The recent slowdown in Western Canadian real estate activity has been hailed by many hopeful market-watchers as the beginning of a return to housing affordability. But there is one big reason – a massive reason – why this correction may have been just a tiny blip in the big picture over the next few decades.
That reason? Global climate change.
Last week, I attended an Urban Development Institute panel event, forecasting real estate trends for 2020. When it came to the question about how climate change would affect the industry, the panellists discussed the importance of sustainable building practices and saving energy.
That’s all great, but it seemed to me to be missing another, extremely crucial point. Which is that, if global climate change continues to cause increasingly extreme weather events, such as Australia’s bushfires and North America’s hurricanes, our regions could be looking at vast amounts of global climate migration over the coming decades. If that happens, it could hugely affect our real estate markets.
Last week, Filippo Grandi, the United Nations High Commissioner for Refugees, said at the World Economic Forum that the world needs to prepare for millions of climate refugees, according to a Reuters article.
Reuters reported that a ruling by the United Nations has been made for refugees to safely move to another country in a climate emergency. “The ruling says if you have an immediate threat to your life due to climate change, due to the climate emergency, and if you cross the border and go to another country, you should not be sent back, because you would be at risk of your life, just like in a war or in a situation of persecution,” Grandi said.
Guess where those displaced will look to settle? Somewhere temperate, less prone to extreme weather events, and with a stable economic and political system.
Of course, that description takes in countless options across the world, but very much included are regions such as B.C.’s Lower Mainland and Vancouver Island, among others in Western Canada.
And that’s not all. Another wave of immigrants could come from regular migrants, who are diverted from their first choice of new country due to climate change. For example, Brits and Irish looking to emigrate have often chosen between Australia and Canada, as both are English-speaking Commonwealth countries where it is easy to get a work visa and settle. With many would-be Australian immigrants now likely thinking again, because of the bushfires, Canada could be the obvious next choice.
At a more local level, even our own wildfires in B.C., which have increased in size and number over recent years, could drive people from the at-risk Interior regions to the safety of the cooler, coastal cities.
Geopolitical climate migration
It’s not just extreme weather that will push more newcomers our way. The global geopolitical climate also plays a big part in this.
People looking to exit harsh regimes or poor governance will always seek stable political and economic systems such as ours. For example, many of those looking to get out of places like Hong Kong, or even post-Brexit Britain, will likely be looking at Canada – again, especially with Australia, the usual alternative for both those countries, now less appealing.
What could all this mean for our local real estate markets? Well, there’s always a cap on how many immigrants are let into the country, so it doesn’t mean we’ll be overrun with millions of people in 30 years. But I am pretty certain that the global desirability of cities such as ours will only go up – and up, and up.
If that happens (and it’s a big “if”), that could mean real estate prices and the cost of living will skyrocket over the coming decades, far and away past anything we’ve ever seen before.
So to the policymakers thinking about sustainable building practices and saving energy, please continue, but add into that how we’re going to accommodate the potential flood of climate migrants who will want to move to our regions.
And to all those who are applauding the current minor slip in real estate prices: celebrate while you can, because we might never see home prices this low again.
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