New figures show regional real estate sales are off to a slow start compared to the same period last year.
According to the Victoria Real Estate Board (VREB), net sales through the first two weeks of 2018 hit 115. Accounting for the fact that two weeks remain in the month, this figure is off the pace for January 2017, when the VREB recorded 478 sales.
New listings for 2018 are also off the 2017 pace. While the VREB recorded 753 new listings in January 2017, new listings for January 2018 stand at 276. Not surprisingly, active listings are down – 1,417 through the first two weeks of 2018 compared to 1,516 through all of January 2017.
Kyle Kerr, VREB’s president, said the figures reflect a number of trends. Some of these are seasonal, while others reflect institutional and structural changes.
Sales coming out of the holidays tend to be slower, he said. New mortgage qualification rules may have also had a psychological effect, said Kerr. While he does not think that the new rules will have a lasting effect, they may nonetheless force individuals to be more cautious — at least temporarily.
“Everybody is taking a step back,” he said.
Kerr also points out that sales in both November and December were strong, as buyers were trying to beat the new mortgage stress rules. Sales rose 12 per cent in November 2017 compared to the same period in 2016, while sales in December almost matched December sales in 2016, a record year for sales.
“A lot of people were rushing out [to buy] before the new rules,” said Kerr.
Perhaps most importantly, Victoria continues to lack inventory. “There is not a lot to purchase,” said Kerr.
The record-setting year of 2016 and another strong sales year in 2017 has led to a large influx of people into Victoria, but also tied up inventory. People who moved into the region during those years are not going to sell their properties a couple of years later, said Kerr.
Looking at the larger picture, the VREB reports that 8,944 properties sold in 2017 – down 15.8 per cent from the record-breaking year of 2016, when the VREB reported 10,622 sales.
Outgoing VREB president Ara Balabanian said 2016 showed signs of “a gradual return to a more balanced market” after the record year of 2016.
Kerr echoed this point in noting that the regional market is coming off two very busy years, which will be difficult to match.
This said, Victoria’s real estate market will remain strong thanks to the region’s diversified economy. In fact, Kerr expects sales to pick up through January and reach more normal levels.
No price figures through the first two weeks of January were available. Looking at the last available statistics from December 2017, the benchmark value for a single family home in the Victoria core was $823,800 – up 9.3 per cent $753,900.
The benchmark value describes VREB calls “a notional home with common attributes of typical homes in a defined area.”