Housing demand isn’t just outpacing supply, it’s lapping it, pitting buyers against each other in bidding wars that are launching real estate prices to never-before-seen heights.
“This is the highest spike I’ve seen in my 30 years selling Real Estate in Ucluelet,” Ucluelet Realtor Judy Gray of RE/MAX Mid-Island Realty told the Westerly News. “It’s no different than the rest of Canada. From coast to coast it’s all the same everywhere, there’s short supply and lots of demand…The prices across the country have gone up in every jurisdiction that I’m aware of.”
A condo in Tofino recently sold for $1 million over its asking price and the Vancouver Island Real Estate board says bidding wars are becoming more common.
“The pervasive lack of inventory has created a strong sellers’ market, and buyers face fierce competition in their home search,” read a statement from VIREB earlier this month. “Multiple offers are the norm rather than the exception, and many homes are selling over the asking price.”
Gray said Ucluelet’s demand is being driven by buyers moving out of cities in pursuit of the West Coast lifestyle, noting that the arrival of high speed internet in 2016 means new arrivals can keep their city jobs while working remotely.
“In Ucluelet we have a lot of people wanting to live here as an alternate choice to living in the city. So, we’re seeing more people that are moving here rather than looking at vacation properties,” she said. “People coming from the city are cashing out of their properties there and coming here. I would say we’re dealing with 50-70 per cent out of town buyers, which is not unusual for us…A lot of the sales are people that are moving here. They are moving here because they want the lifestyle and they can work from home because we have fibre optics.”
Gray noted Ucluelet saw a “drastic increase” in housing costs between
She said the high costs are pricing some residents, especially younger people, out of the market, noting the mortgage stress test is set to increase again on June 1.
“It depends on your income level, of course, whether or not you can get into the market. It’s harder, especially for younger people, to get into the market at this point,” she said.
She added that while rising prices have created a strong seller’s market, anyone considering cashing in must be prepared to deal with rising costs elsewhere.
“It is a seller’s market, but if you are planning to sell your home, you need to know where you’re going and what you’re going to do,” she said. “Lots of people are rubbing their hands together and thinking they should sell their house now while the getting’s good, but it’s relative. If it’s high here, it’s high somewhere else.”
VIREB president Ian Mackay said the situation will not improve until inventory is increased and is calling on the provincial and regional governments to help speed up development.
“We have seen that demand-side policies like taxes and higher mortgage rates are just not working,” notes Mackay.
“The best route to making housing more affordable, particularly for first-time buyers, is to increase supply. It’s not a quick solution, but it’s the only one that makes sense long-term.”
Gray suggested Ucluelet’s housing supply has not grown along with the demand and rapidly increasing building costs have exacerbated the issue.
“We need more supply…There have not been a lot of new projects approved in Ucluelet for supply over the last three years,” she said.
“There are a couple of small projects that have been approved. Subsequently now, since it took so long to get them approved, the cost of building materials has skyrocketed, absolutely skyrocketed…The demand is the driver, but the ability to move ahead with new projects is hammered by the building material cost issue.”