Buying even a modest home is insanely unaffordable.
Real estate has been increasingly unaffordable for many in the Cowichan Valley for a number of years. But the pandemic has exacerbated the problem almost beyond imagination.
Homes that would have sold for less than $300,000 four or five years ago sold during the pandemic for $400,000 to $500,000 and beyond, often thanks to bidding wars entered into by desperate buyers. In many cases, one cannot even buy a lot for less than $300,000 in the market today. Condo prices haven’t skyrocketed quite as high as prices of single family homes, but for many this once affordable option is no longer.
The latest figures from the Vancouver Island Real Estate Board tell the tale. A press release tells us that the market cooled slightly in June. What does that mean? That the benchmark price for a home in the Cowichan Valley was $693,200, up 29 per cent from June of 2020. That is astronomical. Far, far out of the reach of a great many would-be homeowners. Not everything is quite that expensive, of course, and a bunch of properties top that price tag by a considerable margin. But as a benchmark that’s a number to induce despair for many. And the Cowichan Valley is by no means the most expensive place on Vancouver Island for real estate.
The only good news is that interest rates on what for most home buyers is a considerable mortgage are very low at present. With that last being an important qualifier as one stares down the barrel of several decades of payments with no guarantee rates will remain low for the entirety of the debt.
And if you think you’re just going to opt out and save that cash by renting, think again. Your rent, should you be able to find a quiet, safe and well-kept property, could well outstrip what you would have paid in that mortgage you couldn’t afford.
We do expect that the housing market will correct a bit as we come out of the pandemic. Though even when housing markets elsewhere in Canada have declined sharply Vancouver Island and the Cowichan Valley remain such desirable locations that they are still hot properties, if you will.
If one looks at the last 13 years, since the recession of 2008, things have only gotten progressively worse. By no stretch of the imagination have people’s salaries increased to reflect the rise in real estate prices — and that’s only part of the rise in the cost of living. It is clear by now that the market will not correct itself. Intervention is needed.