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Cowichan Valley Realtor

Market Information

April 1, 2018


The third month of 2018 saw continued pressure on the market; pressure that was rooted in the fact that there’s still virtually nothing for sale.  The result was that some high-demand properties, especially in the under $600,000 dollar price range, were selling for far more than asking price, and for a lot more money than they would have commanded even in late 2017. 

Toronto ,Vancouver, and Victoria have all had considerable drops in sales volumes for the first few months of this year, but the latest statistics from the Vancouver Island Real Estate Board show that we are continuing to buck that trend.  Last month was there were a total of 80 single family homes sold in the Valley, up 16 % from the 69 that sold in March of last year, and also still well above the 53 sales that took place in March of 2009. And I truly believe the sales volume would have been even higher if we had more homes on the market to sell.  

There were only 132 active single family home listings on the market at the end of last month, compared to 147 at the end March 2017 and 281 at the end of March 2016.  For further context, consider that there were 501 homes on the market at the end of March of 2009; and that was after the market peaked in the financial crisis of ’08.  
Let me put this another way.  In my 27 years selling Real Estate, this is the lowest inventory I can remember at the end of March, and it is creating considerable pressure in the market even with new tightened mortgage stress test qualification rules, higher interest rates and the foreign home buyers tax in the larger urban centers.

Prices continue to rise; on average, single family residential sale prices for the 12 months ending in March were at $468,467, up 18% from $395,705 a year ago. Another indicator of what prices have done over the last year comes from figures in the MLS Home Price Index; that’s a benchmark for Realtors of a group of home sales.  That gauge shows single family homes in the Cowichan Valley going from $363,000 in February 2017 to $ 419,000 in February 2018.  That’s a 15.4% gain.  

What does this all of this mean to you? If you’ve been sitting on the fence, considering listing your home but worried about the market conditions, it’s time to stop worrying and take advantage of a complete seller’s market before the spring flowers bloom and the potential looming effects of higher interest rates and tighter mortgage qualifications start raising the supply of homes, and the Valley joins the trend of slowing markets that we’re seeing in other parts of the country. We have low supply, low mortgage rates, lots of buyers, and a lot of pent-up demand. Give me a call today.

Provincial update

New Mortgage Qualification Rules Temper Housing Demand
Vancouver, BC – March 14, 2018. The British Columbia Real Estate Association (BCREA) reports that a total of 6,206 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in February, a 5.7 per cent decrease from the same period last year. The average MLS® residential price in BC was $748,327, up 8.8 per cent from the previous year. Total sales dollar volume was $4.64 billion, a 2.6 per cent increase from February 2017.
“More stringent mortgage qualification rules for conventional borrowers are dampening housing demand in the province,” said Cameron Muir, BCREA Chief Economist. “Since the new rules came into effect, BC home sales have fallen more than 26 per cent, on a seasonally adjusted basis.”
Previous mortgage policy tightening has negatively impacted housing demand for a period of four to seven months, with the largest impact occurring in the third month after implementation.
Year-to-date, BC residential sales dollar volume was up 15.9 per cent to $8.47 billion, compared with the same period in 2017. Residential unit sales increased 4.1 per cent to 11,516 units, while the average MLS® residential price was up 11.3 per cent to $735,755.
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BCREA 2018 First Quarter Housing Forecast Update

BC Housing Demand to Slow Through 2019  
Vancouver, BC – March 9, 2018. The British Columbia Real Estate Association (BCREA) released its 2017 Fourth Quarter Housing Forecast today.
Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 8.6 per cent to 94,855 units in 2018, after decreasing 7.5 per cent in 2017. A record 112,209 unit sales were recorded in 2016. The ten-year average for MLS® residential sales in BC is 84,800 units. Strong employment growth, consumer confidence and favourable demographics have been highly supportive of housing demand over the last four years. However, slower economic growth, tougher mortgage qualification rules, and a rising interest rate environment are expected to slow the pace of housing demand over the next two years.
“Housing demand in the province is expected to moderate this year and in 2019,” said Cameron Muir, BCREA Chief Economist. “More stringent mortgage qualifications and rising interest rates will further erode affordability and household purchasing power.”
The 5-year qualifying rate is forecast to rise 35 basis points to 5.49 per cent by Q4 2018, and another 21 basis points to 5.70 per cent by Q4 2019. “With home prices already at an elevated level, BC households are more vulnerable to rising interest rates.”
The supply of homes for sale continues to trend at or near decade lows in most BC regions. However, this condition hasn’t gone unnoticed by home builders. There are over 60,000 homes now under construction in the province, well above the previous peak of 45,000 units recorded in 2008. In Metro Vancouver, over 42,000 units are in the pipeline, 56 per cent more than recorded in 2008. Slowing consumer demand combined with a surge in new home completions over the next several quarters will create more balance in the housing market and produce less upward pressure on home prices. The average MLS® residential price in the province is forecast to increase 6.0 per cent to $752,000 this year, and a further 4.0 per cent to $781,800 in 2019.

Here is a link to this month’s Graph Stats for the Cowichan Valley, courtesy of the Vancouver Island Real Estate Board: Cowichan Valley Graph Stats.

I hope you find this current market information informative. If you have any questions about the market please feel free to contact me anytime.

Thinking of selling? Please feel free to contact me for advice on preparing your home for the market. What money should you spend if any? When is the best time to list? I am happy to consult with you anytime even if you are not planning on selling for some time.

I would love to hear from you. Email me at ken@kenneal.com or Like me on Facebook at http://www.facebook.com/kennealduncan.