The president of the Greater Victoria Real Estate Board predicts that low housing inventories will lower sales, but raise prices in 2017.
Mike Nugent offered this prediction in an interview looking ahead to the coming year after a record-setting 2016.
The local housing market is currently experiencing an upward cycle thanks to a number of factors, including B.C.’s strong economy and net migration into the province, he said.
“However, we have a real shortage of inventory for sale in Victoria,” Nugent said.
One measure of this ongoing shortage? Last year, 25 per cent of listings sold over the asking price. Buyers, in other words, were eager to get into the market and the continued shortage of inventory will mean fewer sales at higher prices. Overall, Nugent predicts that sales will drop by nine per cent, with prices edging up to reflect the lower supply.
Other sources paint a similar picture. The Re/Max Market Outlook 2017 predicts that the Greater Victoria market will remain a popular destination for buyers.
“Market conditions,” it notes, “have continued to favour sellers with any listing under $650,000 receiving multiple offers. There is approximately three months of inventory on the market across all property types.”
Looking at prices, the report forecasts that the average residential sale price for the area covered by the Greater Victoria Real Estate Board will be around $590,450 – up from $580,961 in 2016. That figure in turn had risen 12 per cent from $518,153 in 2015.
The West Shore — like the rest of Greater Victoria — will be subject to these trends, as buyers continue to look outside the region’s core for good value on newer properties. Nugent agrees the market remains strong here and elsewhere around the region.
There is, however, uncertainty around interest rates and their effect on mortgages. While many experts predict interest rates will rise in the United States – a factor that would impact the Canadian economy in various ways, including the dollar exchange rate – Canadian interest rates have remained relatively flat.
“So it is really hard to tell,” said Nugent, adding a proviso that interest rates make up a small piece of the puzzle. Government intervention, he said, could also have unexpected results.
British Columbia has already seen such an event this summer, when the province announced a local tax on foreign buyers in the Vancouver area, a move that has seen property sales plunge in the affected area, but rise elsewhere – including Greater Victoria – as offshore buyers look for alternatives.
In a recent release, the Victoria Real Estate Board acknowledged but downplayed the effect.
“While October data shows an increase in foreign buyers into the Capital Regional District compared to previous months, their 6.3 per cent of property transfers indicate that these buyers are one factor in the marketplace,” the board stated.
“A much larger factor affecting affordability and availability right now is the lack of inventory. An effective method to address housing affordability issues could be through efforts to increase the supply of housing, either through adjustments to zoning or density.”
Nugent used the occasion to reiterate the board’s opposition to a foreign buyers tax for the Victoria area.
“I’m really hesitant to recommend (it) unless I see some of the additional issues: the vacant homes, that kind of thing they have seen in Vancouver.”
In the long term, everything points towards rising housing prices in general for the region, for the simple reason that outside the West Shore, the area lacks developable real estate, he said. “We cannot meet the supply. We are surrounded by water.”
editor@goldstreamgazette.com
Q: Who can apply for B.C. first time homebuyers’ loan?
The much-ballyhooed B.C. Home Owner Mortgage and Equity Partnership program will accept its first applicants starting Jan. 16.
Those wishing to take advantage of this Province of B.C.-sponsored program, which helps first-time homebuyers with their down payment, will need to look after a few things first:
• Obtain pre-approval for an insured first mortgage from a financial lending institution.
• Apply to BC Housing for the B.C. HOME Partnership program loan. If eligible, the buyer will receive confirmation of eligibility and homebuyer’s kit, with information for the lender, real estate licensee and lawyer/notary public.
• Obtain an accepted offer on a home priced under $750,000 and provide details of the planned purchase to BC Housing for approval.
Eligible homebuyers must provide proof of status in Canada and residency in British Columbia, secondary identification with a photo, proof of income and tax filings and proof of the first mortgage pre-approval.
Initial application will be for purchases that close on or after Feb. 15. The program provides up to $37,500 in matching funds for first-time homebuyers, or up to five per cent of the purchase price, with a 25-year amortization loan that is interest-free and payment-free for the first five years. To find out how to apply, visit news.gov.bc.ca/files/Housing_Campaign_HOME.pdf
GREATER VICTORIA MARKET UPDATE » MONTH TO DATE DEC. 31/16 COURTESY VICTORIA REAL ESTATE BOARD
471 / 465 — NET UNCONDITIONAL SALES / TOTAL, Dec. 2015
1,493 / 2,517 — ACTIVE RESIDENTIAL LISTINGS / TOTAL, Dec. 2015
