PETER DOLEZAL: Real estate now back to a balanced market

With monthly home sales in Greater Victoria reaching 15 per cent of total inventory, our local real estate market has clearly shifted

With monthly home sales in Greater Victoria reaching 15 per cent of total inventory, our local real estate market has clearly moved from its previous Buyers’ market to a Balanced one. Despite record numbers of property sales however, prices remain fairly static — up only about one per cent in the past year.

A balanced market is the healthiest state for a real estate market. Neither buyer nor seller has the upper hand. Buyers have ample inventory from which to choose, and with prices holding steady, they need neither rush their purchase decision, nor have much fear of encountering multiple bids when making an offer.

Sellers, on the other hand, are encouraged by a good level of sales activity in the market place. They know that if their home presents well and is priced competitively, it has a good chance of selling reasonably quickly and fairly close to their asking price.

The real estate community is happy in a balanced market. The number of homes selling is steady, at a good pace, with both buyers and sellers relatively relaxed. Qualified buyers find it easy to obtain mortgages at the lowest levels in history.

Banks have been vying with one another to post record–low three-and-five-year fixed-rate mortgages.  Low ‘posted’ bank rates are particularly helpful to first-time, high-ratio mortgage buyers who must qualify for their loan based on the Bank’s posted rate — as opposed to the discounted rate they may in fact be offered. With a higher posted rate, such buyers have a harder time qualifying for a mortgage.

Nationally, the average home price of a single-family dwelling has, for the first time, exceeded $400,000 — largely driven by sales and price activity in the Toronto and Vancouver markets. This remains a grave national concern. Should interest rates spike upwards, many home owners could find their mortgages to be much less affordable. Added to this concern is the fact our level of home ownership, at near 70 per cent nationally, is also at an all-time high.

The federal government and CMHC continue to take action to dampen the enthusiasm of real estate markets nationally. CMHC, in particular, has tightened its requirement for proof of income of self-employed individuals. It has also cancelled high-ratio mortgage insurance for homes valued at over $1 million and for  secondary homes, such as investment properties and cottages — all in an effort to avoid a hard landing for national real estate markets if, and when, interest rates rise. All these mortgage-tightening efforts however, continue to be neutralized by the record-low interest rates currently available.

We have been expecting the inevitable interest rate increases for the past several years – only to see rates hit yet another record low.

With North American and world economies still somewhat sluggishly recovering from the 2008/09 recession, any interest rate increases are likely to be slow in coming, and to be quite gradual when they do. If so, Canadian real estate should avoid a hard landing.

Regardless of future rate movements, today’s home owner or home buyer should not expect long-term home value increases to match those of the past decade. Our changing demographic – more seniors and fewer first-time buyers — suggests that Canadians will be fortunate to see in the next decade, an average price increase which matches inflation.

A retired corporate executive, enjoying post-retirement as an independent Financial Consultant (www.dolezalconsultants.ca), Peter Dolezal is the author of three books, including his recent Second Edition of TheSmart Canadian Wealth-Builder.

Contact Panorama Rec. Centre to register for Peter’s Elder College Fall session – Financial & Investment Planning for Retirees & Near-Retirees (Thursdays, Sept. 18 to Oct. 16).

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

West Shore RCMP is asking for the public’s help in locating Mackenzie Courchene, a Langford teenager.
MISSING: Mackenzie Courchene last seen in Langford on March 2

West Shore RCMP is asking for the public’s help in locating the Langford teenager

Rendering of the proposed Esquimalt public safety building. (Courtesy Township of Esquimalt)
Esquimalt blazes new trail toward modern public safety building

Township using alternative approval process for first time to gauge public support for proposal

Landmarks such as Howard the giant gnome at Galey's Farm in Saanich make a stunning backdrop for celebratory dance in the Greater Victoria Festival Society trailer for its coming Dance Victoria campaign. (Screeshot/Greater Victoria Festival Society)
Residents’ videos help campaign Dance Across Victoria

Celebratory dance clips to be compiled into Greater Victoria Festival Society video

Reynolds Secondary School’s spring musical Freaky Friday features Grace Fouracre as teen Ellie Blake (left) who swaps bodies with her overworked mother, Katherine, played by Nadia Lurie. (Photo courtesy Reynolds Secondary School)
Saanich high school goes virtual with Freaky Friday musical

Reynolds Secondary theatre program to livestream performances March 9-12

Saanich Fire Department. Black Press Media File Photo
Fire displaces three Saanich families from two homes

Saanich firefighters found the fire had spread to a neighbouring home upon arriving

Elvira D’Angelo, 92, waits to receive her COVID-19 vaccination shot at a clinic in Montreal, Sunday, March 7, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
‘It’s been a good week’: Tam hopeful on vaccines as pandemic anniversary nears

Tam says the addition of two new vaccines will help Canadians get immunized faster

(The Canadian Press)
‘Worse than Sept. 11, SARS and financial crisis combined’: Tourism industry in crisis

Travel services saw the biggest drop in active businesses with 31 per cent fewer firms operating

The Port Alice pulp mill has been dormant since 2015. (North Island Gazette file photo)
Parts recycled, life returning to inlet as as old Port Alice mill decommissioned

Bankruptcy company oversees de-risking the site, water treatment and environmental monitoring

The Conservation Officers Service is warning aquarium users after invasive and potentially destructive mussels were found in moss balls from a pet store. (BC Conservation Officers Service/Facebook)
Aquarium users in B.C. warned after invasive mussels found at pet store

Conservation officers were told the mussels were found in a moss ball from a Terrace pet store.

Hockey hall-of-fame legend Wayne Gretzky, right, watches the casket of his father, Walter Gretzky, as it is carried from the church during a funeral service in Brantford, Ont., Saturday, March 6, 2021. HE CANADIAN PRESS/Nathan Denette
Walter Gretzky remembered as a man with a ‘heart of gold’ at funeral

The famous hockey father died Thursday at age 82 after battling Parkinson’s disease

Donald Alan Sweet was once an all star CFL kicker who played for the Montreal Alouettes and Montreal Concordes over a 13-year career. Photo courtesy of Mission RCMP.
Ex-B.C. teacher who was CFL kicker charged with assault, sexual crimes against former students

Donald Sweet taught in Mission School District for 10 years, investigators seek further witnesses

(Black Press Media files)
Medicine gardens help Victoria’s Indigenous kids in care stay culturally connected

Traditional plants brought to the homes of Indigenous kids amid the COVID-19 pandemic

Personal protective equipment is seen in the COVID-19 intensive care unit at St. Paul’s hospital in downtown Vancouver. THE CANADIAN PRESS/Jonathan Hayward
$16.9 million invested to improve worker safety, strengthen B.C.’s food supply chain

Money to be used for social distancing, personal protective equipment, cleaning, and air circulation

Most Read