Foreign buyers put pressure on Island market

Greater Victoria home sales rise in August despite much less inventory on the market

Real estate agent Rajesh Chicher says there is now interest in Greater Victoria properties from buyers who are not interested in paying the new 15 per cent foreign buyers tax.

Fall is coming and with that, all eyes are watching how Greater Victoria’s highly active real estate trend will fare during what is traditionally a slowing period for the market.

Longtime real estate agent and investor Rajesh Chicher believes the demand will continue into the fall and winter, especially with the newly applied 15 per cent foreign buyers tax in Vancouver.

“Because Victoria isn’t as big of a market, it doesn’t take as much to have an effect here,” he said. “The demand is still there and the supply is still coming because owners are taking the opportunity to sell.”

Greater Victoria property sales for August were slightly above that of August 2015, 784 to 741, despite there being 1,500 less listings in the area, 3,688 at this time last year compared to 2,127 currently. It’s a ratio that’s held up all summer, with sales on track for 11,000 in 2016 up from 8,000 the year before, with far less listings.

Chicher listed a home in Saanich’s Mount Tolmie area that opened to bids on Aug. 13 and sold for $81,000 over asking price when it received 14 offers in four hours.

It was another case of an offer coming in without conditions in a bidding contest. However, having a bidding contest isn’t necessarily optimal, he said, though subjects and conditions need to be dealt with before hand.

The best way to comfortably make an offer without conditions is to know what the house or property needs.

“As a buyer, you can’t risk putting conditions in, because as a seller, you want the cleanest offer with the least subjects. As an agent, our job is to mitigate the anxiety of the buyers and sellers, and that anxiety comes with deadlines.”

In the race to have a winning bid, the key is in the preparation. Get the pre-inspection done early. Get a contractor or electrician, one that you trust, one that [the agent] trusts, Chicher added.

From the seller’s end, Chicher says creating multiple offers is a strategy that isn’t always necessary.

Most buyers and sellers know what homes should be listed for, but some houses are still being listed below market value. Whether it’s intentional or not, a lower asking price is much likelier to drive a bidding war. It’s a fine balance as it has to be reasonable, Chicher said.

“If you seeing a house selling $200,000 over asking price, that’s probably too low of a listing. It’s best to put it at the proper market level. But if you want to, you can create the fire to get multiple offers with proper [search engine optimization] on the internet.”

Regardless of how you market your home, Chicher believes the 15 per cent tax in Vancouver will shift foreign buyers to Victoria.

“Greater Victoria is a smaller pie. Instead of paying $300,000 tax on a $2 million home, foreign buyers can pay $150,000 less for a $1 million home here, and then rent out.

“This year I’ve had U.S. citizens asking about Victoria and I’ve had offers sight unseen, from Vancouver. If I’m going to predict the future, the Victoria core remains in demand.”

 

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