A fear is gripping Victoria, and that is the fear of outside buyers coming in to take our jerbs; or at least our homes. Nothing scarier to Victorians than an elderly couple who discovers that their Point Grey house they bought in 1948 for a dot cent is now worth $3.6Million. Or even worse, mobile young professionals (everyone is scared of those) that have discovered they can live in Oak Bay on the cheap while making their dough in Vancouver.
We know of course that this market is not made by those out of towners. They exist, they seem to be up in numbers somewhat, and they are certainly contributing to the active market we have here. But in the end, in 2015 71% of buyers were still local Victorians. Even if The Outsiders are up a bit since then, the large majority of buyers are still locals.
Are those buyers all equal though? If I move up the property ladder I would be one of those local buyers adding to the demand, but at the same time I would be adding an equal amount of supply to the market. Net effect zero. So while there might be thousands of local move-up buyers in this market, I’m not sure if they actually make any difference to market conditions.
Now an outside buyer is quite different. They add to the demand and don’t add to the supply. So it might be that the 600 lower mainland buyers in 2015 had more of an impact than all the move up buyers put together. Of course local first time buyers behave the same way. They add to the housing demand, but only add to the rental inventory.
So what really makes the market is the balance between first time buyers and out of town buyers on the demand side, and people selling to rent, move out of town, or die on the other side.
Out of town buyers we have stats on, first time buyers I believe is still part of the VREB realtor survey, selling to rent is likely minimal and can be left out. What’s left is the outflow which we can’t easily measure. For that I expect the key determinants will be demographics and unemployment. What other factors could influence this balance?