{"id":19257,"date":"2022-01-26T11:11:00","date_gmt":"2022-01-26T19:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=19257"},"modified":"2022-01-18T10:28:12","modified_gmt":"2022-01-18T18:28:12","slug":"majority-of-key-indicators-point-to-higher-prices-for-lower-mainland-real-estate-in-2022","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2022\/01\/majority-of-key-indicators-point-to-higher-prices-for-lower-mainland-real-estate-in-2022\/","title":{"rendered":"Majority of Key Indicators Point to Higher Prices for Lower Mainland Real Estate in 2022"},"content":{"rendered":"<p style=\"text-align: justify;\">Vancouver homes have steadily risen in price in recent decades regardless of economic conditions or new taxes governments institute to curb market speculation.<\/p>\n<p style=\"text-align: justify;\">There is reason to think that will continue.<\/p>\n<p style=\"text-align: justify;\">COVID-19 has caused factories in Asia to temporarily close, crimping global building-product supply chains. Strong global demand for construction materials has also caused shortages.<\/p>\n<p style=\"text-align: justify;\">More than three-quarters of B.C. construction businesses are experiencing supply chain challenges, according to an Independent Contractors and Businesses Association (ICBA) survey of its members earlier this month.<\/p>\n<p style=\"text-align: justify;\">Commodity prices for raw materials such as lumber are up. Shipping costs are soaring. To top it off, the City of Vancouver has raised building permit fees by an average of approximately 5%.<\/p>\n<p style=\"text-align: justify;\">This means that builders need to sell homes at higher prices just to break even.<\/p>\n<p style=\"text-align: justify;\">\u201cContractors in virtually every trade and in every corner of the province are experiencing delays and challenges in getting the supplies they need to complete projects and meet deadlines,\u201d said ICBA president Chris Gardner. \u201cThe basic building blocks of construction are very challenging to source.\u201d<\/p>\n<p style=\"text-align: justify;\">Maison D\u2019etre Design Build Inc. owner Rob Capar told BIV that suppliers require him to pay a deposit within 15 days in order for them to honour quoted prices.<\/p>\n<p style=\"text-align: justify;\">\u201cWe work on getting all these quotes together so we can present it to a client, and by the time they may say, \u2018Yes,\u2019 the quote is already out of date,\u201d said Capar, who also chairs the renovation council at the Canadian Home Builders\u2019 Association of BC.<\/p>\n<p style=\"text-align: justify;\">Developer and Reliance Properties CEO Jon Stovell echoed Capar\u2019s concerns. He added that scarce labour has increasingly been a challenge, and attracting that labour has meant paying higher wages.<\/p>\n<p style=\"text-align: justify;\">\u201cIt\u2019s all contributory,\u201d he said. \u201cProperty taxes are going up a lot. Having to hold the property while you\u2019re waiting to get permits [is expensive],\u201d he said.<\/p>\n<p style=\"text-align: justify;\">Stovell is also charged vacancy and school taxes on vacant properties that he is developing, which increase selling prices.<\/p>\n<p style=\"text-align: justify;\">The Canadian Real Estate Association expects the average price of a home to rise 7.6% in 2022.<\/p>\n<p style=\"text-align: justify;\">There are arguments, however, that countervailing forces could dampen home-price growth.<\/p>\n<p style=\"text-align: justify;\">Rising interest rates would hike borrowing costs and mean that banks would lend those seeking mortgages less capital.<\/p>\n<p style=\"text-align: justify;\">The Bank of Canada is expected to raise its overnight lending rate to 1.25% from 0.25%, by the end of 2022 after a series of hikes. That reduces the purchase-offer prices that new mortgage holders can bid for homes, leaving sellers with lower offers for their homes.<\/p>\n<p style=\"text-align: justify;\">Bank of Canada actions tend to mirror those at the U.S. Federal Reserve.<\/p>\n<p style=\"text-align: justify;\">Notes from December\u2019s Federal Open Market Committee (FOMC) meeting, released in early January, suggested that the U.S. central bank might raise interest rates by a quarter of 1% four times in 2022 \u2013 one additional hike than most market watchers anticipated.<\/p>\n<p style=\"text-align: justify;\">That roiled North American stock markets.<\/p>\n<p style=\"text-align: justify;\">The FOMC notes also suggested that the central bank may shed some of its bond purchases later this year \u2013 an action that would increase the supply of bonds on the market, thereby lowering the price of those bonds and pushing up bond yields, causing inflation. That, in turn, could prompt the U.S. Fed to add more interest rate hikes to control inflation, making borrowing incrementally more expensive.<\/p>\n<p style=\"text-align: justify;\">\u201cRising inflation typically means interest rates rise,\u201d said Real Estate Wealth Lab chief intelligence officer Jennifer Hunt.<\/p>\n<p style=\"text-align: justify;\">But she added that soaring shipping costs and other inflationary forces reduce economic activity, which lowers gross domestic product.<\/p>\n<p style=\"text-align: justify;\">Hunt said that would typically lower rents and property prices, but could also devalue the Canadian dollar.<\/p>\n<p style=\"text-align: justify;\">A lower Canadian dollar, she added, would mean that the value of hard assets, such as real estate, would rise.<\/p>\n<p style=\"text-align: justify;\">Heavy demand for homes, as a result of population growth exceeding increased housing supply, is another factor in predicting home-price fluctuations, Hunt said.<\/p>\n<p style=\"text-align: justify;\">She pointed to Scotiabank (TSX:BNS) research that found that Canada has far fewer homes per capita in comparison with European countries.<\/p>\n<p style=\"text-align: justify;\">\u201cWe need unprecedented construction levels just to catch up to existing G7 standards of providing housing for people,\u201d she said. \u201cReal estate is the most stable asset type through turbulent times, and it has been proven in history to do that over and over and over again.\u201d \u2022<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2022\/01\/commodities-shipping-permits-driving-property-prices\" target=\"_blank\" rel=\"noopener\">Commodities, Shipping, Permits Driving Up Property Prices<\/a> by Glen Korstrom | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Vancouver homes have steadily risen in price in recent decades regardless of economic conditions or new taxes governments institute to curb market speculation. There is reason to think that will &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2022\/01\/majority-of-key-indicators-point-to-higher-prices-for-lower-mainland-real-estate-in-2022\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-19257","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Majority of Key Indicators Point to Higher Prices for Lower Mainland Real Estate in 2022 &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2022\/01\/majority-of-key-indicators-point-to-higher-prices-for-lower-mainland-real-estate-in-2022\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Majority of Key Indicators Point to Higher Prices for Lower Mainland Real Estate in 2022 &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Vancouver homes have steadily risen in price in recent decades regardless of economic conditions or new taxes governments institute to curb market speculation. 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