Careful What You
The desire of
some well-meaning British Columbians for government to drive
down the price of homes through demand-side policy may sound
practical at first blush. However, when you consider the broad
and deep economic toll that a negative shock to home prices
would exact on both homeowners and renters, it quickly becomes
apparent that such an approach is at best, a mug’s game. BCREA
Economics analysis* shows that even a relatively modest negative
price shock will produce significant consequences to the BC
Nearly 70 per
cent of British Columbian households own their home. A
relatively minor 10 per cent negative shock to home prices would
extinguish $90 billion of their wealth, or $70,000 of the
average home owner’s equity. While some may see this as a paper
loss, it will have a significant impact on the economy, as
declining household wealth reins in consumer spending. Retail
sales would suffer, with an estimated $1.8 billion in forgone
revenue in the first year after the shock. Home construction
activity would fall dramatically. Home builders would cut back
production 25 per cent; that’s 10,000 fewer housing starts in
the first year alone. A negative price shock would markedly slow
the expansion of the housing stock, creating even more critical
housing supply problems down the road.
economy, a negative home price shock will slow growth. Tens of
thousands of jobs will be forfeited. The unemployment rate will
shoot up. A 10 per cent negative price shock will slow real GDP
growth to 1.5 per cent from a baseline of 2.7 per cent. That’s
$3 billion in lost activity. If home prices fell 35 per cent, a
level some activists are championing, the BC economy would
collapse into recession. The average home owner would have lost
$245,000 in equity, housing starts would fall by half, 64,000
jobs would be forfeited–sending the unemployment rate to 7.5 per
cent with $4.4 billion in forgone retail sales and a colossal $8
billion loss to GDP in the first year.
does not account for the negative impact on provincial tax
revenues, expanding deficits, ballooning debt and credit
*Based on simulations using BCREA’s econometric model of the BC
economy augmented by a housing Vector Autoregression model.
Full Report & Graphs
My 2018 Calendar
I hope you enjoy my 2017 Calendar. 2018 is finished and
hopefully you have one by now. We had great sunny weather
in Spain in January. We did a week of leisure bicycling (www.andaluciancyclingexperience.com)with
the usual tourist stops (Barcelona, Granada, etc.) on before and
after. The weather was great, the food & wine good and it was a
relatively inexpensive holiday. Our fall trip to the UK included
an 8 day self-guided walk from Oxford to Bath and then a week at
Lavenham in Suffolk. The walk was one of the best holidays I can
I enjoyed making this year’s calendar as if lets me re-live the
trips. If you did not get a 2018 year and would like one of
these hand make calendars of my travel photos please call or
I'm not sure if anyone looked at the additional photos I post
but I enjoyed doing it and re-living the experiences one more
time! “Every Picture Tells a Story” is my way of sharing
more than just the calendar photos from my travels. Maybe the
photos will inspire you to visit one of the areas. Simply
http://myvictoria.ca/2018/ and share my travels.
Have a great New Year,
Vacancy Rates flat but Rents Up
Victoria rental market published. The vacancy rate is
virtually unchanged but the average rental price is up 7.7%.
The inner areas of the city show below average vacancy rates and
higher rental prices. The shift away from home ownership has
placed strong demand on the rental supply. Rents have increased
as a result of strong demand without a proportional increase in
Sales to Active Listing Ratio to end of May 2018 - The
Sellers' market remains strong with the continued trend of low
inventory and high demand. For the foreseeable future we should
stay in the 40% to 50% range. The new mortgage
qualifications from the Federal Government and the new undefined
new taxes from the new Provincial Government are starting to
show signs of affecting the Victoria Real Estate Market.
This chart tracks the ratio
of total residential sales over total active residential
listings at month-end for each of the last 25 months.
The active listing count
and the sales count can be viewed as indicators of housing
supply and demand respectively. Observing the ratio between them
can thus help indicate a "buyers' market", where there is
downward pressure on prices, and a "sellers' market", where
there is upward pressure on prices.
- below 10%, there is
downward pressure on prices (buyers' market)
- above 25%, there is
upward pressure on prices (sellers' market)
- in the 15-20% range,
there is little pressure on prices either way (balanced market)
Please call with any real
Victoria Real Estate Board
Outside Influences Impact Spring
Real Estate Market in Victoria
June 1, 2018 Victoria BC
- A total of 755
properties sold in the Victoria Real Estate Board region this May,
25 per cent fewer than the 1,006 properties sold in May of last
year, and a 2.5 per cent decrease from April 2018. The sales of
condominiums were down 17.4 per cent from last year in May with 237
units sold. Sales of single family homes were down 23 per cent from
2017 with 406 sold this May.
"It's no surprise that our current market is very different than it
was last year," says Victoria Real Estate Board President Kyle Kerr.
"Due to recent changes in mortgage qualification rules, many buyers'
purchasing power has been reduced. Unfortunately, in our area we
have one third fewer single family homes for sale under $750,000
when compared to last year, so we're seeing pressure from increased
competition on a smaller number of homes, which is really pushing
the under million dollar market. We have a much larger inventory of
higher value homes this year. For listings priced at $1.5 million
and above, the number of active listings is almost 50% higher than
last year at this time. Arguably, many of these properties may be
listed due to new and incoming taxes from the provincial government.
The Foreign Buyer Property Transfer Tax, the Speculation Tax, and
the increased School Tax are putting pressure on those high value
home owners. Unfortunately, these taxes are not resulting in what
the government said it intends - to increase the availability of
There were a total of 2,394 active listings for sale on the Victoria
Real Estate Board Multiple Listing Service® at the end of May 2018,
an increase of 19.6 per cent compared to the month of April and 26.3
per cent more than the 1,896 active listings for sale at the end of
"We're in an interesting time here - we are seeing different levels
of price pressure and price relief in micro-climates of our area,"
adds President Kerr. "You may find more flexibility if you are
shopping for a multi-million dollar estate in certain areas. You may
be in for a competition if you're shopping for a lower priced home
or condominium. If you're thinking of buying or selling, it's a good
idea to meet with a local REALTOR® to understand how the current
environment will affect you."
The Multiple Listing Service® Home Price Index benchmark value for a
single family home in the Victoria Core in May 2017 was $820,800,
while the benchmark value for the same home in May 2018 increased by
7 per cent to $878,100, higher than April's value of $866,700. The
MLS® HPI benchmark value for a condominium in the Victoria Core area
in May 2017 was $426,900, while the benchmark value for the same
condominium in May 2018 increased by 15.7 per cent to $493,900,
slightly lower than April's value of $495,100.
About VREB - The Victoria Real Estate Board was founded in 1921 and
since that time has been a key player in the development of
standards and innovative programs aimed at enhancing the
professionalism and community standing of REALTORS®. Formation of
the Board grew out of the realization in the early part of the last
century that there was a need to establish basic standards for those
working in the real estate industry.
View our press release and summary here.
View our complete statistical package here.
Notes for Interpreting Our
The use of sale price
statistics can be useful in establishing trends when applied over a
period of time, i.e. six months or longer. The Victoria Real Estate
Board cautions, however, that such information does not indicate the
actual value of any particular property. Those requiring specific
information on property values should contact a REALTOR®.
B.C. Real Estate Association
Qualification Rules Temper Housing Demand
Vancouver, BC –June 15, 2018
The British Columbia
Real Estate Association (BCREA) reports that a total of 8,837
residential unit sales were recorded by the Multiple Listing
Service® (MLS®) across the province in May, a 28.7 per cent decrease
from the same month last year. The average MLS® residential price in
BC was $739,783, down 1.7 per cent from May 2017. Total sales dollar
volume was $6.54 billion, a 30 per cent decline from May 2017.
“BC home sales continued to slow in May because of more stringent
qualifications for conventional borrowers,” said Cameron Muir, BCREA
Chief Economist. “The changes in mortgage policy are taking their
toll on housing demand, not only in British Columbia, but across the
country by reducing household purchasing power and housing
While the decline in consumer demand has lifted the inventory of
homes for sale, total active residential listings in the province
are still relatively low by historical comparison.
Year-to-date, BC residential sales dollar volume was down 13.8 per
cent to $26.4 billion, compared with the same period in 2017.
Residential unit sales decreased 16.6 per cent to 35,976 units,
while the average MLS® residential price was up 3.4 per cent to
Mortgage Rate Forecast
- March 2018
Vancouver, BC –March 2018
Mortgages rates returning to
B20 stress test prompts slow
start to 2018 for the Canadian economy
Trump trade tantrum may delay
Bank of Canada tightening
Some questions and comments
about Mortgage Rate Forecast to: Cameron Muir, Chief Economist,
Ogmundson, Deputy Chief Economist,
BC Housing Demand to
Slow Through 2019
Vancouver, BC –March 9, 2018
The British Columbia Real Estate Association (BCREA) released its
2017 Fourth Quarter Housing Forecast today.
Multiple Listing Service®
(MLS®) residential sales in the province are forecast to decline
8.6 per cent to 94,855 units in 2018, after decreasing 7.5 per
cent in 2017. A record 112,209 unit sales were recorded in 2016.
The ten-year average for MLS® residential sales in BC is 84,800
units. Strong employment growth, consumer confidence and
favourable demographics have been highly supportive of housing
demand over the last four years. However, slower economic growth,
tougher mortgage qualification rules, and a rising interest rate
environment are expected to slow the pace of housing demand over
the next two years.
“Housing demand in the
province is expected to moderate this year and in 2019,” said
Cameron Muir, BCREA Chief Economist. “More stringent mortgage
qualifications and rising interest rates will further erode
affordability and household purchasing power.”
The 5-year qualifying rate is
forecast to rise 35 basis points to 5.49 per cent by Q4 2018, and
another 21 basis points to 5.70 per cent by Q4 2019. “With home
prices already at an elevated level, BC households are more
vulnerable to rising interest rates.”
The supply of homes for sale
continues to trend at or near decade lows in most BC regions.
However, this condition hasn’t gone unnoticed by home builders.
There are over 60,000 homes now under construction in the
province, well above the previous peak of 45,000 units recorded in
2008. In Metro Vancouver, over 42,000 units are in the pipeline,
56 per cent more than recorded in 2008. Slowing consumer demand
combined with a surge in new home completions over the next
several quarters will create more balance in the housing market
and produce less upward pressure on home prices. The average MLS®
residential price in the province is forecast to increase 6.0 per
cent to $752,000 this year, and a further 4.0 per cent to $781,800
Canada Mortgage and Housing Corporation