The erosion of affordability in larger markets is pushing more buyers away. However the purchasing power caused by the mortgage stress test and rising interest rates continue to be a concern though, continuing strong performance in the economy combined with favourable demographics is expected to push home sales above their 10-year average in 2019.
Vancouver remains an important market for us to watch and I regularly connect with the market insiders and industry leaders in my referral network to get a better sense of activity. Most of them are indicating the houseing market is still correcting with single-family homes the only property type to see current benchmark values lower than a year ago, with the price of a typical Metro Vancouver house now at $1,524,000. This is a 5.1 per cent decline from October 2017 and a 3.9 per cent decrease over the last three months, October sales picked up from September but going into the Winter months you will see a further decline in sales which is typical for the time of year.
In our area Sales of single-family homes in October were 11 per cent higher than in September but dipped by 16 per cent from October 2017. Last month, 385 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 347 in September and 458 one year ago.
Our local market is behaving as expected, moderating after the record-setting pace set in 2016 and 2017. Government policy-side measures introduced to cool the market, such as the mortgage stress test (Guideline B-20) and higher interest rates, are taking their toll on housing sales throughout the country. On the positive side, the provincial economy is still doing well, and the British Columbia Real Estate Association expects housing sales to make a modest recovery during the next couple of quarters. Further, Vancouver Island has so far been somewhat immune to the effects of Guideline B-20 because the broad demographic trend in our area includes baby boomers and retirees who do not typically need mortgages. However, an additional government policy that could reduce that insulating effect is the future speculation tax. Although it currently applies only to Nanaimo and Lantzville, the tax could discourage some potential buyers from relocating to Vancouver Island, particularly those who purchase a home well ahead of retirement.
Despite lower demand, prices in the VIREB area are still rising year over year. However, the board-wide benchmark price of a single-family home did drop slightly from September, and modest month-over-month price reductions on single-family homes, apartments, and townhouses did occur in several zones. Decreased demand and stabilizing inventory are helping VIREB’s long-term sellers’ market evolve into one that is more balanced. Inventory of single-family homes in October was up slightly from one year ago (1,175 compared to 1,138) but down eight per cent from September. ” The benchmark price of a single-family home board-wide was $508,200 in October, an 11 per cent increase from one year ago. (Benchmark pricing tracks the value of a typical home in the reported area.) Nanaimo’s benchmark price rose nine per cent to $548,000 while the Parksville-Qualicum area saw its benchmark price increase by nine per cent to $570,200.
As mentioned previously each price point and home-style reacts differently in a market like this, so it becomes important not to group your home into the average and if you are thinking of selling or buying give me a call and I can give you the expected performance for your specific home.
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