As we enter the spring market we will see an increase in activity. We did see home sales drop slightly in March and April 2018, likely due to a combination of government policy changes, stricter mortgage qualification rules, and consumer uncertainty surrounding new provincial taxes. Last month, 399 single-family homes sold on the Multiple Listing Service® (MLS®) compared to 316 in February and 482 one year ago in the Vancouver Island Real Estate Board.
There were 979 single-family homes available for sale in March compared to 812 in February and 1,023 one year ago.
The British Columbia Real Estate Association (BCREA) reports that housing sales in most B.C. jurisdictions are down compared to last year.
The slower sales, in my opinion, are due to Guideline B-20 and the uncertainty surrounding new provincial taxes with the Foreign Buyer Tax to include the Regional District of Nanaimo.
More troubling is the new speculation tax imposed on the RDN which targets homeowners who do not pay income tax in B.C. While the provincial government did introduce exemptions for Parksville, Qualicum Beach, and the Gulf Islands, the speculation tax will still be applied in Nanaimo and Lantzville.
Some REALTORS® have reported that out-of-province buyers are feeling unwelcome and postponing their home purchases for now. Whether this outcome is short-lived or a longer-term trend is uncertain.
Properties in the $300,000 to $500,000 range are still moving strong and multiple offers are still the norm on reasonably priced homes. Today's buyers are savvy, and overpriced homes take longer to sell and the higher priced homes tend to stay on the market longer due to buyers having more choice.
“Recent changes to mortgage regulations are fueling demand for lower priced homes while shrinking the pool of qualified buyers for higher-priced homes,” said Gregory Klump, CREA’s Chief Economist. “Given their limited supply, the shift of demand into lower price segments is causing those sale prices to climb. As a result, ‘affordably priced’ homes are becoming less affordable while mortgage financing for higher priced homes remains out of reach of many aspiring move-up homebuyers.”
The benchmark price of a single-family home in the VIREB area reached $490,100, up 19 per cent from one year ago. (Benchmark pricing tracks the value of a typical home in the reported area.) The benchmark price of an apartment last month rose to $297,600, up 25 per cent board-wide from the previous year, while the benchmark price of a townhouse hit $385,600, a 24 per cent increase from March 2017.
The Canadian Real Estate Association (CREA) show national home sales edged higher from February to March 2018 with the following Highlights:
When it comes to interest rates, which helps maintain activity in the real estate market, the Bank of Canada has said it will continue to raise interest rates; however, it wants to see a number of economic developments that point to higher inflation before it raises interest rates further.
As of March 7, 2018, the benchmark five-year lending rate stood at 5.14%, unchanged from the time of the Bank’s January 17, 2018 announcement but up a half-point from a year earlier. As of January 1, 2018, all mortgage applicants must qualify for financing based on no less than the benchmark five-year lending rate.
Inflation in Canada is close to 2 per cent as temporary factors that have been weighing on inflation have largely dissipated as expected. Consistent with an economy operating with little slack, core measures of inflation have continued to edge up and are all now close to 2 per cent. The transitory impact of higher gasoline prices and recent minimum wage increases will likely cause inflation in 2018 to be modestly higher than the Bank expected in its January Monetary Policy Report (MPR), returning to the 2 per cent target for the rest of the projection horizon.
As your Real Estate Advisor, I understand how market trends impact your home or investment. Please give me a call if you have questions, and remember each home or property has many unique factors that can't be grouped into an overall market trend.
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