Lorne Martinuik

Again, British Columbia is huge, diverse. Broad snapshots of any region shift focus when examining individual sub-markets. For example, although sales and value for Vancouver Island and Okanagan regions fell overall in 2009, the submarkets of the Capital Regional District/Victoria and Kelowna markets remain strong.

Thanks to what are still relatively low domestic interest rates, the improving global economy and commodity markets, the BC economy will show strength over the next five years, according to Central I chief economist Helmut Pastrick. The recession, coupled with the moderate up tick in the economy, has left “a substantial backlog of unmet demand by consumers and businesses.”

For Metro Vancouver host cities and Whistler, the 2010 Winter Olympics are but a memory. For the Tourism Vancouver estimate of 250,000 Olympic visitors (75 percent from the rest of Canada) and three billion TV watchers, the 17-day event is a lasting and very positive memory and a powerful sales brochure for BC residential, resort and recreational real estate. Add this to BC’s relative affordability vis-à-vis overcrowded, costly Europe, mix in Vancouver’s near-unique blend of urbane business with pleasure and the world will take interest.

Other drivers to buy right now are the looming Harmonized Sales Tax, low but rising mortgage interest rates, the recent easing of prices in many markets and the wish to own a bit of turf.

Many of these new buyers will be youthful. Or so says a recent survey commissioned by the Royal Bank. Asked if and when they plan to buy a home, about 15 per cent of young (18 to 24 years old) Canadians polled said ‘yes’ and within the next two years. This is almost double the percentage recorded in 2009.

Here in BC, spurred along by homeowner turnover, incoming investment, population growth and pent-up demand, Central I says provincial housing starts will jump by more than 50 per cent in 2010, climbing to 30,000 plus units in 2012 and almost 40,000 units in 2014.

Metro Vancouver - Pressure building

In Metro Vancouver, 2009 overall sales and value improved year-over-year with only a slight slippage in prices. It helps that Metro Vancouver (nee GVRD) boasts 13 of BC’s 30 most populous municipalities, its most diverse ethnic mix, rising population (up 6.5 percent in the 2006 Census) and transportation/manufacturing foci.

With the communities of the Fraser Valley, Squamish/Lillooet/Whistler and the Sunshine Coast added, this region accounts for 2.67 million people (2009), more than half of BC’s 4.46 million. By 2036, this relatively small, densely packed area will swell another 50 percent to 3.82 million. Almost 90 percent of immigrants and more than half of interprovincial migrants arriving in BC live here.

With geographic and political barriers on all sides, the region’s land base is finite. Limited land and increasing population puts strain on housing stock and a push for governmental, financier and developer creativity. Witness the recent advent of high quality, relatively affordable, very small Hong Kong-style ‘micro-lofts’ (270 sq. ft. @ $750/month) in downtown Vancouver; what was once dismissed as inhumanly small is now lauded. Today’s rental, tomorrow’s mortgage.

Overview

Thanks to its diverse economy and deep population base, Metro Vancouver is better able to weather cyclical downturns and recessional storms. However, the economies of BC’s outlying regions remain largely resource based and vulnerable to structural issues affecting any export-based industry, in particular, the strong Canadian dollar, the still wobbly US economy and the US housing market.