The Government of BC recently enacted some regulations with the intention slowing skyrocketing prices. However, these and other coming regulations could have devastating effects not just on the real estate market but the economy as a whole. According to the BC Real Estate Association.
BCREA’s report highlights what impact a 10 per cent, 20 per cent and 35 per cent decline in home prices will have on British Columbians and the economy, including higher unemployment rates and fewer housing starts. The data was collected based on simulations using BCREA’s econometric model of the BC economy.
They believe the equity loss could be as high as 25-30% they say in a report. This will result not only in dropping house prices but could be a disaster for the economy.
A year following a 10 per cent drop in home prices, a total of 26,000 jobs would be forfeited, resulting in the unemployment rate rising to 6 per cent from the baseline of 4.9 per cent. Meantime, the economy would lose over $3 billion and real GDP growth would fall to 1.5 per cent from 2.7 per cent.
Royal Lepage has been actively trying to stop these regulations.
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