatively. That's because business in most industries during that period, and even buyers trying to get around due to traffic may have put off their effort until a quieter March.

In the long term, however, the Olympics have led to vastly improved transportation infrastructure and greatly boosted employment.

"Did the Olympics have a positive impact on employment and thus real estate? Absolutely," says Ash. "Vancouver is the most expensive city in the country. Why is that? It's a partial result of the Olympics. All the employment and jobs and opportunities the Games have created have all had a positive effect on real estate values."

The difference in just the past year has been incredible to Ash. He noted the market in the interior of British Columbia was very strong, especially in luxury homes. In the second week of January this year, there had already been eight homes sold for over $2 million in the Thompson Okanagan region, says Ash. Last year, it took six months to reach that tally.

"That right there gives you an idea of how much the market has improved this year compared to last," he says. That recent activity in the interior of British Columbia has fed off its attraction as a retirement section of the market in Canada, which is also true for Vancouver Island.

Ash says the real estate market has grown so much recently that there's not much more room to grow in the second half of 2010. He predicts an overall 2.5 per cent price growth on the year, which could be boosted more by improvements in the U.S. economy, he says.

In British Columbia, the real estate market has been positive on all levels. First-time homebuyers have bought homes, pushing those sellers into higher brackets. That's not happening in the U.S., where first-time homebuyers have been mostly buying foreclosed homes.

The housing supply has also remained at a fairly close level to demand. Certain parts of the market, such as Kelowna have some of the largest standing inventory, but it hasn't had a negative impact there on investors, says Ash.

The properties that didn't immediately sell were rented early on, and now most have sold once demand has caught up there.

The challenge in the British Columbia market could be in the northwest interior forestry region, from Prince Rupert to Prince George. Since it's mostly forestry-based, the recent damage of the pine beetle has impacted that region's economy.

An anomaly could be Prince Rupert, a deep-water port that has been a "sleeping giant in terms of real estate values," says Ash.

Many U.S. companies have recently found the port cheaper than San Francisco to ship to and from China.

"That is only going to continue to build and so I see some exciting things for Prince Rupert in the years to come," says Ash. "If someone is looking for where they could invest some money and see some real potential return, it's Prince Rupert."

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