Stiffer mortgage qualification rules that started January 1st (AKA stress-testing) have significantly cooled real estate markets across Canada. The Victoria real estate market is coming off of a long period of being an extreme sellers' market. The combined effect of fewer sales (demand) and more listings (supply) is a less pronounced but nonetheless still overall sellers` market. A sales to active listings ratio of more than 20% is considered a sellers’ market and the current ratio is about 30%. It’s considerably lower than it’s been for the past two years but indicates there is still upward pressure on prices.
January-July 2018 sales lower than same period in 2017
Total property sales in Victoria during January to July (the first 7 months of 2018) stood at 4,552 units. This is 21% lower than in the same period of 2017.
- Total Sales Dollars declined 12% to $3,220,754,100.
- Listings during the same period dropped by 1%, to 7,962.
- Days To Sell for all property types increased 4%, from 35 to 36.
- The number of Active Listings increased 36% from 1,921 July 31, 2017 to 2,607 July 31, 2018.
- 651 properties sold in the Victoria Real Estate Board region in July, 17.6% fewer than the 790 sold in July of last year.
- July sales were down 8.1% from June 2018.
- Condo sales (188 units) were 22.6% lower than in July 2017.
- Single Family Detached (SFD) home sales (340) were 16.5% lower than July 2017.
- Listings stood at 2,607 on July 31—up 35.7% from the end of July 2017.
Prices still trending up
The MLS® Home Price Index (HPI) benchmark attempts to compare “apples to apples” by looking at typical attributes, so it is not affected by differences in size, age and location of sold properties and other factors resulting in extremely high or low prices—all of which affect average or median prices. If this seems a bit confusing, you’re not alone! I’m happy to talk it over with my clients.
- The MLS® Home Price Index (HPI) benchmark for:
- a single family detached (SFD) home in the Victoria Core was $880,000 in July 2018, up 5.5% from $834,200 in July 2017 but, significantly, down 1.1% from the previous month, June 2018 ($889,600).
- a SFD home in Greater Victoria was $741,000, up 5.7% from $700,800 in July 2017.
- a condo in Greater Victoria was $485,200, up 12% over July 2017.
- a townhome in Greater Victoria was $586,100, up 8.1% over July 2017.
- In contrast,
- the average price for SFD homes sold in Greater Victoria in July 2018 was $929,543 (7.1% higher than a year earlier) and the median price was $800,000 (+5.4%).
- the average price for condos in July was $472,473 (17.5 higher than a year earlier) and the median price was $415,000 (+12.8%).
- the average price for townhomes in July was $552,027 (+9.0%) and the median price was $522,000 (+10.5%).
The HPI is also useful for looking at trends over time in particular neighbourhoods or for specific types of property. As shown below, the most recent run-up in prices began approximately January 2016 and has been significant for SFDs, condos, and townhouses. While none of us can tell the future, if this runup is similar to what occurred from about January 2005 to May 2008 (around the Great Recession/financial crisis), it’s conceivable that prices could continue to increase for awhile and/or correct to some extent, then more or less recover, plateau, and fluctuate for an extended period of time. As always in real estate, it pays to take the long view and hold on to your properties for as long as feasible.
Teranet Price Index
Another way to look at price changes is through the Teranet–National Bank House Price Index™. Described on housepriceindex.ca as “an independent representation of the rate of change of Canadian single-family home prices” which is based on ”sales pairs” as recorded in public land title registries. It is a robust method of checking on the validity of other prices indicators such as HPI. It includes indexes for 11 Canadian metropolitan area (Victoria, Vancouver, Calgary, Edmonton, Winnipeg, Hamilton, Toronto, Ottawa, Montréal, Québec, and Halifax) and one overall composite for the country.
The Victoria Teranet Index is currently at its highest point ever. Twelve-month (year over year) change is still in positive territory, but slowing down from the very large increases of March 2016 to June 2017.
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