Real Estate is very important to most Canadians. The significance of real estate in our lives stems from a variety of areas that span our local Comox Valley region all the way up to the national level and back down to the level that impacts us personally.
According to Statistics Canada, within Canada, the Finance, Insurance, Real Estate and leasing industry group accounted for about 1.1 million jobs in Canada during the first four months of 2014. This represents about 6% of all major industry group jobs in all of Canada and it does not include jobs in related groups such as construction.Think about how many related industries that there are, and the total numbers climb considerably. Real estate, also known as real property, can be found almost everywhere that we live, work, and play.
The real estate sector comprises a residential and commercial component. According to BCREA BCREA economics reports, the total impact of the real estate sector in BC is substantial. The residential sector is also significant. Most Canadians live in a home that is either rented or owned. By some estimates, the housing sector accounts for close to 19% of the Gross Domestic Product in Canada. Since Canada’s economy is roughly a trillion dollars, it is no surprise why so may analysts and news outlets focus and report on changes to the housing sector. Simply put, it is big business, and it is important to all of us as Canadians and our country. It is not just the figures that are important. The trend is also important. Spending on residential construction has increased significantly since the mid 1990s and as it does, the importance of this element of the housing market increases in importance and impact. As with just about all statistics, it is extremely important that the statistics be comprehensive and readily available if they are going to be used to provide an accurate picture of the housing market and its impact on the Canadian economy.
Statistics alone do not tell the whole story. Consider, for example, how well Canada fared during the 2008-2009 financial crisis compared to many other countries including the United States. There are a number of reasons for this. The Bank of Canada has kept its policy rate at 1% since 2010. By keeping this rate low, the mortgage rates available to consumers have been maintained at or near 50 year lows. This is good news for any person who is planning on buying a home. The current rates stand in sharp contrast to the rates that exceeded 17% in the 1980s. While these low interest rates are good news for consumers, they may also be one of the reasons that household debt has risen to record levels.
For many years, the Baby Boomers were viewed as a main driver of the housing market. With nearly 10 million Canadians aged 49-67 it is easy to see why. As people age and become more successful financially they are able to afford more. While this does not apply to all Baby Boomers, it does apply to a significant number of them. There is a newer generation that has been given the term Echo Boomer. This generation will play an increasingly more important role in the real estate market in the years to come. These people now aged 20-38 outnumber the Baby Boomers. While the tide has not yet turned in favor of this generation of Canadians having the biggest impact on the Canadian real estate market, the potential exists for them to do so in the next decade as many of the Baby Boomers retire and make changes to their lifestyles in, in turn, their housing needs.
We all go through a number of stages in life. As we go through many of life’s changes so do our real estate needs and wants. What is important to a young single person or a young married couple may not be important to a couple on the verge of retirement. For example, many older people prefer to live in a home on a single level with no stairs. To a younger person this may not even be a consideration let alone a need. Location is also important and location preferences may change as well. Remote rural locations may be attractive to someone now but later in life they may want or need to be closer to an urban center for health or other reasons.
Let’s turn briefly to demographic change in British Columbia. For the twelve month period ending January 1, 2014, there was an increase of just over 51,000 people to the province. Nearly 80% of the increase was due to international migration and the other 20% was due to natural growth. Inter-provincial migration actually accounted for a loss of nearly 4,000 people. While these figures maintained by BC Stats are interesting, they would be more useful if they also broke the numbers down by age for the reasons discussed above. Finding statistics that are relevant and useful to real estate can be a challenge. More than 50% of households had no children at home.
The same holds true In the Comox Valley. While several sources of demographic information are available for the Comox Valley, several refer to the Statistics Canada 2006 census. Eight year old statistics are not really relevant or useful if current stats are markedly different from those in 2006. At that time, the average age in the Comox Valley was about 44. Similar statistics are contained in a Statistics Canada report on the Comox Valley Regional District but the report also has a few predictions. Here are a few of the comments and predictions:
- The population in the Comox Valley is estimated to reach over 88,500 by 2031 a gain of 23,000 (nearly 26%) from 2006;
- The Comox Valley remains one of the fastest growing areas in the Province;
- The Comox Valley added nearly 11 years to its median age over the past 20 years compared with a provincial gain of 7.2 due to its popularity with retirees and seniors. The median age in 2006 was 44 compared to about 40 in the province;
- The total dependency ratio was nearly 59 in 2007 meaning that 59% of the population were either below or above the typical working age; and
- Just over 60% of the population lived in either Courtenay (39%) or Comox (22%)
Each of the above Comox Valley statistics are interesting but are the meaningful? What is the basis of the population growth estimate? What are the assumptions? While the dependency ratio statistic is based on typical working age, what is actually happening vis-a-vis work and age, especially in the older population component? The report does not say nor does it provide enough detail to answer these questions. As well, while the report does focus a bit on the Baby Boomer generation (without actually using the term), it does not spend much time on the Echo Boomer generation. What is the forecast there? While climate and quality of life combined with a slower pace of life may attract Baby Boomers, what does and is being done to attract Echo Boomers?
When people buy homes in the Comox Valley, RE/MAX asks buyers to completes a buyer profile proving some information on why they chose to buy in the Valley. For example, it asks:
- Are you relocating to the valley from outside of the valley?
- What were the main reasons for relocation?
- What was the main reason for purchasing real estate?
Here again, the statistics derived from answers to these general questions may or may not be useful. First, not all buyers fill them out. Second, there is no demographic age component. Third, the type of real estate purchase is not asked. Even if demographic information about factors such as age were asked it still may not be entirely useful. Why? Because there does not seem to be any standardized way of collecting and presenting the information. For example, an investincomoxvalley website presents age demographics broken down as follows: ages 0-19; ages 20-34, ages 35-49; and over 50. What is the basis for the breakdown and what is the relevance to the various age categories? To be meaningful, statistics must be meaningful in type and composition.
So what is really happening in the volume of affordable homes in the Comox Valley regional district ? To answer this question recent experience will be used. First of all, there will always be a local component to the real estate market. Some people are born here, grow up here, and eventually die here. As they do their personal and family needs often will and do change. What was good for these people when they were young may not even be suitable for them when they get older and their family grows. A common theme that I hear all the time from buyers is that they are looking for something that is updated and move in ready. While some people are willing to fix up things in a home or even update things in a home, many are not. As a seller, this is important information. Has your Comox Valley home been updated recently? Is it in need of any major repairs or maintenance? Here is an example. A number of people in Royston and areas south may have been waiting for decisions concerning the installation of a sewer system in their area so they have not kept up on the maintenance (or replacement) of their septic system. This is not a good idea. Most buyers will have a home and septic system inspection done on a rural Comox Valley property. Others will do much more to investigate and inspect the property before they buy. Increasingly, what used to be not that important in the past has become important. Permits are another area. For example, homes that have suites installed in them without the appropriate permits are becoming less and less attractive to many buyers.
Homeowner renovations are another area of increasing concern. While a particular homeowner may have the ability to carry out the intended renovations themselves, they should not be undertaken without the appropriate permits. Increasingly, buyers are not prepared to assume the risk and buy these homes. And by the way, the law requires homeowners to declare all latent defects associated with their home and property. The lack of a required permit is a latent defect under the law. This information must be provided to potential buyers. Some ask what about getting a permit after the fact. Ask this question of the local city, town or village planning department or of the Comox Valley Regional District planning department and see what you get for an answer. The answer may surprise you.
There are, of course, many other and different considerations that may affect a specific property. Urban and rural properties may have a few different considerations but many are the same in the eyes of the buyer. Sellers need to know their properties and homes and any potential issues that may affect resale and selling the home before they place it on the Comox Valley real estate market. Knowing is good, but having the documentation to prove it is even better. Being fore-warned is fore-armed when it comes to information about your home and property.
Comox Valley home buyers will ask a number of things about a specific property and they expect honest and complete answers. There may be some situations where the seller will not or cannot answer the questions. Foreclosures and estate sales often fall into this category of home sale. There may be other questions that the seller simply does not know the answer to but there are organizations and resources that are available to Comox Valley realtors who may be able to find out the answer for you. Consider a large rural property in the Comox peninsula. There may be parts of the property affected by things such as the Riparian Regulation, eagle nesting location and a number of other issues. Why is this important? Because some of these types of things can place restrictions on the future development of the home and/or property. They, among other things, may also affect the current value of the home and/or property.
Buying and selling Comox Valley real estate can be a fairly straight forward process but it can also be a very complicated and lengthy one. Homes and properties in the Comox Valley may have surprises waiting for the unsuspecting buyer. They may also have surprises in-waiting for the unsuspecting homeowner and seller. If you are planning to buy or sell a Comox Valley home, contact Brett to be your realtor and benefit from his many years experience as a professional.