Kamloops housing spike correlates with B.C. spec tax: study
Researchers at Thompson Rivers University have found that while speculation and vacancy taxes implemented in B.C. cities may have stabilized some housing markets, Kamloops saw a spike in selling prices.
In a recently published study, Jabed Tomal of the mathematics department and Dr. Hafiz Rahman of associate economics professor, found home prices rose drastically after the 2016 foreign home buyers tax was implemented in other B.C. cities.
When Tomal and Rahman set out to collect their data, the goal was to fill the "void" in research and expected the imposition of the new tax had shifted demand into cities that did not implement it.
The speculation and vacancy tax was first implemented in some of the most expensive cities to live in B.C. back in 2016, with Vancouver being a top concern. It was later expanded in 2018 to cover more cities, like Victoria, Kelowna and more cities in the Lower Mainland like Chilliwack.
The researchers found the average monthly selling price in Chilliwack rose rapidly in 2016, with Kamloops following shortly after.
The researchers used monthly statistics from January 2011 to July 2020 from the Canadian Real Estate Association to collect their data.
In 2018, the tax was implemented in Chilliwack and correlated with prices stabilizing in the city that year. Selling prices have still risen in Chilliwack since then, but less rapidly, according to the study.
The speculation tax has not been implemented in Kamloops, while real estate prices have continued to rise for the past five years.
Prices in Kamloops rose steadily from January 2011 to October 2015, then rose more dramatically through the study period.
They found the growth rate of average selling prices in Kamloops had risen by over 500%, using a mathematical tool called a Bayesian piecewise linear model.
Their model found that from January 2011 to August 2015, the average selling price for homes in Kamloops rose by $407 per month.
From August 2015 to February 2018, there was an average price increase of $1,991 per month. Then $2,093 per month from February 2018 to July 2020.
Tomal and Rahman noted that while the speculation tax was brought to Victoria and Kelowna, prices have not stabilized in the same way as Chilliwack experienced around the time the speculation tax was implemented in 2018.
"The reasons for different patterns could be that the cities of Victoria and Kelowna are much different in size and business capacity than Chilliwack and Kamloops," the authors wrote. "Also, each of them houses a different sized university than the universities in Chilliwack and Kamloops."
Although the study did not use data after July 2020, housing data released from the Kamloops and District Real Estate Association shows prices in the region continued to rise.
The average price for a single-family home in the Kamloops area was over $550,000 in September 2021.
The real estate association noted that the amount of sales had dropped slightly since April, but that did not represent a drop in the average price once the deals were signed.
"We have seen sales numbers drop a little since they peaked in April 2021, but I’m glad that there has not been any abrupt fluctuation in our performance," association president, Chelsea Mann, said in a news release earlier this month.
The TRU researchers are currently developing a model to study housing prices in both Victoria and Kelowna in order to better understand how the speculation and vacancy tax has affected markets outside of Vancouver.
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