Information arriving in the mailboxes of Langley property owners this week should be treated in the same manner as a pail of fresh, cold water.
It’s a wake-up call.
B.C. Assessment Authority has determined that the values of most homes in Langley have barely risen in the last year, and in some cases, have actually fallen. In other words, the real estate boom is over.
This is despite low interest rates, generous borrowing terms and plenty of supply on the housing market.
The fact is that prices for real estate are far too high for many first-time buyers to have a realistic chance of owning a home. While some developers have built smaller apartments, the reality is that such apartments aren’t always the best fit in some areas of Langley, where one must own a vehicle to get around and where urban services aren’t always available.
Real estate prices have continued to rise dramatically in Richmond, West Vancouver, some parts of South Surrey and the west side of Vancouver. But the fact is that much of this demand is from offshore buyers, who are oblivious to local living and working conditions. Their source of income isn’t from Canada, and the prices they pay have more to do with how much they make in whatever country they live in.
When it comes to people who actually live and work in the Metro Vancouver area, many of them have no ability to take on any more debt. Some are worried about what will happen with their jobs. Others fear that a small rise in interest rates would catch them unable to make payments. Still others keep hoping that prices will fall.
Canada has been very fortunate, as the real estate market here did not collapse, as the U.S. market did in 2007 and 2008. The after effects of that collapse are still being felt there.
However, home prices in the Metro Vancouver area are far too high to be sustainable. They have to come down, because the supply of buyers will continue to diminish if they don’t.
Taking on more and more debt at a time of global economic uncertainty makes little sense, and potential buyers’ caution is understandable and commendable.
The assessment authority has provided clear proof that the market is changing. Let’s hope the adjustments are gradual and don’t lead to a U.S.-style recession that never seems to end.