The recent boom cycle in housing sales continues to cool off so far in 2018.
The Okanagan Mainlines Real Estate Board reports sales for May across the region from Revelstoke to Peachland contrasted sharply with last year, with 817 homes sold in May, a slight uptick from April but down 28 per cent over May 2017.
“Not surprisingly, the residential home market continues to slow after a particularly heady market that peaked in 2016. Supply is starting to catch up with new units coming on stream, while demand is dampening as a result of government regulations,” said OMREB president Marv Beer.
Beer acknowledged that May is the third consecutive month where sales volumes were down from the same monthly period last year.
New listings were 1,764, up 16 per cent over April and seven per cent over this time last year. Average price, typically the last indicator to normalize, was $532,972, just 1 per cent over April and four per cent over this time last year.
“Market peaks and valleys could be significantly softened if government were to address the root cause of B.C.’s continued chronic shortage of affordable housing,” Beer said.
“When demand for housing increases, home builders typically respond by building new homes. But, as we’ve seen here and across B.C. in general, prices increase when supply doesn’t ramp up fast enough, making homes less affordable in general.”
Adequate housing supply is critical for long-term generalized housing affordability, he noted.
Rather than targeting specific groups, Beer suggested government could make a lasting, more significant impact on housing affordability by addressing the regulatory hurdles that constrain housing supply in general.
This, in turn, would impact a much larger population of renters and buyers who would not qualify for social housing.
Beer cited a new UBC study concerning Metro Vancouver provides evidence that the focus governments have placed on demand-side policies are unlikely to lead to housing affordability, saying those same concepts are also applicable to the Okanagan.
Current regulatory barriers coupled with an uncertain regulatory environment aggravates supply of housing now and likely critically affects overall affordability in future, Beer said.
“The problem with trying to curb demand is that it is unlikely to free up the kind of housing people want and need, plus it’s risky, with the potential for broad-reaching economic and development implications.”
According to Beer, the situation is made even more worrisome when federal and provincial governments are both tinkering in the market independent of each other.
“As governments continue to tinker, rather than deal with the root cause of BC’s real estate market woes, they are very likely to harm the very people they aim to protect and support.”
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