There are some important changes happening in the Victoria Real Estate Market, changes whether you’re selling or buying.
As I’m sure you’re aware, over the last while, sales have exceeded listings, indicative of a hot market. That means fewer people have wanted to sell, and for good reasons. People have had fear they’d not get back into the market in a timely fashion, fear they wouldn’t be able to find a new home they liked, or fear that by the time they did find something, they might be priced out of the market.
With less product for sale, the frenzy to buy led to offers higher than asking prices, sometimes much higher, and sometimes even without a property inspection. As you can imagine, this is what started all those aforementioned fears.
Of course, with fewer listings coming available, this again moved prices higher and created yet more urgency to buy something immediately. This represents, more or less, the buying/selling landscape as we’ve known it the last few years.
But the market is shifting a little and changes might/will include:
1. Over the summer and early fall, we’ve seen sales backing off a wee bit, as has the pace. There has also been a slight increase in listings that has followed us into the Autumn. This trend could well continue although at what pace, no one knows.
2. In spite of a pass by the Bank of Canada on a Fall rate increase, current thinking is the Bank will move interest rates up a bit come Spring of 2018, likely another 25 basis points, and perhaps a second time in the fall. Why? Because the economy is humming across the country, employment rates are high, and things mostly look good. That said, Bank of Canada Governor Stephen Poloz isn’t rushing in just yet and he has yet to tip his hand.
3. Further, as of January 1, 2018, new stress tests are being put in place, which looks to mean some buyers will lose 15-20% of their current buying power. The stress test will apply to every mortgage, regardless of income or equity stake. This change could create a slight drop in property prices by mid-year as the stress tests reduce the amount of mortgage money available to purchasers.
4. Another change is the information I get daily through the Multiple Listing Service (MLS). Among other things, listings under Price Changes, while always shifting upwards in 2015, 2016 and the part of 2017, are now almost universally shifting downwards. Is this an end to frantic pricing? Only time will tell.
What does all this mean?
It’s hard to be certain, although for the right property, as always, one needs to act quickly and decisively.
However, it also might mean we’re going to move to a more balanced market, where neither seller nor buyer has the upper hand dealing in real estate transactions. With a more level playing field, all buyers, some of whom will be at a borrowing disadvantage, ought to have more choices to view. Those thinking to sell and move up (or to move down), will, hopefully, be paying prices not pumped up by fear of losing out.
Remember, none of this is certain; anything could happen in an open market.
Should you want advice that’s particular to your situation, please contact me and we can go over it all together.