Western Real Estate May be Headed For Correction

Ottawa – Canada’s westernmost provinces are flirting with a real estate price correction as housing affordability across the country reaches its worst level in 18 years, according to an RBC economist. “We could draw a line at the Manitoba-Saskatchewan border, said assistant chief economist Derek Holt as he discussed the results of RBC’s annual study of housing affordability.

“Everywhere east of there is not likely to be in a bubble situation, but west of that border we’re definitely in uncharted waters in British Columbia and we’re already seeing a price correction in Alberta.”

Prices in Alberta have dropped anywhere from 3-9% over the fourth quarter and the trend continued in January, Holt said.

Heritage Vancouver has pulled out the big guns

At the top of the list is the iconic art deco Burrard Bridge, completed in 1932, which has earned a spot on the list for the past six years because the city is pushing to overhaul its look with outer bike lanes, known as outriggers. It's akin to placing a stainless steel hula-hoop over your grandmother's ball gown, Heritage Vancouver notes dryly.

Second on the list are about 40 to 60 of the city's historic public schools, which continue to be threatened with demolition as part of a seismic upgrading program. Downtown's Robson Square Complex, which is 30 years old and an internationally recognized architectural landmark, is third on the list because of the province's proposal to cover it over with wood laminate for use as a public meeting place.

Real estate experts recommend only signing pre-sale deals

The condos were being built by Divergent Environments, a Victoria-based company, whose website says it has 16 years of development experience in Western Canada, including at least four condominium projects.

One of the disappointed Willows buyers is Heather Brown, who until recently lived in an upscale condo in North Vancouver.

After retiring, Brown wanted to live a less stressful life. So, with the aim of retiring in the Okanagan, she signed a pre-sale agreement for one of the Willows condominiums.

Vancouver real-estate prices have skyrocketed

One of the more interesting sub-debates is whether creating more density is going to make things affordable. Opponents point out that Vancouver real-estate prices have skyrocketed even while it has been adding phenomenal density to the city. Jeannette Jones from the east side pointed out that townhouses in her neighbourhood are now selling for $500-600,000.

Mortenson also provided an interesting stat. He noted that downtown Vancouver has only five per cent of the city’s total land, but houses 10 per cent of the population. The next ring of old streetcar suburbs (Mount Pleasant/Kits/Commercial Drive/etc) have 10 per cent of the land and house 15 per cent of the population. That means the other 75 per cent of the population is spread out over the remaining 85 per cent of the land.

Smaller lot sizes to boost home affordability

In Vancouver, Campbell said, reducing the frontage for single-family homes to 10 metres could knock $200,000 to $300,000 off the asking price of a home.

Campbell, a former property developer, also said new compact housing types, green communities and reduced urban sprawl will contribute to a long-term reduction in the cost of housing in the province.

"Land is very expensive," said Peter Simpson, CEO of the Greater Vancouver Home Builders' Association. "Over the last decade, there's been a dramatic swing from single-family homes to multi-family homes, to tackle affordability."