Will Housing Become A Luxury?
Everybody right now is complaining that there’s too many houses on the market; which is true. There is certainly a bit of a general market flood occurring in most areas of the country. However we might be too quick to complain because the future or real estate might take a different turn than expected once the market recovers.At the current rate of market activity, new developments are being executed at a sufficiently sustainable rate. There’s a good availability of workers, costs are relatively low, the listing prices of new properties, due to the nature of the market, are also low, and the rate of new developments is manageable due to low market activity. However we may be getting ahead of ourselves to be pushing for a quick market recovery.
Once the market’s demand and activity stabilizes, new developments will predictably increase, but it’s not looking like enough craftsmen will be available to sustain this potentially increasing demand. And if there’s anything we can say for sure, it’s that once the market recovers, there will certainly be an increase of new development proposals. Now the issue is finding people to build them.
Within the next 10 years, Canada will see an estimated shortage of 800,000 skilled workers due to the lacking emphasis on the social importance and demands for tradesmen. This situation could play out negatively or positively depending on which side of the fence you’re on.
If you were hoping on building a house in ten years, you’d better start saving your pennies (still getting used to that one) nickels, because the price tag is going to look a whole lot different than the one you were expecting. However, for property owners, this may not be such a bad thing.
Due to the labour shortage, house prices will predictably rise due to the squeezed rate of supply and demand, single-handedly increasing market value. Now, this also goes hand in hand with a smaller index of available properties due to the foreseeable housing shortage. That being said, the increases in value may be bittersweet to those looking to eventually sell and settle down in ‘the perfect place’, because that ‘perfect place’ will look like a ham to a herd of wolves when the time comes around.
Real estate comes at a price – that prices varies in many degrees including long-term investment. At this point there’s a large availability of affordable properties on the market, so get ‘em while they’re hot, because ten years from now things might be taking a strange turn.
image courtesy of Dave Stokes.