Welcome to my blog – Episode One! I am looking forward to providing you with educational videos and content regarding the real estate in Victoria and statistics about the market.
I began this real estate video and blog series with the intent of providing homebuyers and home sellers with the information they need to succeed in today’s real estate market.
Scientia potentia est – Knowledge is power!
Overview: Current Market Statistics
In comparison to June 2017, June 2018 has seen fewer sales with property sales down by 29%.
Less property sales means more inventory for buyers. In general, this will create a less competitive real estate market, which will provide buyers greater market inventory but less buying power. In the future, there will be some interesting market scenarios as, currently, condo sales are down 25% and home sales are down 35%.
Here are a few reasons as to why our current market is low: pressure on qualification, increase in interest rates, and foreign buyers tax.
If you would like to learn more, here are a few helpful resources:
BC Speculation Tax:
Let’s talk real estate taxes in British Columbia! Originally, the foreign tax only affected the mainland with 15% applicable to most of Metro Vancouver; in comparison, we are now seeing 20% affecting most of BC. We have witnessed these taxes dampening the market and they have affected both Nanaimo and Victoria. There are many foreign investors who are waiting to see what this tax will mean for their investments. In the event that this tax is lifted, we could see more foreign investors coming over to Vancouver Island. Over the next decade, the NDP Government is planning to use the tax revenue to fund affordable housing.
In addition to the foreign buyers tax, we have the speculation tax. The speculation tax is aimed at individuals purchasing a property and leaving it vacant, but many investors will be happy to know that there are exemptions, including long-term rentals and owner-occupied properties.
Please use the above infographic to help determine if your real estate investment is exempt from the Speculation Tax and, as always, please feel free to contact me if you need further clarification.
Stress Tests and Rising Interest Rates:
The CMHC recently introduced stress tests for real estate buyers in Canada. The whole idea behind the stress test theory is to avoid over leveraging your assets.
Strict mortgage qualifications complicate the home buying process, which has been determined by the ‘Stress Test.’ We see lenders loaning out less than what the buyers/borrowers are qualified for – typical when we get to this point in the cycle.
Stress tests are especially important because interest rates are changing all the time (here are current interest rates). Towards the end of the year, these interest rates are expected to rise as high as 5.7%, so…
I would recommend approaching a lender, or broker to lock in current rates if possible.
Is it a good time to buy houses in Victoria?
Yes, larger inventory influx means less multiple offer situations; although, this does not mean that they won’t happen. Overall, the number of days a property is on market has increased; however, statistics show that we are down about 30% for overall sales. If you are able, now is a good time to buy. If you are a buyer looking to get in on a real estate purchase in this market, ask yourself ‘Is it worth competing for?’ There will be more inventory available as this market continues to change. One of the bigger challenges buyers will face is mortgage qualifications – a recurring issue I have seen within my own personal business. I have seen several buyers back out of the purchasing process as they have had to go back and re-qualify but could not get what they wanted to support their lifestyle. This could always change in the future!
Is it a good time to sell in Victoria?
Yes and no. Yes, because you will be able to take advantage of equity gain, which has seen large increases in the last four or five years. If you are able to sell and you live in a good area, having a strong marketing plan with an aggressive/realistic price point, is highly recommended. It is important to have a good marketing plan to set yourself apart from the competition – a factor which is more important now than ever. We are coming out of a sellers’ market, approaching a more balanced market that is in the buyers’ favor. It is essential to gather advice from several agents – even a third party appraisal of your home can help you execute a lucrative sale of your home!