Real Estate In British Columbia, Canada
Table of Contents
Validation for the research Question and objective. 5
Review of Literature: Real Estate in British Columbia. 6
The Strength of the Resale Marketing Conditions. 8
Rising in Prices as a result of Constraining Supply Markets. 11
Drivers for Housing Demand. 13
The threat of New Entrants. 18
Bargaining Power of Buyers. 19
Bargaining Power of Suppliers. 19
Consumer Knowledge Perspective. 26
The Prospects for the Future Real Estate Market 29
Real estate industry has earned a reputation for its resilience in the past few years regardless of economic downfalls. Even though the market has experienced a notable growth competition and other forces such as political, social and technological factors normally affect the stability of the industry. With favorable investment policies in Canada it is evident that the market has much potential that is yet to be exploited. Thus, this report will seek to conduct a detailed analysis of the B.C real estate market. The report will mainly focus on several market model such as PESTEL analysis, Porter’s Five Forces, SWOT analysis, Marketing Mix, Balanced Score Card and Ansoff Matrix.
B.C- British Columbia
PESTEL- Political, economic, social, technological, Environmental and legal
SWOT- Strengths, Weaknesses, Opportunities, Threats
Real Estate in British Columbia, Canada
British Columbia is one of the largest provinces in Canada in terms of economic growth and population. B.C accommodates about 4.6 million persons while most of these people reside in major cities such as Victoria. With the rapid growth rate of globalization as well as supportive policies by the Canadian administration, the real estate industry has been a source of attraction for an extensive attention in the global scale by investors and consumers. The real estate sector has been unexpectedly firm even in the light of tough economic times. Over the last decades the industry has recorded a significant growth which is expected to expand in the next coming years. B.C being the home of diverse investors has demonstrated undeniable real estate potential. However, the market cannot be charged in that manner given there are challenges that are known to be affecting the overall outcome of the business within the external and internal environment. Competition has intensified in the recent as more investors are joining the industry. The study will seek to acquire answers on a specific research question that is; is the real estate a worthy investment in BC, Canada? With respect to the British Columbia, Canada real estate market, the objective of the research is to establish the feasibility of the real estate market, barriers and strategies for overcoming and succeeding in the market.
Validation for the research Question and objective
Since the research seeks to conduct a thorough analysis on the BC real estate market, the research question will be answered by focusing on a systematic review. In that, data will be obtained from the past studies through a comparative review to gain a clear picture of the market. Thus, it is through secondary data that the objective will be achieved. By assessing the external market this will allow the researcher to determine the feasibility of the market based on several aspects such economic, financial growth and expansion potential. In other words the main is to establish whether the business is profitable and sustainable.
The study will mainly be using secondary rather than primary data since secondary information is vast and this will help in answering the research question. In addition, through the comparative analysis of this sources, this will minimize any cases of biases since the study will adhere and evaluate past findings. The market is rather broad and given the time limit for the research it is not possible to carry out the research effectively. The targeting of the existing companies is also different and thus small samples might not adequately represent the entire market. The use of secondary data is more reliable and leads to accuracy and quality results.
- is the real estate a worthy investment in BC, Canada?
- To determine the feasibility of the market based on several aspects such economic, financial growth and expansion potential.
- To establish whether a real estate business in Bristish Colombia is is profitable and sustainable
Review of Literature: Real Estate in British Columbia
Housing Market in British Columbia has for a long time remained very resilient and with an economy that is very strong. This has been coupled with relatively low-interest rates besides a high population growth (Teixeira, 2009). The low inventory of the house's sales has majorly contributed to the pressure that is evident in the upward prices. The sales of houses and housing facilities together with the services has been on an upward trend. This has created underlying positive momentum in the economy sector. Metro Vancouver was one of the highest performers in this sector in the year 2018 and a prospective good performance in the year 2019. However, in 2017, the highest market performers in British Columbia were the Okanagan market and the Vancouver Island markets.
The markets north of British Columbia, however, continue to be subdued. There has been a diagnosis done for the Housing Outlook in the province of British Columbia for the financial year 2017 to the financial year 2019. There have been more stringent regulations, policies, and laws from the federal government (Gill, 2011). However, despite this, there has been a success in the real estate economy which means that the buyers of real estate in the region remain unperturbed by the tighter regulations. The impact of the foreign buyer Tax and insurance requirement for federal claims has been receding for a very long time. On the other hand, there has been a steady increase in the sales which border on the long-term practices. This is in conjunction with the prices for the houses (Teixeira, 2009).
The sales and related conditions seem to be very strong in the southern parts of British Columbia a fact which confirms the historical stance of the region in British Columbia. Additionally, the northern parts have also been seen to be steadily increasing in the real estate economy over time. In fact, there are good prospects for the northern parts even though it has been performing poorly in the past years.
With this upside momentum, there has been a higher revision of the provincial housing outlook. A comparative study done shows that there was a difference between the targeted outcome and the real outcome by a margin of 17 percent in 2016. However, in 2017 this margin reduced by 7 percent down to 10 percent. There was another rebounder to close to a total unit sales of 100,000. The momentum in the prices for the houses will remain on a positive trend majorly because there was a fall in the inventories of the past years. The steadiness in the economy is majorly attributed to Kelowna regions and Vancouver Islands. Metro Vancouver is expected to be among the leaders in the sales and the growth of the economy in the forthcoming years. The major trouble and one that will slow the process of gradual increase in the real estate economy of British Columbia will be the northern parts of the province which have continually proved to be poor performers in the region (Gill, 2011).
Pure price erosion will not drive the provincial resale median price to a dip of 2.2 percent. The key drivers are likely to be the luxury sales in this region, fewer homes that are detached and a shift from Metro Vancouver in the aspect of geographical composition. The influence that these factors have on the prices in the province are likely to fade in 2019 and 2018 which will lead to an increase in the gains by 3.1 and 5.5 percent respectively. The housing starts are likely to be maintained at near 39,000 units in both 2019 and 2018 due to the shortages in the inventories and the demand that is persistently strong. The only lagging had been in 2017 due to the poor performances in the northern regions.
The Strength of the Resale Marketing Conditions
Contrary to the reality, there has been a media focus on the decline in the sales year-after-year. Metro Vancouver has been in the spotlight for a long time which suggests a collapse in the housing market (Gill, 2011). When a historical average is done, the trends have shown that there has been a rise in not only the sales but also the prices in the region. The conditions in the regions that are outside the northern regions of British Columbia has indicated that there is a steady increase in the sales of housing facilities. The contributions of these regions to the general real estate market have been on above-average sales and economic contribution.
High growth in the economy and continued low-interest rates have been one of the significant drivers towards the never-ending demand for housed in British Columbia. The other factors include the desire to own a home, changes in the demographical aspects of the region and high population growth in British Columbia. These factors have even reduced the effects of the mortgage insurance policy and regulations that have been tightened in the region. These changes in the policy are majorly related to the portfolio insurance. The exchange rates of the Canadian Dollar has been low, and several purchases at the international level have done a lot to improve the status. However, there has been a force working to curtail this process. This is the foreign buyer tax which was established in Metro Vancouver with the sole purpose of curtailing the whole process of foreign buying and encouraging local ownership. This has also been coupled with CRA rules that have become more stringent and tougher (Gill, 2011).
There is a preference for an arms-length transfer of titles when used as a measure of resale transactions. However, a photo scan across the province will portray a picture of the current conditions that do exist in the region. The scan will portray the real conditions which are that there are housing hotspots in the region of the Southern Interior parts of the province and the Vancouver Islands (Patterson, 2008). This began from the ages of early 2017 and often go unnoticed. The real estate sales in the regions of Vancouver Islands, particularly in Victoria Capital area have been continually on the rise even though there had been an economic decline from the years of 2016 onwards.
The period which occurred between 2007 and 2004 was the very phenomenon in the real estate sales of the province being that there was an unprecedented high demand (Patterson, 2008). The demand was majorly contributed to by an increase in population growth, the tight and growing labor market, and low-interest rates that are persistent. Okanagan regions and specifically the Kelowna regions did show what can be best described as a cyclic high rise in prices at about the mid-years in 2000. That is at around 2005. The other regions that did register a similar level of increase in the mid-2000s are the Kamloops region in the province of British Columbia. It was at this time that many of the regions that now show a lethargy in the level of sales for real estate and the general economy did very well in these very sectors.
Spillover effects have been attributed to be the major contributor to the 2016 increase in sales activities concerning real estate in British Columbia. However, due to the interference with the sales in 2016, there has been a general decline in the level of economic activity in British Columbia and the neighboring provinces especially in the lower mainland regions (Patterson, 2008). There has been a trend of various individuals cashing out from the regions known as the lower mainland and looking for newer areas in a bid to escape the higher prices that have been brought about by, the higher prices that are as a result of the taxes and other foreign buying restrictions. The majorly affected members who have been forced to respond in such a manner are the younger households in the province.
It is no news that the real estate economy has been on a continuous downward spiral, with the more significant effect being on the regions of Metro Vancouver among other areas such as, the lower mainland regions (Bulan, 2009). The housing sales in these regions have been worrying and have generally affected the real estate economy in the whole province, eventually overcoming the profits that have been gained in the northern parts of British Columbia. The only thing that could be understood in the sector was the fact that despite the decline in the sales with close to a margin of 10 percent to 30 percent there was no evident crash on the economy as many commentators had anticipated. The only year that could have contributed to the regaining of normalcy in the economic sector was the outstanding performance at the onset of the financial year 2016 which recorded a powerful performance (Bulan, 2009). The sales were lifted to above 20 percent of the regular sales [rice highs. This saw the economic activity regaining a steady stance. It gradually came to reasonable and manageable levels.
The strong sales have often been connected with individual factors such as an improper implementation of the foreign buyer tax levy, the shock that did happen during the decline in the sales, the decreased levels of listings and erosion of affordability. The reduced level of listings was particular to the lower regions of the mainland. In as much as the improper implementation of the policy and regulations about the foreign buyer tax contributed to the increase in sales, it did it only to a limited level. In most scenarios, it only had a temporary if not a slight effect on the outcome in the market. The luxury and the detached market have continuously shown a weaker trend (Bulan, 2009). Specifically for the sales in 2017 about an average of a decade was close to being achieved except for the fact that the population did show a trend which could lead to the conclusion that it was slightly below the population average in the decade.
Similarly, in 2017 there is a pointer towards the fact that the level of the sales was quickly reducing and was coupled with an increasing trend of houses and housing services becoming more affordable. This was primarily contributed to by the fact that there was a shift which was primarily informed by the tightening of the mortgage insurance policies and regulations (Bulan, 2009). The northern parts of British Columbia have a higher concentration of the underperforming markets in the economy. This is a visible pointer towards the stagnation in the market, weakness in the aspect of investment of capital and the challenges in the commodities markets. This weakness, however, has been particularly evident in the recent years (Duranton, 2015).
These challenges are not only limited to Northern parts of British Columbia but have also been observed in Kootenay. The trends, however, have had a lesser impact in the economy of the stated regions majorly because there has been an improvement in some sectors such as tourism and coal mining sector which have primarily contributed to the economy in the recent past as opposed to real estate (Duranton, 2015).
Rising in Prices as a result of Constraining Supply Markets.
Constrained supply has been forced to meet the strong sale cycles that have been experienced in the British Columbia region for some time now. There has been evidence of the collapse of inventories in the regions that have a characteristic large (Duranton, 2015) market. This is not to say that the collapse is only limited to such regions since as a matter of fact, the collapse in the inventories has also been experienced in regions with medium-sized markets. In more than a decade, the number of active listings has declined to close to the bare minimum in the regions which include the southern interior, Vancouver Island and Lower Mainland regions. Hitherto, there has been no sign that there will be an improvement in the new listings that have been initiated. They have maintained a low listing level for several years now. This contrasts with the fact that there has been an increase in the prices and sales which could be a reason for the increase in the number of sales (Duranton, 2015).
Another particular aspect to note is the fact that there has been a decrease in the number of inventories for the new homes which is a characteristic of the general trend. Despite the increase in prices this type of inventory has also been on a general trend of reduction and is close to its minimum levels.
There are nothing more puzzling than the fact that there has been limited listings (Mian, 2015). It is a matter of the fact that low inventory in the perverse cycle is mostly contributed to by an initial low inventory (Mian, 2015). Prices of housing in Metro Vancouver have become firm after falling slightly in 2016 during the last quarter. This was majorly due to the declining levels of both confidence and momentum in sales levels. There was a record of decline year-after-year. The declines which were majorly reflected at 10 percent, however, did not accurately reflect the market conditions. The detached market, on the other hand, did show some level of affordability on the specific markets. The impact was more significant on the question of foreign buyer tax. There was a decline in the overall price level which made a reflection on several compositional factors (Mian, 2015).
There has been an overall decline in the level of detached homes in the market share to about 35 percent. This is a reduction from close to half of the market share in the recent years. There is a metrics of price which is always maintained at a constant quality. Several benchmarks that have been done in the recent past have shown that there is a rise in the recent months and the revel has returned to the initial level that was initially in place. High local demands have maintained the prices for the hometown and apartments, and they have been in a continuous rise (Mian, 2015). There are low-interest rates, and there are tight market conditions which have been underpinned by relative affordability. These have continuously led to the increase in prices of the houses and residential areas.
Housing outlook has been substantially revised to a higher rate since winter, and this has ensured a good population and economic growth in early 2017. It is coupled with tighter conditions in the market. This literary reflects on the economy of British Columbia since essentially there is a general bid to maintain the moderate pace of expansion in the year 2017 after there was a blockbuster in the same year (Mian, 2015). There is a prospect of maintaining the gross domestic product as a result of real estate. The maintenance will be done from about moderate to about 2.6 percent. This is a reduction of 3.8% that was experienced in 2016. The factors underpinning this is the growth of the sectors that are export-oriented, the rising investment and expenditure by the government and strong consumer demand.
The level of growth is estimated at 3 percent in both 2019 and 2018. The indicating factor is the increase in the rate of employment which has been quite evident in the year 2017. This level of increase in employment was even evident in the other regions which were outside the jurisdiction of the British Columbia. This did happen in the regions which were outside Vancouver. Many factors were pointing towards broad economic growth and gains. In last year alone there was an employment gain of about 3.2 percent which was something that could not be repeated. The growth has been said to be modest and near 2 percent in the period in which the forecasting was done. This consequently led to the lowering of the rate of employment by close to five percent and eventually contributing to the wage momentum (Mian, 2015).
One factor that will continue to increase the profits of the housing sector is population growth which owes its continued growth to the continuous migration that is experienced in the regions of British Columbia. There have also been increased in international gains. Gains in Alberta have been facilitated by the challenges that were faced in Alberta, and to a certain extent, they are similar to the challenges in British Columbia. The strength in the economy alone has led to the attraction of several immigrants who have since moved to British Columbia. The provincial growth is set to converge as the trend will gradually reduce (Newman, 2015). All in all, the provincial growth will remain positive. The segment of retirees will also tend to flow in a westward manner. That is too large urban markets and mid-sized markets.
The other favorable factors include trends in the demographic sector. On the other hand, there are definitions which innately vary with the years that have finally constituted to the millennium. There was a large group that became very interested in home ownership (Newman, 2015). They are those who entered the job market in the recent past. The housing markets that they were used to were those who were initially used by their parents. This is one of the best sources of demand for the real estate sector. However, despite this fact, the population growth of this group of the age 25 to 34 has tremendously reduced between the ages 2010 and 2007. This has been majorly contributed to the fact that there is low international migration. The positive gains in the area have only been due to the steady migration to other areas such as Victoria and Kelowna (Newman, 2015). These two areas have a very high rate of migration and have even overshadowed the fact that international immigration has been at a languid pace. Almost close to none. The rates that are levied on a mortgage will act as a weaker aspect of the housing activities. On the other hand, the posted rates will have broader bond yields. Lower rate discounts will be issued by lenders who will make the effective rates climb quickly to the top. There has been an increase in the cost of funds which has been as a result of the changes in the mortgage insurance policy which has occurred in the recent past. The change that has occurred has been in the insurance portfolio of availability (Newman, 2015).
Borrowers, on the other hand, have had a tight mortgage insurance criteria which were introduced in British Columbia in early 2016. This increased rate of qualification for eligibility for mortgage insurance has had quite less than anticipated effect on the market which has led to the continued increase in prices and demand for urban areas. Smaller market areas are more affordable than the broader market urban areas. These, therefore, are some of the factors that have significantly influenced the nature of the real estate market in British Columbia among several other areas in Canada (Newman, 2015).
Analysis of the Real Estate Industry in BC, Canada
This section provides a detailed analysis of the real estate market in British Columbia (B.C), Canada. This incorporates an overview and review of the existing data concerning the real estate market in the state. The objectives are achieved through the application of various marketing theories to establish the actual state of the industry. The report focuses on several methods which include PESTEL analysis, Porter’s Five Forces, SWOT analysis, Marketing Mix, Balanced Score Card and Ansoff Matrix. The primary aim of this report is to establish the viability of the market based on its current situation by highlighting its strengths, faults, and potentials.
Political factors serve a significant responsibility in the determination of the forces that generally affect real estate investment as well as profitability in BC. The real estate industry has always been so strategic, but it has also evolved in the recent into a well-organized sector. The Canadian government has developed a real estate regulatory intervention authority for the coordination of regulatory efforts at the federal and state levels respectively. Real estate investments have increased in the recent as the industry is ranked among the top leading industries regarding economic influence. The regulation is aimed at collecting taxes from the industry while creating a balance with the country’s economic vision and directions. The political state in BC is not only stable but is one that generally supports investments from local and foreign corporations (Wisemean, 2011). With the presence of favorable policy and the active government participation in supporting investment, the industry has achieved remarkable growth.
Technology development and modernization have given rise to intense construction in the urban and rural areas. BC is characterized by a state financial state. Due to the stability of the economy, the income rates have grown significantly in the last decade. There is a notable level of increase for middle-class individuals requiring more modernized housing. Thus, it is the rising income earning as well as the rampant urbanization that is responsible for the present real estate success. In fact, it is accounted that in BC real estate account for more than 10 percent of the state’s annual revenue is one of the industries with the fastest development rate (Wisemean, 2011). However, the increasing inflation rates within the sector are gradually affecting the prices which have led to a decreased growth rate between 2010 and 2015. Besides, the stability of the economy additionally facilitates easy financing options which in turn encourages more investments.
Canada is highly reputed for its possession of educated and well-skilled personnel. The aspect is reflected in BC. The diversity level is also high as the aspect that has been fueled by globalization the reason behind the rising demand for modern housing and real estate services. BC does not expect any scarcity of the expert workforce soon based on the increased populace inflow. BC is guided by the individualistic culture which mainly emphasizes on competition and prosperity. From education to the business sectors individuals are governed by the need to prosper since the culture is not restrictive. The government has reserved more funds for rural housing as part of social stabilization (Gill & Williams, 2011).
Technology is responsible for the increased disruption that is taking place in various industries and the real estate one is not an exception. Real estate is currently more rampant in the urbanized setting but also slowly getting into other environments. In catering for the modern technological needs several technologies such as mold gathering and cement blowing machines are being utilized for efficiency, speedy construction, quality as well cost saving. Also, technology is being used in the industry as a strategic alternative to the development of competitive advantages (Blazek, 2013). In that, the use of electronic platforms in keeping records and information has been useful in tracking stock and maintaining constant communication with suppliers to avoid delays. Also, the success of the industry’s marketing and awareness incentives has been promoted by technology which helps in attracting consumers.
The success and benefits of the real estate industry in BC is being enjoyed by many. However, it is worth noting that environmental degradation accompanies the progress by cutting trees, hills excavation, building materials exploitation such as such leading to erosion and agricultural decrease (Marchak, 2011). Thus, the government is focusing on the general minimization of such effects by encouraging the proper use of resources and guarding natural ones such as trees and agriculture which play a critical role in cleaning the air and feeding people respectively St-(Hilaire, Ragan, & Leonard, 2007). The aspect possesses a threat to the industry since the constructions might be halted in the future.
Every building necessitates registration and approval from the agencies. The process is always an extensive one since it requires clearance from the landowners and assessment from the government to establish the real practicality of such constructions. The companies must adhere to the set laws and practices. Also, the taxation rate has been rising in the recent which affects investment and the profitability of the involved companies. Such factors are the primary determinant of the move that the industry is supposed to utilize.
The actual capital and resources that are needed in setting up a real estate firm are unusually high given that the inventories have to be organized and prepared by the construction developers before beginning. Also, in the industry there is no advance pays from the consumers thus the firm is supposed to fund everything. In this context, new firms in the industry usually experience intense difficulties in their attempt to grab projects particularly the large one since track records are also used in the assessment. In this context, it is only the well-established firms with more resources and a desirable reputation that can take such initiatives in general. In addition, based on the last financial crisis BC is still in the recovery process, and the rise of the real estate constructing and developing firms in the market has further lowered the profitability of the industry (Wisemean, 2011). The industry is mainly focused on the reduction of cost so that their profitability can rise in return. However, the cost of living has affected even the prices of materials thus necessitating the firms to focus on outsourcing most of the inventory which has played a part in cost reduction (Ebner, 2018). Also, the companies also plan on reducing the operating prices about their management offices as well as minimizing the scope of operating which is associated with extraordinary operating expenses. Thus, this is a form of a challenge and impossibility for the new firms as well as the established ones. However, new firms are the ones that face the most difficulties which then implies that entrant threat is minimal.
The products in the industry such as the construction spaces are average. The switching expenses for the buyers within this industry is particularly very utmost. In that, the consumers in the industry are mainly involved in settling for the consumers with the best record such as the brand image. In this context, since those that offer the least prices are not very skilled or have no favorable reputation in construction the buyers bargaining authority is minimal. Property rates went down during the last financial crisis which created affordability for the buyers and gave then bargaining power an aspect that has changed in the course of the previous few years. Most individuals in the state are not able to afford these properties even though the development companies are unwilling to lower them considering that their operation expense is high and thus the move would lead to losses which will push most of them out of the industry (Hilaire, Ragan, & Leonard, 2007). As the industry is becoming very competitive, the sellers are attempting to entice the buyers through the provision of discounted deals thus the buyer's power is average.
In the market that is mainly dominated by well-established company’s supplier's bargaining authority is low. There is minimal to zero switching expense for the companies while acquiring raw materials needed for the development such as cement, paint and so on. Forward integration, therefore, presents minimal threats which offer the involved companies with better switching opportunities. In this context, the suppliers have less authority in influencing the responses of the firms (Mitham, 2017).
In the real-estate sector, there is no substitute for development and construction since the housing sector depends on it ranging from personal to commercial buildings. With no alternatives, this generally implies that there is no threat.
Competition in the industry is intense due to a large number of established and new companies that are currently in operation. All these companies are providing the same products and services which are not differentiable unless several advancements in designs and materials are used which in turn makes the operating expenses higher. With the high number of competitors, profitability has decreased considerably in addition to the current economic state. Thus, it is only the firms that hold top funds and resources reserves that are likely to survive in the instance that this situation is continuous. In this case, it is rather apparent that the rivalry is intense with every company owning a piece in the market that is not very profitable as most would anticipate.
The real estate industry in BC is associated with the highest growth rate when compared to other companies. The booming of the industry is mainly influenced by technological growth, globalization which has facilitated the increased inflow of people and modernization. The use of technology, a positive reputation and resources are leading industry’s strength. In that, the industry is characterized by adequate resources in general that sustains its projects over time. The investment that is required in the sector is high, and it is only dominated by the firms that are well equipped regarding funds and resources ranging from the skilled workforce, reliable supplies, and effective management. Technology growth has provided the industry with good infrastructure that in turn supports the development of the industry in general (Blazek, 2013). With the ongoing evolutions, the industry can utilize such strengths in building a more profitable enterprise. Also, the ability to adapt to market and economic changes is an additional strength of the industry. The consistency of the industry well illustrates the aspect in the last few years where despite the financial crisis the sector has not withheld its operations. With the ability to mitigate changes then the productivity of the industry is not affected which is essential in preserving its relevance and profitability.
Even though the real estate industry represents the fastest growing and important industry today, it is facing some challenges that threaten its wellness and growth. First, the focus of the developers is too narrow as they only focus on housing construction and development. In this, context the market is thin, and the situation even becomes worse due to the presence of a high competitors number in general (Proctor, 2016). The industry needs to be broad and target another different project that will seek to transform the state, in general, leading to developments. In addition, there is low awareness of the value of this industry to the target consumers. Due to the intensifying demand for real estate services the operating companies are driven by the assumption that the sector is well known in the market. However, the norm is inaccurate given that most individuals tend to distance themselves from the services on the ground that the products are expensive and they would not afford. Thus, it is clear that the industry has not invested adequately in creating awareness as well as familiarity with the real estate value and the benefits that the consumers are likely to achieve. Resources scarcity also represent a significant weakness of the industry given that most of the firms are pushed out of business due to the lack of adequate financing.
The ability to diversify into related fields is a significant opportunity. In that, the involved firms have the opportunity to expand into other different areas and explore them to acquire a substantial share. The market in BC is a developing one which means that it has not been exploited fully and it has some viable opportunities that will strategically position the industry. In addition, technology offers a possible chance of the industry’s development in general. Amidst the growing techniques that are likely to be used in the quest for increasing the productivity rate (Proctor, 2016). In that, the utilization of technology offers individuals the opportunity to identify viable markets and new trends that will, in turn, result in development (Blazek, 2013). In addition, these are essential in improving the marketing abilities of the industry in general. In addition, product development is an additional opportunity where the companies are needed to focus on the use of innovation to come up with innovated and well-developed products that will generally appeal to the consumers and meet the modernization needs. In other words, this is a form of differentiation of the product that will enable the industry to develop a strategic and sustainable competitive edge.
Competition is one of the leading danger towards the development of the real estate sector at the moment. The industry is saturated by companies that incorporate new and established firms. Given that BC does not offer an extensive market when compared to other areas the domination of these companies has resulted in reduced profitability as well as market share for those that are involved. The low market share, therefore, means that the industry might not be able to attain any substantial growth in the recent which has thus resulted in the loss of revenue. In addition, the low level of regulation is a significant threat to the industry given that it is accountable for financial damages as well as the loss of professionalism in doing business. There is lack some standardized protocols in the industry and as the market is expanding these threats the future wellness of the sector which might lead to productivity loss (Proctor, 2016). The economic crisis also presents risks to the industry since when the financial gains are not in balanced state individuals tend to prioritize on other things rather than housing. With the increasing cost, the consumers might neglect such needs due to the necessity to save more and invest in businesses. In that, the market might grow into a price-sensitive sector thus forcing the companies to lower their prices. In addition, the entry of some established or accepted brands in the market is likely to lead to increased switching where the customers will be seeking for their services. Such companies have the potential or eroding the industry have they own not only more resources but also the general ability to be innovative which will lure the customers to their side.
The real estate industry in BC is more organized than before. The target consumers hold differentiated need thus unique strategies are necessary for success in the sector. Thus with a compelling marketing mix, the industry’s objectives must be achieved
It is essential for constructions or housing developments to be priced appropriately. In the market, today buyers have been subjected to extensive options, and if the rates are unfavorable, this means that the consumers will be lost. Due to the moderate buyers bargaining authority and the lack of substitutes somewhat high prices guide the industry. The switching cost is high, and this forces the customers to acquire the rates based on the firm’s reputation. The norm might appear as favorable, but it is likely to discourage the consumers in the near future by developing prices sensitivity which will, in turn, encourage the domination of other players.
The product in this context refers to the real estate services. While the success of the firms in the industry mainly relies on the ability to cater to the most consumers, the sector should be ready to create a balance. The industry is primarily involved in the provision is retail and collective services depending on the size of the facilities that are to be provided. The convenience of the services and quality has been useful in retaining a significant market share for the consumers in general.
The use of useful marketing options has driven the success of the real estate sector in BC. In that, the industry has been focusing on organized housing as well as promotions on online platforms, advertising, and discounted sales. Online marketing is the preferred marketing option on the ground that it is cost effective and can reach more consumers within the shortest time. Online websites and social media have been an excellent platform where the consumers can directly interact with their preferred firms and inquire about their services.
In attracting the highest number of consumers to the real estate sector, the industry has been focusing on the right placement of its advertisements and services. In that, most companies have selected some of the most useful sites that hold more users to post their publications such as Facebook. Besides the agencies are set within short distances where the customers are located which allows them to get the services and connect with the companies while reviewing their operations.
Market penetration generally entails the trail to increasing market share in a given market either by increased sales or attracting a new set of customers (Wippel, 2013). The real estate industry is dominated by a single product that has no substitute thus the involved firms are involved in the competition to ensure that they get a substantial share. The real estate competition is intense which has forced companies to forge approaches to address the issues for revenue maximization. In penetrating in the market, the involved firms mainly rely on cost differentiation as the entry approach. However, since cost leadership is likely to lead t losses in economic crisis period diversification is an alternative as it requires similar resources and guides to saving.
The aspect of market development involves establishing a new set of buyers for the products (Wippel, 2013). In that, the industry has been targeting middle and upper-class individuals since they have adequate income that enables them to afford the services. However, through market development, the sector should develop customized products targeting the low-income individuals. It is estimated that this populace comprises about 40 percent of the BC populace which will provide a viable market.
Product development to the situation where a company that is well established in the market in terms of market share and resources introduces fresh products (Wippel, 2013). The product should be customer centered by adding more value to outdo the contenders. In that, since it is not possible to differentiate products in real estate, it is only through innovation that the companies can upgrade their competitiveness. In that, this is achieved through improved designs and providing other services and discounts.
The approach incorporates the development of a new set of products that generally offers complementation to the existing products. As consumers are becoming more sensitive with regard to technology, there is a necessity to innovate the product to fulfill their demands (Blazek, 2013). Even though such products demand higher prices, there is a target set for such products.
The real estate industry in BC aims at being the most stable industry in dealing with constructions and developments. To achieve the objective it intends to maximize its revenue by owning the most comprehensive market share in general. Thus, through the adoption of technological advances, this will be useful in attracting a new set of consumers. However, with the consistent changes in the market, the adaptability is proving to be a challenge as competition has also intensified.
The industry through the existing companies aims at achieving sustainability in terms of financial stability through research and development. The approach will bring about sustainability and standardization in the market. It is anticipated that with an economic crisis the sales will reduce by about 20 percent in the next two years (Tencer, 2018). Thus the industry is focused on stabilizing it's earning in standardizing everything that is likely to be lost.
Consumer Knowledge Perspective
The consumers of the real estate sector are diverse in terms of income and preferences. Thus, the industry is seeking to focus more on innovation which will, in turn, increase its strategic success. The consumer-focused operation is essential for inducing a large market share which will be used for competitive positioning.
Learning perspective is an essential aspect that ensured that all the goals are satisfied. The real estate suffers from the lack of a large skilled workforce with most companies relying on manual labor from cheap laborers. There is a necessity to provide adequate training to the staffs which will ensure that they offer the best towards the projects. The approach leads to quality and effectiveness in general.
It is without a doubt that the real estate industry is one of the well-established sectors across the globe an aspect that is well reflected in BC. It is apparent that the success of the sector is mainly linked to technological advancement, globalization, modernization, political, economic stability and income increase. It is proposed that for the industry to retain its competitiveness and success in the long term, then it should thus focus on the use of technology. Technology has proven its potential, and ability to catalyze development across different industries and the real estate has not been exempted. In this context, the use of technology is useful in increasing efficiency in general. In that technology can best be utilized in reporting as well as keeping records. Technology provides the opportunities for individuals to advance and acquire new skills that seek to guard the profitability of the company. It is through the use of technology that innovation can be embraced leading to efficiency and productivity.
In addition, there is a need for the industry to invest in research and development. R&D has proven to be a practical approach for the stability of different sectors across the globe. Thus the industry should spend as the means of establishing the needs of the consumers as well as seeking to develop different strategies to meet the demands. The market is generally associated with general changes that affect the adaptability of the involved firms. Due to modernization and technology advancement, the needs of the consumers are changing so often that the companies are required to keep up with the changes. With the need for more resources, the ability of any firm to survive in the market is generally determined by its ability to cope with changes. In that, a company can never be successful in the market if it is unable to meet the needs of the consumers. The satisfaction of the consumers leads to the development of a positive reputation which consequently attracts a new set of customers while retaining the existing ones. Therefore R&D will be useful in enabling the company to provide more quality services to the customers. In addition, this will increase the adaptability of the company.
Social media marketing has proven to be one of the most effective strategies for promoting operations in the modern society. Due to the development of technology and internet access millions of people are currently using social media. Thus, this is a potential platform where companies can market their businesses (Blazek, 2013). It is worth noting that unlike the use of online advertisement marketing is cheap and support the aim of the industry to minimize the operating expenses. In this context, it is rather evident that online marketing will allow the companies to reach more consumers within the shortest time. In addition, the companies have the opportunities to interact with their consumers at ease which will enhance customer relationship. The platforms are beneficial since the companies will get to learn about the needs of the customers through their feedbacks. It is also through the responses that the companies can focus on addressing their weaknesses.
More so, awareness and familiarity campaigns interventions are also recommended. Based on the market analysis above, it was determined that most of the consumers in the market are not aware of the value that the real estate industry offers. Most of the consumers hold the assumption that the firms price their products highly which discourages them from buying. Thus through the programs, such assumptions will be eliminated which will enable the consumers to seek to the development services. The industry should diversify its product by targeting a new set of consumers. In that, currently, the industry only focuses on the upper and middle-class individuals. Thus by customizing the services, the low-income earners will join the market as they provide the greatest share as per the current. The combination of this strategies will competitively position the industry thus increasing its earning.
Based on the analysis above, it is evident that the real estate investment is feasible since the market is growing rather rapidly. In that, while the market is dominated by while established firms it has not been exploited fully. Most of the existing firms tend to focus on the urban towns while the inner areas are forgotten. In addition, the fact that real estate is perceived as an option for the upper and middle class best illustrates that there is a need to create awareness in the market. In my opinion, I believe that investing in the sector is a potential business. However, new companies must strategically differentiate themselves from the rest to achieve competitiveness such as by providing quality and yet low cost services to the consumers.
The Prospects for the Future Real Estate Market
Prospects for the real estate industry in BC Canada is very captivating. The future of the industry is excellent given that the highest growth characterizes the industry. Due to the stability of the economy, more and more individuals have begun to recognize the worth of the sector. Modernization is consistently allowing individuals to enjoy the significant benefits that result from real estate services (King, 2018). Thus as technology continues to advance, it has been established that the future of the real estate sector will be more promising. In that, the involved firms will be able to manage the movement of stock, maintain constant communication with the suppliers and consumers as products enhancement. In general, it is rather evident that technology leads to the advancement of the industry (Mitham, 2017). As the consumers are getting adequate awareness of the market in general then they can get to understand the operation of the market then the market will continue to expand.
The market has not be exploited fully, and the future will be more profitable as the companies get to understand the aspects of the thriving market. It is without a doubt that as the market continues to expand so will other investors get into the market thus intensifying the competition on the market. The higher the level of competition the lower the revenue that the firms will be getting from the market (King, 2018). However, a balance will be created on the ground that the companies will be able to expand and explore other markets that have more potential. Also, with the rising cost of the acquisition of resources, it is rather clear that new companies will not survive in the market which will lower the competition rate. The market is only more promising for the companies with adequate sources and funds to support their operations. With the investment in research and development, the companies will be developing.
To sum up, BC represents one of the most preferred locations for residential and business focus in Canada today. This is how the region has managed to become the favorite investment destination for most individuals. As the population in this region continues to increase so is the demand for modernized housing. The real estate sector will continue to harvest more resources in this market. In addition, the economic stability of the region is a source of hope for the future of the industry. As individuals continue to achieve financial balance so makes their demand for suitable housing. Due to the political and economic stability, it is anticipated that the industry is likely to produce a growth rate of about 20 percent in the next three years. The growth offers more opportunities for the operating companies in general.
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