VANCOUVER ISLAND, B.C. – Higher interest rates and a tougher ‘stress test’ for buyers are taking a toll on housing sales across the country.
And Vancouver Island is no exception.
“We attribute the weaker sales throughout British Columbia to a decrease in demand rather than oversupply,” says Cameron Muir, Chief Economist with the British Columbia Real Estate Association (BCREA).
Last month, 57 single family homes changed hands in the Comox Valley compared to 74 in August and 72 in September 2017. That marks a 21 percent dip in sales.
In Campbell River, there were 44 homes sold in September, down from the 48 transactions in August and 65 the previous September. Overall, house sales are down 32 percent in Campbell River.
Royal LePage realtor Kevin Reid, who is the Vancouver Island Real Estate Board’s Comox Valley director, said sales are still “good” in the valley.
“There has been a slight adjustment in price, and inventory coming into the market,” Reid said.
“I think what’s happening is (between) sellers and buyers, there are a few more opportunities to negotiate between them.”
Reid said a year ago, a house would enter the market priced at $500,000 and there would be a bidding war between four buyers and it would sell for $525,000.
The trend has reversed, he noted: “Now that same house is coming on for $500,000, is waiting two, three weeks, and a buyer is coming in at 490 (thousand dollars).”
The interest rates and financial stress test are challenging buyers with more equity, according to Reid.
“So that’s a borrower who has a 20 to 25 percent down payment already… they’re being ‘stress-tested’ a little bit harder,” Reid said. “The other part affecting buyers is still inventory. We’re still low on inventory (in the Comox Valley). Saleable homes are increasing but it’s still statistically low.”
Across Vancouver Island, sales of single-family homes in September dropped by 32 percent from one year ago and 25 percent from August 2018.
Last month, 348 single-family homes sold compared to 467 in August and 511 one year ago.
As well, the number of apartments and townhouses changing hands last month dropped by 26 per cent and 41 per cent year over year, respectively.
Inventory of single-family homes in September rose slightly, up four per cent from last year. Active listings of apartments dipped by six percent year over year while townhouse inventory posted a modest increase, up by three per cent over September 2017.
While sales are down, prices are inching up across the North Island.
Last month, the benchmark price of a single-family home in the Campbell River area rose to $402,700, an increase of 12 per cent over September 2017.
In the Comox Valley, the benchmark price reached $495,700, up nine per cent from last year.
Meanwhile, Courtenay is an exception across Vancouver Island when it comes to housing starts.
Canada Mortgage and Housing Corporation (CMHC), notes that there were 94 starts in the city in September, compared to 15 in September 2017.
And according to a CHEK News report, 397 builds are starting in Courtenay in 2018, a more than 40 per cent jump from last year with 189 of dwellings currently under construction being single detached homes.
Also on the positive side, the provincial economy is still doing well, and BCREA anticipates that housing sales will make a modest recovery during the next couple of quarters, albeit not to the levels seen in 2016 and 2017.
Further, Vancouver Island is somewhat immune to the effects of Guideline B-20 because the broad demographic trend continues to include baby boomers and retirees who typically do not need mortgages.
That said, the VIREB’s long-term sellers’ market appears to be moving towards more balanced conditions, according to the board’s president Don McClintock.
“Multiple offers have certainly slowed, and buyers are taking more of a wait-and-see approach, which is a good thing,” McClintock said.
“Sellers need to be realistic when listing their home, which is why it’s important to consult with a local realtor who can help determine the optimal price for your property.”