This post was written using a transcript from the above video. It’s been edited for clarity.
PAUL POULSEN: When talking about living on the Sunshine Coast, there's no avoiding real estate. In the past, we've touched on real estate in a general sense, but today, we're going to review the 2021 housing market with Sunshine Coast Realtor Tony Browton, and I'll put him on the spot and ask him to make some predictions for 2022.
TONY BROWTON: Thanks very much for having me.
Why are Sunshine Coast prices rising?
PAUL: Anybody that's been paying attention to the Sunshine Coast real estate market over the past two years has seen prices appreciating sharply. Between November 2020 and November 2021, housing prices have seen a 26% increase on the Sunshine Coast. If we go back three years, prices have increased nearly 40%. What is driving these huge jumps?
TONY: I think it’s competition from different buyer groups. Traditionally, the main buyer group on the Sunshine Coast has been retirees as the ferries have been a barrier for working people. But since COVID hit, that equation has changed. As the Sunshine Coast has reliable internet service and reliable power, buyers that would have never considered the Sunshine Coast due to the ferry situation are now happily moving to this area. Similar relocation are happening all over Canada and North America and the UK. People are moving to rural areas because they're no longer office bound.
TONY: As such, BC’s Sunshine Coast has become a viable option for a younger demographic. Because the ferries were previously a huge barrier to market, the Sunshine Coast was undervalued in comparison to other regions across the Lower Mainland. I think these relocations to smaller communities are only going to continue. Assuming there are still COVID concerns, I can't see it changing in the short term.
PAUL: But even with a younger demographic moving to the Sunshine Coast and doing remote work, there's still big demand from retirees, is there not?
TONY: That's right. Both groups are competing with each other but it seems to me that the younger demographic has the deeper pockets. They're driving up prices and winning most of the bidding wars. Each community on the Sunshine Coast is seeing different types of pressure. As you said, the Sunshine Coast has seen general appreciation across the board, but it would be much more significant in, say, Gibsons than Pender Harbor. And it diminishes as you move up the Coast. Halfmoon Bay is an area where there's still a lot of demand from retirees. They're looking for bigger properties and rarely have to take the ferry into Vancouver. Whereas younger buyers are typically sticking to homes no further north than West Sechelt. This is typically because they anticipate having to go into town periodically.
Foreign buyers on the Sunshine Coast
PAUL: Sunshine Coasters love to talk about foreign buyers and all this “foreign money” pouring into the Coast...
TONY: I'm starting to see a bit of it now. Up until the last two months, I didn't see a lot of foreign buyers. A few British expats, that kind of thing. But most people think that there's a lot of mainland Chinese money coming to the Coast and I haven't seen that much. What I've found is that we're more influenced by foreign buyers in the sense that they're buying in areas like Richmond or the North Shore, and that's pushing people over to the Sunshine Coast because they can't afford those neighborhoods anymore. By comparison, we're priced very reasonably.
TONY: But I am starting to see people buy stuff on spec. I'm starting to get phone calls from Realtors that see what's happening here, and they're buying anything they can because they know it's going to be a good holding property. It's kind of the perfect storm right now. There’s such low rental inventory that landlords can get a very good return on their investment from an appreciation perspective. At the same time, long term rentals are in huge demand, and as such, landlords can demand a premium for rent. This is why some of the local municipalities are doing what they can to reduce Airbnbs. But price appreciation and high monthly rents mean that people now are buying just because they want to park their money somewhere.
Where do buyers get their money?
PAUL: Whether these buyers are young buyers or older buyers or even foreign buyers, the actual cash to buy has to come from someplace. Where is that money coming from?
TONY: If they're coming from, say, India or mainland China, in my experience, it's family money that they've pooled together to come up with a down payment to help the person moving to buy. People relocating from North Vancouver or West Vancouver, they're either selling a house that they own there and using that equity to buy a house here.
TONY: But a lot of times, it's help from mom and dad. I often see that with first-time home buyers or what I’m calling this new breed of buyers. They’re typically under 40 with a couple of kids and they’re buying for the first or maybe second time. They’ll quite often have family helping out, financially and otherwise. I’ve seen a lot of adult parents coming to the Sunshine Coast to live with their kids. Forty-something parents with two kids move to the Sunshine Coast and one of their adult parents are going to live with them. That's what I'm seeing.
Sunshine Coast real estate predictions for 2022
PAUL: I'm going to put you on the spot now. Look into your crystal ball and tell me what you see happening with the Sunshine Coast real estate market in 2022.
TONY: It's tough to make predictions because last time we did this was pre-COVID, and I was completely wrong. I'd say for at least the first quarter or the first half of 2022, the market will stay the same as it is now. I think spring will be a really busy time. I think the collective consciousness is very aware of the Sunshine Coast now. And I think that people are analyzing the Sunshine Coast and looking at it like they did 10 years ago in Squamish. The Sea to Sky Highway and the upgrades due to the Olympics really opened up that market and drove demand. Now I see COVID and the ability to work from home driving demand here on the Sunshine Coast.
Remote work is causing the Sunshine Coast to boom
TONY: Being able to work from home eliminated the need to commute and as such, the ferry is no longer a barrier to our market. This is going to drive a lot of buyers out our way. I think we've got quite a ways to go before we're at price parity with similar locations. I think that with what's happening with Omicron right now, you're going to continue to see people wanting barriers between them and large populations, provided they can live someplace that still has all the niceties and amenities they’re accustomed to. I think this mindset will continue to drive people to the Sunshine Coast. Where the ferry was once a barrier for younger buyers, almost overnight, our isolation due to the ferry has become a benefit.
Too few homes available
TONY: I think there’ll continue to be inventory concerns. There just aren’t enough properties to meet demand. As someone that has a decent chunk of the local real estate market and does a lot of listing, a big concern for my business is not having any inventory to sell. But I think inventory will continue to remain low because would-be sellers don’t have anyplace to go. What I’m seeing now is that if someone's selling, they already have another property to move into or they’ve pre-negotiated a purchase before selling, or they're moving off-Coast. The Sunshine Coast market is so tight that sellers will end up being desperate if they don’t have somewhere to go before they sell. I anticipate this’ll continue into 2022.
Will real estate prices drop in 2022?
TONY: I don’t see a correction in pricing, not with the supply remaining so low. We need more inventory on the market for prices to drop but I don't see that happening.
TONY: I think that people that got into the market before all of this are pretty happy. But it's scary. If you want to sell, where can you possibly go? And with inflation happening as fast as it is, I think that's also driving a lot of people to park their money in real estate. I think that's contributing to the frenzy, as well. Savvy investors look at 6% inflation and think, “What's the best thing that I can do with my money so I don't lose any buying power?” A hard asset like real estate is an obvious consideration.
Interest rates vs inflation
PAUL: If inflation continues and there’s an interest rate increase, do you think that will cool demand for real estate on the Sunshine Coast? Or is demand for housing so high that interest rates are a neutral factor for buyers?
TONY: I'm not a particularly smart fellow or an economist, but from what I can see, the government has the ability to control interest rates, but they've got no handle on inflation. The federal government’s been printing money for two years to stimulate the economy and that's resulted in inflation. They need to get a handle on that so does that mean higher interest rates? I think it does.
TONY: But in that situation, where does a savvy investor park his money? Nine times out of 10, an advisor is going to say, "Put a percentage of your money in real estate." That's what I think is part of what's driving this boom. You've got people looking to relocate out of the city and set themselves up for a nice lifestyle with their families. You've got the traditional retirees that want to go somewhere and enjoy a peaceful life. And now you've got investors looking to park their money in real estate.
No foreign buyers’ tax on the Sunshine Coast
TONY: When investors look around our province, they look at the Sunshine Coast and see there’s no foreign buyers' tax, no empty home tax, and a disproportionate level of property appreciation that's anticipated to continue for a long time. The Sunshine Coast will likely see a lack of rental accommodation and housing for a prolonged period of time because local governments have been so reluctant to allow any planned development.
TONY: In my experience, the response to housing demands on the Sunshine Coast have been reactionary. With the exception of some local builders that seem to do it right, the default reply to a request for development is to say, “No.” But now, local governments have to do something because their tax base isn't generating enough revenue. So, now they realize that need to do something, but it's not necessarily correct, and it doesn't necessarily fill the void in the housing demand.
PAUL: Especially in the short term.
TONY: And there's no infrastructure in place for that kind of a population increase. I mean, we live in a rainforest and yet we have water shortages. That seems to me to be mismanagement at multiple levels of government.
PAUL: Changing gears, something that people might not know about Gibsons is that every summer we're inundated with film crews to shoot Christmas movies for Hallmark. And a couple years ago, actually, Tony was in one.
TONY: All Summer Long. Highlight of my career!
PAUL: Now that you have this insight into the film industry, who do you think will be the big celebrity that comes to Gibsons to star in a Hallmark Christmas movie this year?
TONY: This is unconfirmed, but I did hear that when Ryan Reynolds was on Corner Gas Animated with Brent Butt, they were talking about doing a Molly's Reach reboot. In the interview I saw with Brent Butt, he was saying that his Corner Gas had surpassed Beachcombers to become the most beloved sitcom in Canadian history. So, I heard that they're going to do a little bit of a collaboration, like a little half-an-hour special.
PAUL: Beachcombers 2.0?
TONY: Beachcombers 2.0 with Deadpool. That's what I heard. So, that's my prediction. Ryan Reynolds and Brent Butt will be here.
BC Ferries in 2022
PAUL: Fill in the blank. In 2022, BC Ferries will...
TONY: Ugh. continue to be the most hated ferry service in the world. I don't know. I can't see it getting any worse, but they never seem to let you down.
Best lunch on the Sunshine Coast, BC?
PAUL: You spend a lot of time exploring the Sunshine Coast and showing each community to would-be buyers. What's your go-to spot for lunch when you’re out and about on the Sunshine Coast?
TONY: I like Sushi Bar Nagomi down in Lower Gibsons. I think that's a gem down there, and that's where I personally go most of the time. That’s my go-to. The Blackfish Pub is another good lunch spot. They've got a nice big menu and it's not too pretentious. Those would be the two that I visit most frequently in Gibsons.
Underappreciated business on the Sunshine Coast
PAUL: Do you have a local business that you think is a well kept secret on the Coast? Something that’s underappreciated?
TONY: Because I'm in the business that I'm in, I do get quite a bit of dry cleaning done. I appreciate there is only ONE dry cleaner on the Sunshine Coast and I do like their service. That's Bergner Dry Cleaners in Sechelt. And I think the proprietor is Chris Barlett, or Barlow, maybe. He's a good guy, provides a good service.
Advice for sellers in 2022
PAUL: If somebody watching wants to sell their home during the first part of 2022, what is your advice?
TONY: I say this to everyone: “Where are you going to go?” Don't just list your house thinking, "Oh, the prices are good and I'm going to be able to sell it." Because if you do sell without having a plan, and you end up taking a few months to find somewhere, you could conceivably price yourself out of the market.
TONY: I had clients this year who sold but didn’t take my advice when I suggested properties to write offers on. They were happy getting top dollar when they sold, but then they wanted to lowball everyone, and have ended up in a situation where there's a ticking clock for them to be out of their home before pulling the trigger on buying. That's what my main advice to sellers: Have a clear plan, understand why you're selling, and have a realistic plan for making the transition from seller to buyer.
Advice for buyers in 2022
PAUL: If somebody is getting ready to buy in the first part of 2022, what would your advice be to Sunshine Coast buyers?
TONY: You need to be working with a local agent. The Sunshine Coast is a pretty big area and you’ll see that even local agents specialize in specific areas. I'll work all the way up to Halfmoon Bay, but 90% of my businesses is in Gibsons. I'm super dialed into that market.
TONY: I would never presume to go to Commercial Drive in Vancouver and claim to be an expert. Even if a friend of mine wanted to buy a condo there, ethically, I wouldn't be able represent them adequately because I just don't know that area.
Work with a local expert
TONY: With the exception of maybe a spouse or a significant other, why would you work with someone that’s not an expert on the region where you’re buying? Most Realtors have referral networks so they'll have access to good agents in different areas right across Canada. So, if I’m buying, the first thing I'd do is make sure I'm dealing with a local agent that does a decent amount of transactions in my target area and knows what they're doing.
TONY: The second thing is, talk to a mortgage broker and get pre-approved. Like with an agent, you need to work with a mortgage broker that understands the local market conditions.
TONY: I saw this happen a lot this year. Some out-of-market mortgage brokers don't understand that the Sunshine Coast pretty much only has appraiser for the entire region. When it’s busy, the appraiser will be booking three weeks out. I'll get an accepted offer on one of my listings from a Vancouver agent that is working with buyers that are relocating. Quite often, in a market where property is appreciating much, much faster than the average, the property report, or the BC Assessment on the property, is going to be lower than actual market value.
TONY: Banks see that low number and go, "Whoa! We need to get an appraisal!" And if it doesn't appraise right, the buyer has to come up with a larger down payment. But if you've already put down your deposit and removed subjects without that appraisal, buyers might find themselves being unable to qualify for the mortgage and lose their deposit.
TONY: The appraisal's the key part of that process. So make sure that your mortgage broker is aware of the nuances of this particular market and make sure that they have a direct line to the underwriter or whoever they need to deal with at the mortgage company, to get that appraisal done.
Be ready to act quickly
TONY: If you are looking from out-of-market, you need to be ready to jump on a ferry or a seaplane and come over here and see the property. Get your agent to pick you up and go see the place. If you like it, write an offer, and have your mortgage broker on standby.
TONY: Lastly, spend some time figuring out if the Sunshine Coast is where you want to live. If you can find a rental, maybe try renting here before buying. The Sunshine Coast is not for everybody. Really suss it out and figure out if this is where you want to be.
CALL TONY TODAY
If you’re not already working with an agent, call me when you’re ready to buy or sell and I’ll guide you through the busy and competitive real estate market on BC’s BEAUTIFUL Sunshine Coast.
Tony Browton - TrueBlueRealty.ca
Personal Real Estate Corporation
RE/MAX City Realty (Gibsons)
Email: Click here to email Tony
Personal Real Estate Corporation
RE/MAX City Realty (Gibsons)
Email: Click here to email Tony
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