November Market Update
Hello again, everyone. Here is a market update for November 2017.
In October real estate sales experienced a slight up-tick from September (664 sales from 640), continuing a pattern of lowered sales numbers when compared to last year (735 sales in October 2016). Despite a slower market, average home prices continued to rise during the last year with the average price of a single family dwelling moving from $773,504 in October 2016 to $854,833.
Victoria Real Estate Board President Ara Balabanian is forecasting market stability in the coming months, with the provision that the new mortgage stress tests could give some buyers a sense of urgency:
“In the coming months we expect to see less inventory on the market, because the year end changes buyer and seller behaviours, their focus shifts to holidays and winter weather. One unknown influence that may play on the winter market is the upcoming mortgage stress test. Some buyers may move their purchasing timelines forward to make their home purchases before the stress test on uninsured buyers (those with a down payment of 20 per cent or more) becomes required January 1.” (VREB.org)
So, what about the introduction of the mortgage stress test? The Office of the Superintendent of Financial Institutions’ new rules extend a stress test that was already in place for high risk mortgages to lower risk ones. Under the B-20 guidelines, uninsured borrowers will have to prove that they can withstand either a 2% rate increase on their mortgage or payments at the five-year average rate, whichever is greater. At the moment any buyer with a down payment of 20% or more is not required to buy mortgage insurance. Although the new rules officially come into effect January 1st, expect some federally regulated lenders to impose them before then. Practically speaking, this new rule could force buyers into a lower price range than they might previously have been qualified for, and squeeze out some buyers altogether. A mortgage broker we often work with has stated that some buyers who previously would qualify for an $800,000 mortgage might be downgraded to one at $600,000. Also, the market could heat up during November and December as buyers try to maximize their purchase power and sellers, especially those of more expensive properties, try to capitalize on a larger buyer pool.
As always, if you are interested in learning how the current market conditions affect you or your investments, would like a market analysis of your property, or if we can be of assistance in any way at all, please don’t hesitate to give us a call (250-886-8520) or send us an email (firstname.lastname@example.org).
Island Homes Group
4440 Chatterton Way