VIREB July 2, 2019 – Weaker Housing Market Persisting
Last month, 408 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 458 the previous month and 437 in June 2018. Sales of apartments dropped by 29 per cent year over year while townhouse sales were down by 32 per cent from one year ago.
The mortgage stress test (Guideline B-20) continues to hurt housing sales throughout British Columbia, including Vancouver Island. Although the B.C. economy continues to be highly supportive of housing demand, the negative shock to affordability and purchasing power created by the stress test is making it extremely difficult for some buyers, particularly millennials, to enter the housing market. Even when prospective buyers can afford monthly mortgage payments, they are unable to qualify because Guideline B-20 has eroded their purchasing power by as much as 20 per cent.
Weak housing demand has also contributed to an increase in total active residential listings across the province. In the VIREB area, inventory of single-family homes in June rose by 20 per cent from one year ago (1,334 to 1,597). Active listings of apartments climbed by 14 per cent (308 to 352) year over year while townhouse inventory decreased by three per cent (196 to 191).
Prices in the VIREB area continue to rise despite a somewhat lacklustre market. The benchmark price of a single-family home board-wide was $514,400 in June, a four per cent increase from one year ago and slightly higher than in May. (Benchmark pricing tracks the value of a typical home in the reported area.) In the apartment category, the benchmark price climbed to $304,300 from one year ago, a six per cent increase and marginally higher than May’s sale price. The benchmark price of a townhouse hit $446,800 last month, up by six per cent over June 2018 and a bit higher than in May.
Regionally, the benchmark price of a single-family home in the Campbell River area hit $434,900, an increase of four per cent over June 2018. In the Comox Valley, the benchmark price reached $518,200, up by three per from one year ago. Duncan reported a benchmark price of $471,400, an increase of slightly less than two per cent from June 2018. Nanaimo’s benchmark price rose by three per cent to $559,300 while the Parksville-Qualicum area saw its benchmark price increase by three per cent to $589,500. The cost of a benchmark single-family home in Port Alberni reached $318,300 in June, a nine per cent increase from one year ago.
Trend-wise, VIREB’s housing market has transitioned from one favouring sellers to one that is balanced. Kaye Broens, 2019 President, states that buyers are very price conscious and pursuing their home purchases cautiously, while sellers are finally realizing that they need to price their homes competitively to garner interest and a sale.
“Whether you’re a buyer or seller, obtaining the services of a local REALTOR® is crucial,” says Kaye Broens, 2019 VIREB President. “We have access to tools and market analytics that allow us to determine an optimal selling price for your home and help you find a house that fits your needs at the right price.”