What's the Future of the Housing Crisis?

Hello, I'm Debbie Simmons with the Simmons Lifestyles Real Estate Group. Myself and my partner, Mark Rutherton, serve the central Vancouver Island real estate market area. And this is our report for Monday, April 8, 2024. And our solar eclipse is about to happen in about 15 minutes. So hoping to get my report done before that all exciting things start to happen. I'm down in Mexico right now. So your timeline is probably different than mine. Mine's happening at 10.45am. Okay, let's get on with our report. No change in interest rate analysis for this week. The economists are coming out with a new report by the time I do this report next Monday. So we'll have an update on interest rates then. Our topic for the week is the housing crisis. What is the future of our housing crisis? I have a lot of stats on you for that. And unfortunately, it's not good news. So the CMHC is telling us that we need 750,000 new housing starts every year in Canada. And from now till 2030 to catch up with the backlog of demand. Starting last year, starts were down, not up. They were down to about a quarter million. So that's one third of what we required. CMHC has come out and said this week that they need that, you know, for the next several years, seven years to catch up. Next year, we're at 224,000 starts. For 2025, they're projecting 232,000 starts. And for 2026, they're projecting also another 232,000 housing starts. That is one third in four years in a row of starts that we need to meet the current demand. So that is not good. This means that this housing crisis is here for the foreseeable future probably for years to come. Now they've introduced this flipping tax of 20%, which means that builders, developers or individuals who used to like, you know, renovating houses and making a bit of profit on the side as a hobby or a sideline business are just not going to do that anymore. So, you know, places like Carver stores, Home Depot, they'll have the spinoff effect of that, as well as, you know, we won't have pretty houses put back in the market. Houses will sit there derelict and not be renovated. So that's not good for the availability either. It's just going to worsen the housing crisis. Landlords have said that they've had it. 99% of landlords are barely breaking even now. With increases in insurance and property taxes and calling it a plumber or whatever it is, those costs have escalated far beyond what rents have, even though rents are high, very high. And so it's just made it very unattractive for investors and landlords in BC. They introduced about a year or two back a 12-month penalty if landlords evicted their tenants illegally. They're now thinking of raising that to 18 months. So that's just further more reason for landlords not to be in the business anymore. The risk is too high. The risk reward is just not there anymore in BC for sure for landlords to be attracted to that. They're far better off to go invest in a REIT or, you know, just park their money somewhere else. I made more than that just within my RRSP last year in my sleep. So that's what's happening with landlords in British Columbia. All right. Well, let me show you the market activity now. I will share my screen. Once again, we're in full swing in the market. So we're in full swing in the spring market. So we have 36 new listings. Here they all are. That is amazing. Here's the highest one, 1.23. Sorry, 1.3 million on Dogwood Road in Shermanis. And I think our lowest valued one was at 369.9 here, which is a unit on Jim Crown Drive. I believe it's a townhouse unit. And if we go over here to page two, there's actually four pages of hot sheet this week, which is tremendous. I love to see that. There's six new sales this week in the Cowichan Valley. There were nine new properties that changed hands to their new owners. And I'm going to just flip through all of this again. There's pages and pages of it. There were eight cancellations and there were seven expirings. So once again, always the exciting news for us as realtors are the new listings that come on. The two that we really paid the most attention to is how many new listings are coming on? What is the pricing and what are the new sales and what are the price points of those new sales? Because the price points of those new sales, we're able to use that to calculate what percentage of market is moving up, down or laterally. So that's market activity for this week. And please let me know if you want any information on this. I can forward this to you. You can look at every finding. You can click into every one of those listings and figure out what went on with them, the size, where they were, the address, and what it was listed for, what it sold for, and all those important details. Okay. And please call me if you have anything else that you want me, either Mark or myself, to send you, like houses under $700,000, condos only, rental investment, properties with suites only, whatever. We can sort all that criteria out for you. Saves you a lot of labor and we can send it to you very readily. And the last thing I want to draw your attention to is Michael, my notes from Michael Campbell this week, because there's always some real, you know, really, really great stuff in there. And if you haven't clued into Michael Campbell on Saturdays, then, you know, it's too bad because there's so much information that's so important for all of us as Canadians that we can't get anywhere else on the news. So this week, his deep dive was into the BC rebate deal that was promised five years ago to small business. They were carbon tax rebates. To date, they haven't received a single penny. I went to a mergers and acquisitions course, and I was shocked to find out that the government deemed small business to be between $5 million and $50 million. Well, how many people do you know who own $5 million businesses? I personally don't, might know five that I've met in my whole life. You know, I'm from a small town, but if you're one of the very few large cities in British Columbia, you might know a few more. But that means that the $0 to $5 million business crowd is being completely left out. They're not even talked about. And that's, you know, the vast majority, in my mind, of small business in this province are the ones who really need the help. So anyway, that's a nugget. Gold is at new highs, and silver is up significantly as well, because of our declining purchasing power and the erosion of our standard of living. That's why gold and silver are up. Oil broke $90 this week. I have within my portfolio, I have a wonderful financial planner. So if anyone needs to know that, who that is, I'm happy to share that with you. Anyway, I have one oil stock that was at, CNR was at 290%. So Canadian oil companies are well positioned right now with low debt and increasing cash flow, and lower leverage than our American counterparts. So that's one piece of good news for our energy sector. And also the lower Canadian dollar equals better cash flow yields than the US companies. In the US, unemployment is down to 3%. It's going down. In Canada, it's doubled in the US, it is up to 6%. And so this divide will continue to grow, where we will have more unemployment, and they will have less unemployment. So that's another trend that is developing within the Canadian economy. All right, well, that's the report for this week. I hope that you all enjoyed the eclipse today. And thanks so much for listening. If you have any questions, we are an extremely experienced real estate group. So either contact Brotherton or myself at 250-246-0708. Have a great week ahead. Professional, caring, kind.