In a recent study done by the Bank of Canada, evidence shows that fewer and fewer first time buyers are entering the market. The Bank of Canada’s study showed that first time home buyers made up 47% of home sales in June 2021, down from 53% in 2015. While there is no single answer to this phenomenon, undoubtedly the housing supply shortage, low interest rates and high inflation have been catalyst to drive real estate prices beyond reach for most first time buyers.
Additionally, the housing supply shortage has caused rental rates to rise making it even harder for first time buyers to enter the market. As a result, people who own homes, or investors have increased their activity in the real estate market. Repeat buyers, or people buying a second home have grown from 30% in 2015 to 33% in June 2021. Meanwhile, investors presence in the market has increased even more significantly making up 21% of the market in 2021 compared to 18% in 2015.
2021 saw also saw a significant increase in activity compared to 2020 in all three kinds of buyers. Investors increased 100% year over year, repeat buyers increased 66% and first-time buyers increased 47% year over year. This has led to a diminished housing supply entering 2022, which has caused a surge in new homes being registered for construction in BC. In 2021, 53,189 homes were registered, a 67.5% increase from 2020.
Overall, the drastic increases seen in BC’s real estate market has benefited those people owning a home and priced out many who want to buy their first home. Finally, the current real estate market in BC is not expected to change until rates increase, or supply is able to catch up to demand for housing.
If you need more information regarding mortgages or if you need any advice on your personal situation please contact our office at 604-556-3893 or email at alex.kotai@ymscanada.ca.
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