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BC waterfront scene - Why Invest in BC Real Estate?

Why Invest in BC Real Estate?

Why invest in BC real estate? In this article we explore five key points that explain why investing in a British Columbia Canada’s real estate portfolio could reap rewards.

  • Real Estate investing opportunities
  • Positive GDP and Budget
  • Net migration
  • Provincial government proposed initiatives
  • Positive 2023 forecast

Why invest in BC?

BC real estate is considered a popular investment option due to several factors such as high demand, stable growth, and attractive returns. Here are a few reasons why investors consider investing in BC real estate:

  1. Strong economy: British Columbia has a strong economy with a diverse range of industries, including real estate, technology, forestry, and tourism, which provides stability and growth.
  2. Growing population: The population of BC is growing rapidly, which leads to higher demand for housing, commercial real estate, and rental properties.
  3. Low-interest rates: Low-interest rates make it easier for investors to finance their real estate investments and enhance the potential for profitable returns.
  4. Scarcity of land: BC has a limited amount of livable land, which makes owning real estate, especially in urban areas highly valuable.
  5. Stable real estate market: BC’s real estate market is renowned for its stability and steady growth, especially in Vancouver, which receives high demand from foreign investors.
  6. British Columbia offers favorable tax conditions for real estate investors including no land transfer tax for first-time buyers, rental income tax benefits and access to capital gains tax exemptions if an investor sells a property that is their primary residence.

BC Lifestyle

British Columbia is known for its abundant natural beauty and diverse culture and is rated as one of the most desired cities in the world. It offers a unique lifestyle. The lifestyle of BC depends on the region and demographic of the people. Still, in general, people in BC lead active and outdoor-oriented lives, thanks to the province’s stunning landscapes.

Outdoor activities like hiking, skiing, kayaking, and mountain biking are common among both locals and tourists. Cities such as Vancouver, Victoria, and Kelowna offer urban amenities like restaurants, shopping, nightlife, and cultural events. In contrast, smaller towns and communities embrace a slower pace of life and smaller environmental footprint.

BC also offers a range of eco-tourism, wellness experiences, and sustainable living options. People in BC value environmental consciousness and prioritize sustainability in daily life.

In addition, BC is home to a diverse population, including Indigenous peoples, immigrants, and expats. The province has a multicultural and progressive urban lifestyle, welcoming people from various backgrounds and lifestyles.

Overall, BC lifestyle is a blend of outdoor elements, urban amenities, and a focus on mindfulness, sustainability, and diversity.

BC Real Estate Strategies:

Here are a few common BC real estate investment strategies:

  1. Diversify your portfolio: It’s important to spread your investments across different types of properties, such as residential, commercial, and industrial properties, to minimize your risk and maximize your returns.
  2. Research the market: Stay informed about the latest trends, such as supply and demand, interest rates, and housing prices to ensure you have an accurate understanding of the current market conditions.
  3. Partner with local experts: Learn from the expertise of a local real estate agent or property manager to gain insight and information about the region’s real estate market.
  4. Consider long-term investments: BC has a stable and growing economy, and investing in a property in the area with long-term potential could result in substantial returns on your investment.
  5. Take advantage of new developments: Keep an eye out for new residential or commercial developments that are being constructed in BC as this may present investment opportunities.
  6. Property management: Consider hiring a property manager to handle the day-to-day tasks of managing your rental properties. This not only frees up your time but also can help ensure that your property is being maintained and managed effectively.
  7. Seek professional advice: It’s essential to seek guidance from a real estate lawyer, financial advisor, or real estate professional before making any real estate investments to ensure you understand the legal and financial implications of your investment.
  8. Depending on your investment goals, available funds,  and your level of involvement preference, If you are willing to invest outside of Vancouver or Victoria’s real estate, BC real estate offers an abundance of long-term, short-term (vacation rentals, Airbnb), as well as opportunities in upcoming markets such as:
  9. Nanaimo
  10. Courtney/Comox
  11. Bamfield
  12. Cowichan Valley
  13. Penticton

Figure 1, BC MLS Residential Sales by region, Figure 2 Around the province, sales year over year. All stats sourced from British Columbia Real Estate Association (BCREA).

MLS residential Sales BC - Why Invest in BC Real Estate
BC Sales by region

Figure 1

Avg price of BC real estate chart - Why Invest in BC Real Estate?
BC provincial prices year over year

Figure 2

BC’s GDP

According to the latest reports, in 2020, GDP rates in BC were $299.6 billion, which is approximately 13% of the Canadian economy.  It is expected to grow .4% in 2023 for an increase of over 2% growth in 2024.

Housing Crisis – High Demand/low supply

British Columbia’s housing crisis is a significant and ongoing issue in the province, particularly in major urban centres such as Vancouver and Victoria. It is characterized by low vacancy rates, skyrocketing home prices, and rising rents, making it extremely difficult for many British Columbians to find affordable housing.

Several factors have contributed to the crisis, including a lack of new housing development, limited land availability, a rapidly growing population, and an increase in foreign investment. Additionally, speculation and short-term rentals have led to a decrease in available rental units, driving up prices and creating even more pressure on the housing market.

The provincial government has implemented a number of measures in recent years to address the crisis, such as increasing the foreign buyers’ tax and introducing a speculation tax. However, many believe that these efforts have not been enough to provide adequate relief for those struggling with the high cost of housing.

The housing crisis in BC has significant social and economic consequences, such as increased homelessness, reduced economic growth, and decreased quality of life for many residents. Addressing the issue will require a multi-faceted approach that includes increasing the supply of affordable housing, implementing effective policies to reduce speculation, and improving affordability for renters and first-time homebuyers.

Net migration/Housing initiatives in BC

According to the 2016 Canadian Census, British Columbia experienced a net migration gain of 44,926 people from 2011 to 2016. This means that more people moved to BC from other provinces and countries than moved away. Net migration has been a significant contributor to the province’s population growth in recent years.

  • BC population: 5 million Net Migration is over 100,000 per year.
  • 29% of the population are immigrants.
  • The population is projected to grow by more than 1 million people over the next 10 years.

BC Housing Initiatives

The BC government has initiated programs aimed to increase affordable housing availability for low-income earners, students, and Indigenous peoples in British Columbia. Some of the initiatives that positively influence homeowners and investors include:

  • $91 million over three years for a new pilot project that will provide financing incentives to encourage homeowners to develop new secondary suites on the property of their principal residences for long-term renters.
  • 1.3 Billion will go to Building BC and BC Housing programs $575 Million to Student Housing $732 Million to Reduce Homelessness Includes $394 million to help buy land for thousands of new homes near future transit development projects.
  • A new income-tested Renter’s Tax Credit will provide up to $400 per year in income tax credit for households with adjusted income up to $60,000.
  • Zoning Changes and Faster Permitting Process The new BC Government promises to introduce zoning changes and speed up the permitting process to generate more housing supply.
  • No more Strata Rental Restrictions The new government swiftly passed Bill 44 in November, removing all rental restrictions from Strata buildings in BC. No more rental pools or limits on # of units allowed to be rentals in a Strata complex All age restrictions removed except for 55+

The images below from BCREA show BC Active Listings ,Figure 3, active listings, normalized Figure 4, sales by region, normalized Figure 5, average new rental rates, Figure 6, average price by region, Figure 7.

BC Active listings chart - Why Invest in BC Real Estate?
BCMLS Active Listings

Figure 3

BC Normalized active listings - Why Invest in BC Real Estate?
BC Normalized Active Listings

Figure 4

BC Sales by Region chart - Why Invest in BC Real Estate?
BC Sales by Region

Figure 5

Average new BC Rental Rates chart - Why Invest in BC Real Estate?
Average new rental rates

Figure 6

Average new rental rates

Figure 7

BCREA Market Forecast 2023

The British Columbia real estate market is expected to continue growing at a steady pace in the coming years. The BC real estate market is expected to remain stable, while the retail and tech sectors are expected to experience growth due to investments in infrastructure and innovation. The tourism industry is also expected to continue thriving, particularly in coastal cities like Vancouver and Victoria. Overall, while there may be potential challenges, the BC real estate market is expected to remain strong and resilient in the next few years. Here are the 2023 predictions.

  • Home sales will remain slow during 2023, however, the housing market typically tends to lead the business cycle.
  • Recession tends to signal the start of a housing recovery & the following year should see a strong bounce back.
  • Sales are forecasted to be low this year at 75,150 units (down 7.1%) before rising to 93,025 units up (23.8%) next year.
  • While Real Estate Inventory is rising, overall levels remain low.
  • The abrupt shift in Market conditions saw prices fall during last year but are now starting to stabilize Monthly price recovery is expected later in the year.

Much of this content was sourced from a presentation recorded for the Canadian Real Estate Channel from Emily Zurrer’s presentation. on Why Invest in BC real estate.

Do you invest in BC real estate? I’d love to know why or why not, email me [email protected]

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