Buying a home is the biggest financial decision most people will ever make, and it’s not one you make when you’re unsure what next year looks like. Right now, many British Columbians are unsure.

The Confidence Problem

BC lost 20,000 jobs in September. Earlier this year, unemployment among core-age workers hit its highest level in more than a decade, and population growth, which has driven this province for a generation, has all but stalled. 

Behind those numbers are real people. Someone worried their position won’t survive the next round of cuts, a small business owner whose orders have been slowing for months, a young couple trying to figure out if they can build a life here.

Investment goes where it feels welcome, and costs, taxes and timelines all send a signal. Lately the signal from BC has been to hold off. 

Businesses that hold off on investing also hold off on hiring and raises, and people who aren’t sure about their paycheque put off the big decisions. That kind of uncertainty is hard for any economy, or any household, to plan around.

Why Buyers Are Waiting

The housing market is where that uncertainty shows up most clearly.

Greater Vancouver had 1,717 home sales in September, about 25% below the 10-year seasonal average. Prices are down 5.5% from a year ago, and inventory sits 24.3% above the long-term average. On paper, this is one of the better windows to buy in years, and yet people are still waiting. 

I don’t think that’s mainly about price. It’s about whether people feel secure. If you’re not sure you’ll have the same job in two years, or you run a business and can see it contracting, you’re not going to take on a 25-year mortgage, no matter how good the deal looks.

The Cost of Not Building

New homes have an extra problem. Rising costs, driven in large part by government-imposed requirements, fees and charges, have pushed the price of a new home beyond what most local incomes can carry.

As a result, far fewer homes are getting started. Condo starts dropped another 40% in the first half of this year, the weakest first half since 2011. Those are homes that won’t be there for the families who will need them a few years from now.

It’s also worth noticing how much expectations have shifted. CMHC now describes “restoring affordability” as a return to 2019 levels. In Metro Vancouver, that means ownership costs taking up 71% of the average household’s income. That’s the target, which says a lot about how far we’ve drifted.

And yet, we see falling rents being celebrated, not because the market is balanced, but because of reduced immigration and a lacklustre economy, to say the least. UDI CEO Michael Drummond recently talked about this disconnect and what falling rents really tell us about the state of the market: read his article.

Affordability Has Two Sides

This is why growing BC’s economy is so important. It isn’t about hitting a better number on a forecast. It’s about people having better-paying jobs and enough confidence in the future to make plans.

Affordability is the gap between what homes cost and what people earn. BC has to close it from both sides.

On the cost side, government-imposed requirements, fees and charges are policy choices that can be changed directly. On the income side, there’s no shortcut. Better-paying jobs come from a strong and growing economy.

That looks like employers hiring again, businesses expanding, and wages growing faster than the cost of living. Getting there means making BC a place people and capital want to invest in again, sooner rather than later.

If people have good jobs and confidence in what’s ahead, they’ll put down roots here. They’ll buy homes, build businesses and invest in their communities.

Grow the economy, and housing will follow. If we don’t, we risk losing more of the talent, the investment and everything else it takes to build a stronger BC.

Jay Chadha is Director of Policy & Advocacy at the Urban Development Institute.