If the 2018 B.C. Assessment numbers have given you cause to celebrate your new millionaire status, don’t get too comfortable. That jump in property value is a lot like a paper moon.
Prices are based on sales from last year and prices could also stabilize or drop in the coming months if fewer people can buy homes or have to lower their expectations because of a new mortgage rate stress test that came into effect Jan. 1.
The new rules require financial institutions to screen applicants seeking uninsured mortgages for rates two per cent higher than their contracted rates or the equivalent of the Bank of Canada five-year benchmark, resulting in less buying power this year for some people, compared to 2017.
Under the new rules, some prospective homebuyers will be forced to opt for cheaper homes or will have to stay out of the market entirely, which could have a downward pressure on prices if sales slow.
Still, assessments continue to defy the odds and are rising to the stratosphere, suggesting that homebuyers with average salaries are coming up with creative ways to get into the real estate market. Or, as is the case with many younger people, who are coming up with creative ways to leave the Lower Mainland and try to own a home elsewhere.
And, let’s not forget the “bubble will bust” economic pundits who continue to forecast a rapid loss in home values despite years of continual climbs – although that is also the reason that they continue to predict a “levelling off” of home values. After all, they say, it just can’t keep going up. But, so far, they’ve been wrong.
It’s likely home prices will continue to rise, despite changes in the rules and taxes designed to deter foreign buyers. After all, the old saying, “land, they aren’t making any more of it,” still rings true. Although condos stretching high above their actual land “footprint” might have to make us retool that original truism a bit.
The reality is that not only is the Lower Mainland one of the most beautiful natural areas to live in, it also boasts a mild climate and a vibrant multi-ethnic community. We have a stable democracy, a reasonably low crime rate and an economy – that while it doesn’t benefit everybody – benefits enough people to keep the engines moving. It’s no wonder people want to live here, retire here, or start a family here.
The challenge, of course, is to try to keep entry-level home ownership attainable for the average wage earner. And so far, we’re losing that battle.
