The Squamish real estate market, which has seen enormous growth and price inflation in recent years, now faces a number of variables, the impacts of which industry insiders say are impossible to predict.
The provincial government recently expanded the foreign buyer’s tax, which had been in place in Metro Vancouver since 2016, to the Fraser Valley, Nanaimo Regional District, Metro Victoria, Kelowna and West Kelowna. They also upped the tax to 20 per cent from 15 per cent.
Finance Minister Carole James also announced last month that a speculation tax would be assessed on homes in those regions, beginning at 0.5 per cent of a property’s value this year. That rate will remain an annual assessment if the owner lives in B.C. For owners who live in Canada outside of B.C., the tax will rise to 1 per cent next year. Foreign owners will pay 2 per cent beginning next year. The tax applies to homes that are unoccupied for half the year, with some exceptions for vacation properties.
Squamish is not in the areas affected by the taxes. But one realtor doesn’t know if that will necessarily mean more foreign buyers here.
“We don’t have a huge number of foreign buyers now,” said Lisa Bjornson, managing broker of Royal LePage Black Tusk Realty. “And there has been a foreign buyers tax in the Lower Mainland at 15 per cent for quite a while. So is the five percent difference a tipping point from where we are right now? That’s the uncertainty here.”
The effects of other fundamental changes that could affect the market are also too soon to judge, she said.
“The federal government just changed all the mortgage qualification rules,” said Bjornson. “That was at the beginning of the year. Purchasers — more those on the first-time buyers’ scale — lost about 20 per cent of what they qualified for in 2017 because the qualifications went up. How does that affect buyers coming from the Lower Mainland? [Are they] coming up here because they can’t qualify in the Lower Mainland? It’s still early in the year to tell how all these things are playing out.”
The federal government has also announced that immigration numbers will be increased by about 13 per cent by 2020. New Canadians are more likely to settle in urban areas, and Canada tilts westward in terms of internal migration.
“There is not one sole thing going on as far as real estate is concerned,” said Bjornson.
According to the Real Estate Board of Greater Vancouver, the benchmark price of a single-family detached home in Squamish in February was $993,600, up 13.3 per cent over a year earlier and nearly double over five years ago. Townhouses averaged $848,600, up 16.3 per cent from last year and 157 per cent over five years. Apartments averaged $488,100, up 32 per cent since last year and more than double five years ago.
The number of single-family detached homes being sold has plateaued, apparently as prices have pushed buyers to choose townhomes or apartments instead.
In 2017, there were 267 townhome units sold, compared with 203 in 2016. The Real Estate Board’s numbers only include homes listed through MLS. Therefore, the many presales by developers of townhomes and apartments — a fast-growing segment — are not captured in the data.
Michelle Lanthier, a realtor at McDonald Realty, has been selling in Squamish for a decade.
“About three years ago, people were primarily looking for detached homes because the price was in a sweet spot,” she said. “It was a great deal to buy a house here. But that spiked.”
Almost all the buyers she’s seeing are coming from Vancouver, though there are a few Albertans and Torontonians coming as well.
She estimates about 75 per cent of her clients are first-time home-buyers, with many of the others downsizers from the city.
“There’s a lot of young couples who are going to get married or are going to have a baby,” she said. In many cases, one partner works in the city and commutes while the other works from home or cares for the kids. Tech sector workers, whose location is often irrelevant to their job, are adding to an entrepreneurial vibe to Squamish.
“I think it’s going to be a busy spring market especially with the townhome and condo developments,” Lanthier said.
While she acknowledges she never predicted an average house price of close to a million dollars, Lanthier said she is surprised it took so long for Vancouverites to discover Squamish.
“I think the locals were trying to keep Squamish this big secret,” she said. When the highway was improved in conjunction with the 2010 Olympics, the commute became easier.
“That’s when it started rolling,” she said. “And the gondola was built, and people realized that Squamish is awesome. I think people didn’t think about it as a place to move to [before].”
While new developments are increasing the supply of townhouses and apartments, Lanthier doubts that the new supply will outpace demand anytime soon.
“Because of how high the demand is, I think it will continue, just because there’s not enough of anything,” she said.
The price explosion and sales numbers have naturally affected the rental market as well.
Martin Sprenkels, broker/owner of Century 21 Performance Realty and Management, says rental rates are now on par with Vancouver.
“One bedroom, you’re looking anywhere from $1,000 to $1,600,” he said. “Two bedrooms, $1,200 to $2,000. Three bedrooms and up, anywhere from $1,600 to $2,500.”
“It’s very expensive for most people who work in the service industry,” said Sprenkels, noting that many are fleeing to Vancouver Island or other parts of the province. This will have effects on employers in the area.
“Even ourselves, sometimes it’s hard to get extra help,” he said. “We don’t have qualified people here because it’s just too expensive to live here.”
While there is little purpose-built rental accommodation in Squamish, the unceasing development of townhomes and apartments will add to the rental pool, because investor-owned condos are the main source of rental accommodation in town.
“I think as more units get built, we’re going to see some easing of rental rates and vacancies,” he said. “We’ve got a lot that’s coming on stream in the next couple of years.”