The general population is, by now, well aware of the house buying frenzy brought on by pent-up demand and a severely restricted supply of homes.
The ensuing price wars and related price increases are taking the affordability of detached homes further out of the reach of many Canadians – despite the incredibly low interest rates.
What is not apparent to many, is the increasing supply restrictions in industries other than house selling.
These industries, from food and household products to building materials, have serious concerns about the future availability of products / materials needed to fuel their busy businesses – be it re-sale or value added.
Many have already seen an increase in the retail prices of many products.
A CBC prediction that food prices would increase 2-4% in 2020 from 2019 has proven to be optimistic – ask any Costco shopper.
Or consider the prices of BC lumber – one of our primary industries driving the economic health of our province.
Softwood lumber prices have skyrocketed from $400 per 1000 board feet (mBF) in March of 2020 to $950 mBF today. And panel prices, plywood, OSB etc has gone from $350 to $900 per mBF. A builder commented that in the past 12 months the cost of just the materials for a new home has increased by $70,000!
Closed borders, fewer ‘buyers’ coming to BC, Covid restrictions with the resulting jobs lost, restricted supply and now a rising cost of living provides a less than rosy picture for 2021.
Major moving companies in the US (United and Allied) have spotted an interesting trend. More than 70% of their moves last year were from big cities to those smaller cities / towns with lower density and hence fewer Covid restrictions.
This trend is happening in BC. Where acreages and waterfront properties in our interior used to take 2-4 years to sell. Now they are selling in record time with rising prices producing a narrowing price spread between Lower Mainland homes and those on Vancouver Island and the BC Interior.
Hopefully a timely cancellation of lockdown/Covid restrictions will stem the flow and save the majority of small businesses all but destroyed by political /’health’ decisions.