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Pandemic accelerates exodus from city to suburbia

With newfound work flexibility, urbanites in British Columbia appear to be headed for greener pastures
Movers with AMJ Campbell Van Lines load the content of a home in Mount Pleasant

Over time the pandemic has prompted stories – many of them anecdotal – of an exodus from the city to suburbia or cottage country as COVID-19 permanently entrenches the concept of working from home or hybrid work hours.

Though it will take time before hard statistics are available, recent real estate numbers and a number of surveys provide some evidence that the exodus is indeed happening.

Real estate sales and price data confirm the Fraser Valley, the Okanagan and even northern B.C. are seeing strong and fairly rapid growth in home sales and prices. Whether that’s at the expense of Vancouver and other Metro Vancouver cities like Burnaby and Richmond remains to be seen.

“Stats on intra-provincial migration aren’t great, so it’s difficult to quantify that kind of movement,” said Brendon Ogmundson, chief economist for the BC Real Estate Association (BCREA).

“What we do know is that demand outside of Metro Vancouver, particularly for single-family homes, was very strong over the past year and that the smaller markets that are experiencing an uptick in demand do not have the supply necessary to absorb it. As a result, prices are rapidly rising.

“If we look at what markets have seen sales rise the most in the past six months compared to their 10-year average … then the entire Fraser Valley really stands out.” The pandemic appears to have accelerated a demand, not just for lower home prices and taxes, but for more space.

“One of the most significant trends arising from the pandemic is a shift in buyer preferences toward acquiring extra space,” the BCREA noted in a recent report. “Homes have suddenly become a workplace, a school, an entertainment centre and a refuge, and buyers have been willing to pay a significant premium to accommodate those new and diverse needs.”

It’s still unclear just how long the work-from-home and hybrid work models will last.

A recent Conference Board of Canada report cites Statistics Canada, which found that 80% of employees surveyed said they would prefer to continue to work from home, either full time or part time, after the pandemic is over.

Only 6% of employers plan to call their entire workforce back to the office, according to the conference board’s The Next Normal report.

In a survey of 877 medium and large employers, the conference board found that most employers have yet to decide what their post-pandemic offices will look like, but roughly half plan to adopt some flexible work schedule.

“On average, organizations will require their employees to be in the office half the time,” the survey found.

Many expect to have employees in the office only two or three times per week.

A Brookfield Institute for Innovation + Entrepreneurship survey found that among businesses that allow employees to work remotely, 29% said they would require employees to come back to the office full time, and 17% said they would allow some employees the option of working remotely. Eight per cent said they would reduce their physical office space once the pandemic is over.

For someone living in Vancouver, having to come into the office only once or twice a week may be incentive enough to move to Whistler, Mission or Gibsons, where he or she can enjoy more space and lower taxes and housing costs, and reduce a daily commute to work to one or two longer commutes per week.

“The persistence of remote work has major implications for the B.C. housing market, especially in markets more removed from major metropolitan areas where office work is concentrated,” the BCREA says. “Since the onset of the pandemic, markets outside of metro areas have seen surging demand for homes.”

A recent survey by global tax services firm Ryan LLC finds a significant number of Metro Vancouver’s generation X demographic are thinking hard about selling and moving.

“A large percentage of Metro Vancouver homeowners who responded to our survey are considering cashing out their real estate gains and moving to more affordable markets – a staggering 34%, which was the highest percentage compared to homeowners in other regions of the province,” the firm said.

“Even more alarming is the sentiment that 40% of gen-X homeowners in Metro Vancouver (aged 35 to 54) indicate that they are considering selling their home and moving to a more affordable market in the next five years.”

In a recent survey, Insights West also found younger homeowners in Metro Vancouver more inclined to sell and leave for greener pastures. It found 36% of Metro Vancouver homeowners aged 18 to 34 said they would consider moving to the Fraser Valley, and 54% said they would consider moving somewhere else in B.C. Twenty-two per cent said the pandemic had a major impact on their decisions or intentions with respect to where they live.

“It suggests that, over the next five years, if the trend continues, where house prices either stay the same or go up, you’re going to have this massive migration of people from the city to the suburbs and elsewhere,” said Insights West president Steve Mossop. “The pandemic has radically shifted homeowners’ perception of where they live and given them the flexibility to consider other places.”

High taxes and high housing costs – for homeowners, renters and businesses – are the main motivation for the exodus. The pandemic, and new work-from-home models, untethered a lot of workers who would otherwise have been stuck living close to where they work. High taxes are particularly a concern in Vancouver.

Paul Sullivan, Ryan Canada’s regional property tax lead, said other municipalities in Canada opted to freeze property tax increases during the pandemic, while Vancouver raised them.

“In Calgary, Edmonton, in Montreal and Toronto, they went with a 0% tax increase,” Sullivan said. “In Vancouver they went up 7% last year and up 5% this year, and they’re telling us 9% next year.”

Homeowners and renters may not be the only ones considering an exit from Metro Vancouver. Businesses, too, may be looking to move to other municipalities. Along West Fourth Avenue, a Ryan survey found 25 vacant storefronts, “which is clearly an indicator tenants are having an affordability problem.”

“Whether we’re talking about overall taxation, or just taxation on business, it’s definitely going to be driving – and has been driving – people out of Vancouver,” Sullivan said.

Anita Huberman, CEO for the Surrey Board of Trade, said Surrey is generally benefiting from the exodus.

“In comparison to Vancouver, whether lease rates or purchase rates, it’s more affordable than Vancouver,” Huberman said. “And it’s not only in Surrey – it’s in the entire South Fraser economic region. And we are benefiting from that, absolutely.”

The BCREA found the following recent price increases compared with a 10-year-average:

  • Chilliwack, up 96%;
  • Surrey, Langley, Abbotsford, up 83%;
  • Okanagan, up 80%; and
  • Kamloops, up 64%

As a result, sales and prices of single-detached homes, especially in areas outside of major metropolitan markets, have skyrocketed.

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