One year ago, after pandemic lockdowns went into place, it was almost a given that Canada’s housing market would tank in 2020.
But the residential market has defied all expectations and gone in the opposite direction instead. That’s been especially true for suburban areas outside of Metro Vancouver.
But even in northern B.C., the housing market has defied COVID-19. The BC Northern Real Estate Board (BCNREB) reported 5,083 property sales worth $1.6 billion in 2020. That’s up from 4,748 sales worth $1.5 billion in 2019.
“It started out terrible, but it picked up,” said board president Shawna Kinsley.“A lot of the economics of the pandemic were pretty counterintuitive,” said Brendon Ogmundson, chief economist for the BC Real Estate Association (BCREA). “Despite a very deep recession, we ended up with very high housing demand and very low supply.“The last three months or so, we’re seeing record high sales.”
Ogmundson added that much of that activity is in areas outside Metro Vancouver.
Not surprisingly, in forestry-dependent towns like Mackenzie, the real estate market has been comparatively cool due to sawmill closures. Fort St. John’s housing market also suffered a chill after low oil prices took the steam out of oil and gas exploration.
Northwestern B.C. is a different story.
Prince George, Kitimat, Smithers and Terrace experienced relatively strong real estate activity in 2020, with demand generally outstripping supply and pushing up prices.
“I think in the whole western part of northern B.C., like Smithers west, it’s been very hot,” said Sandra Hinchliffe, a Smithers real estate agent and BCNREB vice-president.
Some of the frothiness in northwestern B.C.’s real estate market can be attributed in part to major investments in the region, notably the multibillion-dollar LNG Canada project in Kitimat.
Kitimat’s residential housing sales increased 15% in 2020 compared with 2019; sales in Smithers and Terrace, which is relatively close to Kitimat, rose about 13%.
The BCREA expects an overall increase in northern B.C. housing prices of about 5% in 2021.
But it’s not just industrial activity in places like Kitimat that has put wind in the region’s housing market sails. Northern and rural communities are also benefiting from a general Canadawide real estate frenzy.
“Rock-bottom interest rates, changing housing needs and high household savings seem to have motivated many to make a move – or take the investment plunge,” RBC noted in a March 15 snapshot of the Canadian housing market.
The pandemic may have liberated some urbanites, who now permanently work from home, and a “home” in Prince George can cost a third of what a single detached home in Vancouver sells for.
Prince George, where the average home price is $410,000, has been seeing an influx of newcomers lately, Kinsley said. While some of them may be retirees, others may be telecommuters.
“I have clients right now, they’re working from home and they actually work in Vancouver,” Kinsley said.
“People are really looking for space,” Ogmundson said. “And you can really only find that outside of major metro areas.”
In many rural and northern communities, the demand for housing far outstrips the supply, which has been driving up prices. In Prince George, for example, residential sales fell 5.6% in 2020 compared with 2019, but home sale prices overall rose 10%. On average, housing prices increased 14.7% between 2018 and 2020 for northern B.C., according to the BCREA.
The lack of supply suggests a demand for new home construction. New housing starts in Prince George have, in fact, been soaring since 2017, and the COVID-19 pandemic appears not to have slowed that growth.
“The total value of multi-family permits in 2019 and 2020 is about $15 million more than the combined total of all prior years since the turn of the century,” the City of Prince George stated in a recent news release. “The value of new multi-family building permits reached an all-time high of $68 million in 2020 – up about 30% over the previous record of $52 million set in 2019.”
In January alone, Prince George issued permits for seven multi-family developments, worth $4.3 million.
In Smithers, meanwhile, a new subdivision highlights the market’s strength, Hincliffe said.
“Each phase, which is about 12 lots, sells out right away.”