Editorial: Real value in real estate

Since last summer, Canadians have had to follow tighter lending criteria in order to purchase a home.

Since last summer, Canadians have had to follow tighter lending criteria in order to purchase a home.

The change was meant to cool off hot housing markets in major cities like Toronto and Vancouver.

It’s these kind of strict regulations that protect us from the drastic sub-prime-mortgage delinquencies and foreclosures that we saw in the U.S. over the past few years.

The regulations meant banks could only offer loans up to a maximum of 80 per cent of a property’s value, down from 85 per cent previously. Along with that, amortization for government-insured mortgages dropped from 30 years to 25 years, after falling from a high of 40 years in 2008.

The changes meant Canadians would borrow less over a shorter period of time, thereby lowering the amount of interest over the life of the loan. The changes also meant homeowners would have to make higher monthly mortgage payments to pay for their loan.

The old adage, what goes up, must come down is coming true as we see the correction in the marketplace, with sales beginning to slow and housing prices drop in Victoria.

As many in the financial industry will tell you, the housing market is a good snapshot of the local economy. We can see that any extra cash new homeowners have is now tied up in mortgage payments, rather than making its way into local coffers.

To put the numbers in better perspective, over the past decade Victoria home prices increased by 128 per cent, so a two per cent drop in the last year is nothing to worry about if you’ve owned your home for a while.

As recently as 1992, an average-priced home in Greater Victoria sold for $222,415. Last month that same house sold for $576,720.

Anyway you look at it, owning a home in Greater Victoria is still a good investment in the long term. The challenge now for sellers and first-time buyers is in the short term. Sellers may have to wait longer and expect lower bids, while buyers will have to lower their expectations, too.

Just Posted

PHOTOS: Thousands show for 40th GoodLife Marathon in downtown Victoria

New records, first-time runners, and stories of resilience

Mother of alleged hit-and-run victim hopes municipalities will work together to improve crosswalk

Young woman injured, dog killed when struck by driver on marked crosswalk at Foul Bay Road

Here comes the rain: Victoria can expect post Thanksgiving showers all week

Mild, rainy weather expected from Tuesday to Saturday

Opponents of Elizabeth May criticize her push to scrap temporary foreign worker program

May has proposed to scrap the federal program which supplies local business with temporary workers

Victoria woman uses loss to raise awareness of Pregnancy and Infant Loss Awareness Day

City of Victoria to recognize Pregnancy and Infant Loss Awareness Day Oct. 15

VIDEO: Greater Victoria, here’s the news you missed this weekend

Dog killed in alleged hit and run, Goodlife Marathon takes over city and more

Canadian Snowbirds plane crashes before air show in Atlanta

Pilot lands safely after ejecting from jet

Share crash data, private insurers tell David Eby, ICBC

B.C. monopoly makes drivers retrieve their own records

B.C. VIEWS: Wolf kill, not backcountry bans, saving caribou

B.C.’s largest herds turn the corner from extinction

Pearson nets shootout winner as Canucks clip Flyers 3-2

Vancouver picks up second straight home win

Map on Elections Canada website sends Nanaimo-Ladysmith voters to landfill

Address for polling station correct, but Google Map address differs

BC Children’s Hospital launches 2 new virtual care sites bringing total to 19 across province

Provincial initiative allows pediatric patients to see health specialists through video

‘Wham-bam out the door’: Surrey man’s front yard left ruined by scamming landscaper

Resident warns neighbours to be careful of door-to-door salesmen

Most Read