Home prices in Squamish are on the rise, and experts say it comes down to a lack of supply compared with demand.
Lisa Bjornson, the managing broker at Royal LePage Black Tusk Realty, said that median home prices jumped 20% in 2021 compared with to 2020, and both median townhome prices and apartment prices jumped 20% and 19%, respectively, over the same time period.
“What it all boils down to is, at the end of the day, there’s no supply,” said Bjornson. “We can’t build it fast enough. We are in a massive housing deficit.”
Bjornson added that though it may feel like a Squamish problem, it is happening all across B.C.
Brendon Ogmundson, the British Columbia Real Estate Association chief economist, confirmed that housing demand is rising throughout the province, dating back to the summer of 2020 when the market halted due to the pandemic.
“Sales are recovering by early summer of 2020 and then that recovery continued and really gathered steam where we’re hitting month after month of record sales in essentially every market in B.C. including Squamish,” said Ogmundson.
The rising demand and record sales led to a diminished supply, according to Ogmundson.
“We finished 2021 [with] the lowest number of listings in B.C.’s recorded history,” he said. “We had about 12,000 listings in all of B.C. In Greater Vancouver, there were fewer than 6,000 listings. For a market to be like normal, healthy, functioning market — with prices kind of growing at the amount of inflation — we need to have like 15 to 18,000 listings.”
“Demand is still pretty strong and we’ve never had supply this low and the result is what you expect: prices are rising.”
Rising population perhaps leading to rising demand
Ogmundson attributed some of the rising prices to Squamish’s rising population, which he believes was a byproduct of the pandemic.
“A lot of that population growth was because people were looking for space during the pandemic, so square footage or yard,” he said. “In a lot of markets outside of Vancouver, they’re close enough to Vancouver to work remotely but still commute if you have to.”
According to the provincial government population estimates, Squamish gained 484 residents from 2020 to 2021, equivalent to about a 2.2% rise in population.
However, Bjornson said they were seeing similar patterns of buyers in 2021 compared to past years.
“Squamish is a big enough community now that we probably transact 50 to 60% at the local level,” she said, adding that this includes people who are upsizing, downsizing or moving laterally. “Where [buyers are] coming from is quite typical of what we’ve seen in years gone by.”
Jonathan Stein, a senior sales specialist for Illumina, bought a condo in Squamish with his partner in May 2021. Stein said they were very fortunate with how the purchasing process went.
“We found this place… and the photos were terrible, but the square footage was pretty decent and the price was not terrible,” said Stein. “We call our agent and he puts in an offer and we find out there’s another offer already on it.”
“So this is the first offer we’ve ever put on a place ever. And at this point, I’m just expecting that we’re not going to get it.”
But perhaps with a little bit of luck, on his partner’s birthday, Stein said their agent called and said the other offer fell through.
They even got the condo at the asking price.
Still, Stein acknowledged that this was by far the best-case scenario, which might not resemble everyone’s experience.
“I think we just got really, really, really lucky,” he said. “It’s not the way that I think most real estate interactions here happen. At least, that’s my understanding and having kind of seen other friends who’ve gone through the process here.”
Permitting and construction too slow for demand
Part of the issue in low supply stems from permitting and construction proving to be too slow for the current demand, said Ogmundson.
“The only thing that works long term is increasing housing supply and getting supply in the market faster than we have in the past,” he said. “Building density especially takes a very long time and our approvals process is very slow, and that’s usually a municipal government thing.”
As an example, Ogmundson said “a large apartment project in Vancouver from permit to completion could be five to seven years. So if you’re 30 years old, that’s like your whole 30s that you’re trying to get into the market.”
Ogmundson added that taking that long to get projects to market misses out on a prime, household-forming generation.
“That’s just not good enough,” he said.
Additionally, Bjornson said that rising prices tend to price out people in certain industries.
“Look at the service sector, tourism, hotel workers, those people that are at that end of the industry haven’t got that accumulated wealth” to be buyers, she said.
Ogmundson said that “the types of buyers we’ve seen over the past two years, kind of driving the market, are the highest kind of creditworthy buyers… because they’re the ones with enough equity and incomes to qualify.”
For its part, the District of Squamish said council and staff have long been working to address Squamish’s housing conundrum.
Examples of steps taken include a Zoning Bylaw Amendment that lists ‘Housing as a Human Right’ as a priority. The muni has also endorsed a’ Housing First Strategy’ approach to vulnerable housing populations, District staff said.
Council has also approved a Perpetually Affordable Housing (PAH) Policy to provide developers with a clear definition of the District’s affordable housing needs, according to staff.
The muni also works with BC Housing and local non-profits to increase affordable
housing supply such as with Under One Roof, Centrepoint, and the currently under construction Westwinds and Buckley Avenue projects.
The District has also acquired affordable housing units in future developments as Community Amenity Contributions and provided two new staff to the Building Department in 2022, in addition to those added in 2021, staff said.
Further, the municipality says it is “leveraging municipal tools such as the provision of land, rezoning and creating policies in order to support affordable housing, and the muni also recently established Squamish Community Housing Society.
Neighbourhood planning within established neighbourhoods is ongoing to increase housing diversity and attainability, as well, staff said.
The District is also maintaining a “fast-track approval process” for up to five applicants at a time for projects that deliver 100% purpose-built rental buildings, 100% commercial buildings, or 100% affordable housing projects, staff said.
Policy should aim for pricing sustainability rather than decline
For what it’s worth, Ogmundson said he expects the supply and demand to reach normal levels within the next two years.
“Our baseline scenario is if Bank of Canada stops raising the rates at 1.75%, that’s six rate hikes over the next year or so. If that happens, and that has impacts on mortgage rates, then we would expect sales to come down to historically normal level by the end of 2023 and listings should get closer to normal by the end of 2023,” he said. “It’s probably a two-year process to get markets back to a healthy balance of supply and demand.”
Still, that baseline scenario might not equate to falling prices.
“You need an imbalance of supply over demand to generate a price correction,” he said. “So supply basically needs to triple for that to happen.”
“You need some shock that causes a lot of supply to hit the market very quickly and that seems very unlikely.”
At the end of the day, however, Ogmundson said there’s no going back to the prices of old, but aiming for sustainable prices should be the goal.
“Home prices are, as we’ve seen over the last 10 years, extremely sticky. So there’s no fixing the problem as in reversing the last 10 years of price growth or something. The best we can hope for our policy, at this point, is just to slow the rate of price growth to something historically sustainable.”