09/10/2024
Real Estate Projection for 2025
2025 is going to be a better year for Real Estate in British Columbia and houses are becoming more affordable. I just had to say it like that to get as many people as possible calling me an idiot. However, it is true. Here is the logic. First, what makes housing more affordable? There are 2 ways. First prices go down. Second, the cost of purchasing a house goes down. If you are buying a million dollar home at 4% interest your payment is roughly $700 less than if you are buying the same house at 5%. Therefore the affordability of that house is more at 4% than it is at 5%. Interest rates have been reduced 3 times this year and will that trend likely continue for the rest of the year and into 2025. Second, there is pent-up demand. Interest rates pushed many people out of the market who can now come back into the market and as interest rates reduce more and more people will be able to buy. Third many people are sitting on the fence waiting to see what will happen with interest rates. Most economic forecasts across the country are talking about pent-up demand. Some of these people will jump off the fence in 2025. Lastly, the demand is still very strong. Where is this demand coming from? Consider this ...last year there was a total of 223,490 people immigrated to British Columbia, plus 175,000 students went to school here for a total of 493,490 coming into the province to live. That is 7% of BC's Population. Average people per household is 2.4. Therefore, we needed an additional 93,120 homes to be built just to house the immigrants. There was a total of 62,248 new builds last year; a deficit of 30,872 homes. What about Migration? (Movement of people from BC to other provinces) Last year was the first time in over a decade that more people moved out of BC than into BC. from other provinces. However the net migration out was only 8,624 people. Not even close to the immigrants moving in.
The demand is high and increasing and the supply is still low. 2025 will not be a banner year but no bubble is going to burst and the market will increase. However, you always have to remember...that's just the world according to BILL. Have an amazing month folks.
