A real estate analyst laments the lack of genuine efforts to increase the supply of housing after another record-smashing month of real estate sales in the area covered by the Victoria Real Estate Board (VREB).
Leo Spalteholz, a real estate agent with Royal LePage, who analyzes the market at househuntvictoria.ca, says governments appear poised to try every possible option to deal with rising real estate prices before confronting the “elephant” in the room: the actual supply of housing.
“In the end we can’t escape that more homes are needed,” he said.
He made these comments as experts and government regulators are becoming increasingly concerned about the state of the real estate.
The latest local figures show 1,173 properties sold in VREB’s region in March, 92.9 per cent more than the 608 properties sold in March 2020 and 35.9 per cent more than in February of this year.
VREB’s Home Price Index (HPI) for a single family home in Victoria Core in March was $968,700, an increase of 2.2 per cent from February and 10.1 per cent from March 2020.
“Sales in March went much the same as sales in February, with anything priced even remotely close to market value selling within the week,” said Spalteholz, adding many sellers of detached homes adopted a list-on-Thursday, accept-offers-by-Monday tactic. “(For) most sellers that worked out beautifully, with 60 per cent of houses going over ask, often in the tens or hundreds of thousands,” he said.
David Langlois, VREB’s president, said limited supply with overwhelming demand has been the story for the first quarter of 2021. While year-over-year numbers are not comparable, the average number of March sales 10 years before 2020 was 715 properties, said Langlois. But if March 2020 numbers approached numbers from March 2016, the current peak sees an even greater inventory imbalance.
Corresponding price increases have caught the attention of authorities and analysts, with at least one prominent analyst, David Rosenberg, comparing the state of the Canadian real estate market to the state of U.S. market before the housing bubble burst.
Spalteholz acknowledges the growing concern among authorities, but finds they lack solutions.
“It’s nearly all the big banks that have now called on the federal government to do something about runaway house prices, with (Toronto Dominion) being the latest to predict that the government will probably step in with measures to cool the market if it doesn’t imminently cool itself,” he said. “What’s missing in all these reports is ideas for what could actually be done.”
Governments musing about measures to curb demand miss the big picture, said Spalteholz. “(It’s) clear that no matter how many demand measures are put in place we have a shortage of homes for people to live in,” he said. British Columbia represents a good test case here, because it has already implemented a foreign buyers tax and a vacancy tax. “I support both measures and they both had an impact in cooling home price appreciation, but it’s clear from the market that they are no long term fix.”
Langlois also points to the importance of supply, but warns of measures to curb demand. “We need to continue to push for both increased supply and sensible government policies around housing.”
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