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Greater Victoria real estate sales slide, prices slip as stress test cools market
The Greater Victoria real-estate market continues to struggle, according to statistics released Friday by the Victoria Real Estate Board.
There were 421 sales in February — up from the 329 that changed hands in January — but still a far cry from the 545 sold in February last year.
The total number of property sales is also well off the February average.
Over the previous 10 years, an average of 529 homes were sold in that month.
Sales in all categories are lagging behind 2018’s numbers, with condominium sales down 25.9 per cent, townhouse sales down 40.3 per cent and single-family homes down 15.8 per cent.
“So much has to do with the [federal] stress test that has come into effect,” said Cheryl Woolley, president of the real estate board. “Many people who were qualified to purchase a home all of a sudden couldn’t.”
New mortgage rules, essentially a stress test to ensure borrowers can withstand a jump in interest rates, came into effect in the fall of 2016 with the intention of cooling off the Canadian housing market by reducing demand.
Woolley said it didn’t just affect young buyers trying to break into the market but those looking to upgrade.
“They are re-thinking what they can afford,” she said. “It will take a bit of time before people adjust to the rules.”
Woolley also said many people might be hoping the rules will be changed.
There have been rumours the federal government has considered allowing would-be homebuyers to once again access 30-year insured mortgages — up from the current 25-year limit — or tweaking the current stress test. Federal Finance Minister Bill Morneau threw cold water on that idea during a recent trip to Victoria, when he told reporters changes are unlikely to be included in his upcoming budget.
Woolley said while governments might have been hoping that stress tests and the speculation tax in B.C. might lead to more affordable housing, that hasn’t materialized.
“The actual result of some of these policies seems to have softened the higher-priced end of the market and increased competition for properties at the lower-priced end,” she said.
The measures might have had some effect on pricing in Victoria.
The benchmark price of a single-family home in the core dropped in February to $845,900, from 847,800 in January and $848,600 in February of last year.
The benchmark price of a condo in the core last month was $502,800, a 3.9 per cent increase from February 2018, and a townhome in the core increased in price 5.6 per cent to $652,900
“We have seen benchmark prices level out,” said Woolley, though she was quick to suggest it is unlikely to be a slide.
“I think they will stabilize. We typically have a busy spring market.”
She said real estate agents have told her they are busy with would-be buyers who are waiting to see if new listings come onto the market this year.
“Supply and demand have so much effect on what prices are going to do,” she said, adding many agents have been surprised at how slowly the inventory of available homes has grown.
There were 2,131 active listings at the end of February, an increase of 3.6 per cent from January and a 37.9 per cent increase from the 1,545 at the end of February 2018.