In October 2018 sales were down 9.9% in the Victoria Real Estate Board region compared to October 2017, but interestingly enough sales increased by 12.2 % from September 2018. Victoria’s real estate appears to be finding a footing in a more balanced market.
At the end of October 2018 listings showed an increase of 31.8 per cent compared to October 2017 but 5.1 per cent fewer than the month previous.
This past month saw the Bank of Canada raise its trend-setting interest rate to 1.75%, the highest level in about a decade, and it sent signals that future hikes could be upon Canadians sooner than previously expected. The hike arrived with the economy showing resilience and the unemployment rate hovering near four-decade lows. Greater Victoria’s unemployment rate remained at 3.9%, the second lowest unemployment rate in Canada behind only Guelph at 3.3%.
Homeowners with variable-rate mortgages have seen their rates go up over the past year. If not already locked into a fixed term rate, it may be time?
Victoria’s high-tech industry is a large contributor to the demand for housing. According to the head of the Victoria Innovation, Advanced Technology and Entrepreneurship Council, since 2014 this sector has grown 30% and according to Dan Gunn, chief executive of VIATEC, “Growing 30% sounds like a lot, but honestly I think the sector’s potential was higher than that,” he said. “We under performed for one specific reason – we haven’t been able to find enough skilled and experienced talent.”
In its quarterly housing market assessment, Canadian Mortgage and Housing Corp is warning that Victoria’s housing market has a “high degree of vulnerability” despite decreasing prices. Strict mortgage rules, rising interest rates and smaller growth in inflation and adjusted disposable income has led to less demand for housing and a decline in prices, the report said. This may open up opportunities to bring in the necessary talent needed to continue the growth in Victoria’s important tech industry.
A CMHC analysis did not find overbuilding in the capital region. But it noted that homes priced at $1 million and higher, “dominated the inventory of complete and unsold units.”
BC’s NDP government has struck a deal with its power sharing partners, The B.C. Greens, to tweak the new housing speculation tax on vacant homes and assure its passage into law.
If passed, the revised speculation tax will impose a tax of .5% of assessed value on vacant homes owned by Canadians in B.C. and 2% for foreign residents. Owners are exempt if they rent their properties out for at least six months a year. There are a number of exemptions and tax credits. More information from the BC Government is available here.
Meanwhile, the average price of a single family home in Victoria has risen 8.5% since October last year, from $814,000 to $883,987 this past month.
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