Upon hearing the latest housing market assessment from the Canada Mortgage and Housing Corporation, real estate agent Patrick Schörle said it reflected what he saw on the ground.
According to the report, Victoria’s housing market continued to show signs of overvaluation. Despite rising wages and a young population (which is correlated with household formation), rising interest rates have increased the carrying costs for home ownership. They believe homes are overvalued for the fundamentals. Single-detached sales declined from 60 to 50 per cent of total sales, while apartment sales increased from 30 to 40 per cent of total sales, so “in other words, demand in the market shifted to units with relatively greater affordability.” Homes are now on the market for longer, and fewer homes were sold above asking price.
Schörle, of Pacifica Real Estate in Sidney, said he does not expect the market to decline, instead saying it is softening. Sellers can no longer be as aggressive on upscale pricing, he said. There were some signs of a slowdown, he added, but it would become clearer by the end of January. It was more likely that the market would flatline, he said.
He saw tremendous growth in the market in 2016, and if home values declined dramatically, recent homebuyers committed to mortgages “would be put under water,” said Schörle.
He said there were sufficient options on the high-end, which he defined as anything above $800,000. For the mid-to-low-end, particularly single family homes, Schörle said anything under $600,000 is “definitely a feat, unless you go to the outskirts of the region.” He said there is definite undersupply in that bracket, partly because high land values made mid-priced homes difficult to find. He said land values were “the crux” of solving the affordability issue, and that government help is likely the only way those options would open up. He was particularly keen on action from the provincial and federal government.
“It is not something we can just achieve in Sidney, or Central Saanich, this needs to happen on a much larger scale.”