CMHC Senior Market Analyst Eric Bond calls Victoria’s Real Estate market “Overheated”. In his opinion, the city of is facing a housing affordability crisis, with the average price of a home reaching $640,802 in March, up 11.3 per cent compared to March 2016. Put another way, the first quarter of 2017 saw the average price for a single-detached home increase by 19 per cent as compared to the same quarter last year.
The Victoria Real Estate Board reported the Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in March was $790,100 - a 19.1 per cent increase from March 2016.
Despite the presence of strong market fundamentals like employment growth, increased population driven by younger demographics and low mortgage rates, CMHC doesn’t think the market’s price acceleration can be justified by these factors alone.
To assess the states of the housing markets, CMHC looks at four factors: overheating, home price acceleration, overvaluation and overbuilding.
In Victoria, sales-to-new-listings ratio maintained a high level around 80 per cent, which is CMHC’s threshold for an overheated market in which demand has outpaced supply.
“The last quarter of 2016 was dominated by strong sales and low supply which pushed house prices beyond levels that are supported by fundamentals such as income and population growth,” says Bond in a recent report. “For these reasons, we detected increased evidence of overvaluation in the Victoria market.”
Anyone selling real estate in Victoria recognizes the supply challenge. After hitting a nearly 30-year low in the fourth quarter of 2016, low active housing inventory continues through the first quarter of 2017.
Many realtors are experiencing the frustration of a long list of actively interested buyers looking for something…anything in Victoria’s market. Some have even taken to knocking on doors in desirable neighbourhoods and offering a purchase price with no conditions for their clients! We have no data on how successful they have been, but one resident reported that while the offered price was attractive, the realization that he would have to find his family a new place to live led him to decline.
We’ll report more details of this marketing strategy as things develop.
Region's Housing Market Overvalued: CMHC
Times Colonist - April 27th 2017