We Are at a Tipping Point in Squamish

craig-mainBy Craig Cherlet
Published: July 10, 2015



WE ARE seeing an increase in people buying here but real estate prices I believe will remain roughly the same if not decline in the coming years regardless of this growth. People want to move here but there’s a limit to what people can and are willing to afford and real estate is not the investment it was 20 years ago.
The main driver for price increases over the past 15 years has been the result of cheap debt, lax lending policies and a whole nation obsessed with real estate, not just for shelter but as an investment/retirement strategy.
The problem now is that Canadians have become so in debt that on average we owe $1.63 for every dollar we earn. Many buyers have have taken on so much debt they’ve become house-poor. Simply put, if Squamish is going to grow, prices are going to have to decrease to match incomes.
There just isn’t enough people with the income or risk appetite to pay much more. Today’s home buyers simply won’t experience the same equity growth the older generation has and buying simply makes less financial sense in today’s slowing economy.
There’s also the risk of slipping into negative equity for anyone buying in the past four years with down payments of less than 20 per cent. As interest rates begin their climb back to non-emergency levels, most likely starting next spring, we’ll start to see monthly mortgages payments go up and this will reduce the overall borrowing power for buyers. Right now supply is low which increases competition and prices but, it won’t be for long. New inventory coming from these developments in and around Squamish will increase as will competition for buyers.
There are 5000+ new homes in development and proposed for Squamish: Oceanfront development(1136 homes); Cheekeye development(750 homes); Garibaldi at Squamish (1000+ homes); 450 acres that Bob Cheema owns in Garibaldi Highlands (2,700 homes); University Heights still has entire phases waiting to be developed; Loggers lane Townhomes (75 homes); and Kingswood (425 homes).
In the 60s & 70s buyers saw houses as a place to live. There was no HGTV, Love it or List it and there was no such notion of “flipping houses” for profit. People bought homes that cost one to two times their yearly income, because they needed shelter. All of the real estate supporters from Canadian banks and realtors to developers, the media and even the government have been supporting the idea that real estate is still the best investment you could ever have. That may have been true 15-20 years ago but we have pushed that idea to its limits and it’s just not true anymore.
I’m not the only one who thinks we are at a tipping point in real estate values. Last December the Bank of Canada said that Canadian real estate was “overvalued by at least 10 per cent since 2007 and may now have overshot by anywhere from 10 to 30 per cent”. There are even investors who made cash off the U.S. housing collapse in 2008 now betting against Canada, creating entire investment funds aimed at shorting the housing market. Even the Bank of America has declared “shorting Canadian banks” to be the second-best investment of 2015.
Regardless of what you choose to believe, it has never been a more risky time to buy a house. Borrowing massive amounts of money is cheaper than it has ever been and ever will be. Incomes are not going up significantly in the near future and when it costs almost double to buy the same place than it would cost to rent it, buying at these prices doesn’t make financial sense.
Squamish is definitely going to grow but that will only happen if prices match incomes.


  1. Douglas R. Day says:

    This writer is dreaming in Technicolour
    Squamish real estate is ridiculously underpriced
    when compared to the two wealthy communities
    30 min north and south of here
    There is going to be a protracted catch up phase
    going on here for the next decade that will not be
    slowed down by new housing projects coming to
    the market
    Developers and their Bankers are not stupid
    New projects will only be built to tie into
    sales achievements along the way.
    In fact, most Banks require at least 50% pre sales
    of a new project before the shovel hits the ground
    Ignore the pundits who encourage people to
    be left behind in our housing market
    Buy now, whatever you can afford, and you will
    appreciate that you did this
    The persons advocating sitting on the sidelines
    will still be on the sidelines decades from now praying
    for the accopolpse in real estate that will not
    happen here.
    Respectfully submitted,
    Douglas R. Day
    Squamish Developer and Land Owner

    • Craig says:

      I didn’t say anything about “apocalypse in real estate”. I said “prices will remain roughly the same and probably decline.”
      Can you provide any data to support your view that Squamish is “ridiculously underpriced”? Why? Just because we’re in between Van and Whistler? Sounds like speculation to me. Also, are you then suggesting that a 500k house today will appreciate just like the 200k house did 15 years ago? Debt loads don’t matter and prices will just keep going up and up forever?

  2. Matt Blackman says:

    Interesting analysis. Unfortunately economic and real estate history do not support it. Squamish has always been a place that those who sold in other areas of the Lower Mainland have moved to and that trend has increased after the new S2S highway was build for the 2010 Olympics. In other words, Squamish real estate prices depend in large part to what is happening in Vancouver and surrounding areas – areas that have consistently been priced above what 70-75% of buyers can afford based on incomes alone.
    In the wake of the subprime financial crisis in the US and elsewhere, Vancouver and Squamish prices experienced a much more shallow correction than elsewhere in North America due to the combination of strong demand and more conservative Canadian bank lending policies (CMHC). Prices in Squamish jumped above their prior 2008 highs last year and so on a longer-term trend basis have still not seen a parabolic rise which generally presages a real estate price top.
    A price correction in Squamish will not be prompted by high BC debt levels: if a decline does materialize it will be due to a big decline in the global economy due to some unexpected financial crisis or a big jump in interest rates. If the economy cools, interest rate demand decreases so it is unlikely that both will occur together.
    As someone who was in the real estate business for more than 20 years, prices have been extremely resilient in this area since the last big meltdown in 1981 and corrections have been shallow and generally short-lived. This should continue unless we see another big financial crisis or rate hike.
    It is also important to point out that the new supply you reference has traditionally represented about 10-20% of the overall market. The lion’s share of supply is provided by resales of existing homes. The new market is also significantly more expensive than a resale home.

    • Craig says:

      Regardless of what our federal government continues push through the media that our economy is just fine, I tend to listen more to unbiased analysis from those not trying to get re-elected or from those profiting off of the rise in real estate prices including banks, developers and realtors. They have no reason to ever advise not to buy. That would be financial suicide for them. We are on the edge of a recession right now, people are in debt and a whole generation of young professionals are priced out of the market.
      We are living in unprecedented times and thinking that history will keep repeating it self if a little narrow sighted I think. Again, i’m not saying the word “crash” here. I said “prices will remain roughly the same and probably decline.”

      I know prices have been extremely resilient for the past decade and like I wrote above, that is a direct result of cheap debt, lax lending policies and speculation.

  3. Wolfgang W says:

    What relevance might statistics suited for a domestic market – those gauging property prices in relation to rents and incomes for example – have in countries subject to a massive, and seemingly unrelenting, influx of foreign capital into the property market, such as experienced by desirable urban centers in Canada, Australia and Britain?
    The property market in such centers has become as globalized as has the economy in general, it is therefore of as little use harking back to real estate realities in the sixties and seventies, as it is to reminisce about the abundance of blue collar jobs during those decades.
    What we experience now is simply the effect of some of the wealth created by globalization and offshoring increasingly seeking a ‘safe haven’ in real estate in countries and cities considered both stable and dynamic, Metro Vancouver among them. The surprise is that it took so long for the ripple effects of the tsunami in Vancouver real estate prices to reach nearby Squamish.
    That said, it does obviously not mean that we have entered a period where shocks are not possible anymore, but decisions and events triggering them have slipped out of our Canadian hands quite some time ago, whatever the wishful thinking of bank pundits.

  4. Douglas R. Day says:

    Well said Wolfgang
    The Eastern Canada based Economists have been predicting the collapse of Greater Vancouver Real Estate prices for at least two decades
    They have been consistently wrong
    And if they really knew what they were talking about
    they would be filthy rich having shorted stocks involved
    in our real estate markets here.
    They could then have been able to afford to lay down their pens and stop writing nonsense
    But they did not do that presumably because they are writing these predictions
    to amuse themselves and gain a headline for an afternoon
    Apparently there are some 10,000 Economists
    in Europe
    Only about 3 of them predicted the financial collapse of Greece
    despite warning signs everywhere
    Along the way these other Economists pick up a few followers
    and they then jump on the bandwagon of the day

  5. adam says:

    1000 new houses at Garibaldi at Squamish?

    Over our dead bodies!

  6. Katie says:

    Lol, what?…. this is simply wishful thinking. It’s unfortunate, but in this area of the world, house prices will continue to increase whether we like it or not. Although the average Squamish family/person might not be able to afford the house prices, other people can and they are moving and investing here. I wish it weren’t the case but it’s highly unlikely that prices will come down to match incomes; simply look to our neighbors to the south in Vancouver where prices are sky high and continue to rise with no end in sight. The Canadian real estate market is not the Vancouver real estate market; it’s a completely different beast. Vancouver is a unique market that doesn’t seem to be affected like the rest of Canada is; we have limited land due to geographical constraints, a lot of foreign funds being parked here and a lot of people that want to live here or invest in this area. I truly wish the situation were different but unfortunately it’s not.


    Good article Craig may I suggest to the bloggers, if they are interested in global vs local real estate factors and possible future consequences , that they peruse a couple of books- Currency Wars- by James Rickards and The Real Crash by Peter Schiff – both books address how real estate is used in the political/economic game played between the nations and the risks involved as they relate to the man in the street. Both point out how national debt has been addressed in the past (low interest rates, devaluing currency values, and when all else fails- pumping currency into the system in conjunction with low interest rate to encourage borrowing (ie. taking out mortgages) to create mostly a short term buoyancy in the economy. Unfortunately, especially in the US, Japan, Europe- the national debts are not sustainable in the long run and the only actual cure is a significant recession. Canada is not immune to this. When that happens the system,and , in this case housing prices , will collapse- when is the question.

  8. Wolfgang W says:

    Thanks for the pointers, but “when” is the question for almost anything in life, isn’it, Larry? In the meantime we live our life, fortunes are made…and yes, sometimes lost.