Though Vancouver Island home sales dipped slightly in August, the demand from buyers is still making for a positive market.
The Vancouver Island Real Estate Board reported that the number of single family home sales has fallen 13% over the last few year and 3% since July, but despite these lower transaction numbers, inventory remains low. What that means is the current demand for single family homes continues to exceed its supply, but again this is very price specific. According to the British Columbia Real Estate Association, we are experiencing the lowest inventory levels in over a decade, and if that remains, our average home price will continue to rise until inventory increases, consumer demand declines or we see a combination of both. As builders and new developments emerge, we may see inventory at higher ranges out supply the market.
Nanaimo’s benchmark price for a single family home increased 18 % to $492,900 last August and there is no clear indication that this trend is going to halt.
For sellers, it can be tempting to push the envelope on pricing; but it is still crucial, even in this market, that homes are priced correctly because overpriced homes can sit unsold for months.
In order to determine the direction of the Real Estate market, we need to step back and look at all of the factors that drive our market. We are in a 10 year cycle and the Bank of Canada again surprised us with another rate rise which had been halted in the last 7 years. Also, The Office of the Superintendent of Financial Institutions' new guidelines proposed Thursday to include stress tests for uninsured mortgages — loans secured with a deposit of at least 20 per cent on the value of the home.
Homebuyers will have to show that they can withstand a 2% increase on their contractual mortgage rate, regardless of term.
Using a million-dollar home as an example, buyers looking for a mortgage with a 20 % down payment at a 3% interest rate would have to prove they could pay up to $4,652 per month instead of the $3,786 on their contract, this is a difference of $866 per month.
Bank of Canada rate over past 5 years
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