The local real estate market took a breath in April with a local analyst suggesting a slow-down ahead.
“The market unquestionably remains red hot, but there are enough small cracks that I think this may mark the start of some cooling off instead of the relentless heating we’ve seen in the past year,” said Leo Spalteholz, a local realtor and analyst at housevictoria.ca.
He made that these comments after new figures from the Victoria Real Estate Board (VREB) show realtors sold 1,116 properties, 288.9 per cent more than in April 2020, but 4.9 per cent fewer than the previous month of March.
While the figures confirm that the market remains in the words of Spalteholz “overheated,” he predicts “we’re going to see cooling soon” pointing to a number of current figures and future developments pointing in that direction. They include among others a small build up in inventory (with sales still remaining exceedingly strong) and tightening of the stress test assessing the credit-worthiness of future buyers in June. He also challenges the theory that consumers flush with cash will continue to fuel the housing market.
“In fact I think we’ll see a housing hangover as the money that had been redirected to housing flows back into consumer spending,” he said. “You can’t have pent up demand when nothing has been pent up, in fact quite the opposite as the pandemic brought a lot of demand forward.”
VREB president David Langlois predicts that the market will remain unbalanced for some time.
“Our market is based on supply and demand and there is a disconnect right now with record low supply and high demand,” said Langlois. “Unfortunately, our housing supply is not as elastic as market demand is. Desire for homes in a certain market can erupt quickly, while building homes takes years. These realities make it hard to bring our market into balance.”
Langlois repeated previous demands that governments do more to increase supply than dampen demand through taxes and borrowing limitations.
“Municipal governments adding costs and time delays to new developments do not bring balance,” he added. “A commitment to developing our communities over the long term may.”
The Home Price Index (HPI) benchmark value for a single family home in the Victoria Core in April 2021 was $996,500, an increase of 12.6 per cent from April 2020 and an increase of 2.9 per cent increase from March 2021. The HPI for a condominium in the Victoria Core in April 2021 was $547,600, an increase of 2.6 per cent.
Figures show 1,454 active listings for sale at the end of April, 36.9 per cent fewer properties than the total available at the end of April 2020 and 11 per cent more than the 1,310 active listings for sale at the end of March 2021.
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