First-time homebuyers are being impacted by tighter mortgage rules, according to Vancouver Island Real Estate Board president Don McClintock.
VANCOUVER ISLAND, B.C. – While the housing market is starting to find its footing on the mainland, sales on the island are treading water.
According to the Vancouver Island Real Estate Board, sales of single-family homes in May board-wide dipped by 12 per cent year over year, but rose by 11 per cent from April.
Last month, 459 single-family homes sold on the MLS, compared to 412 the previous month and 519 in May 2018.
Sales of apartments dipped by seven per cent year over year while townhouse sales increased by 19 per cent.
On a seasonally adjusted basis, sales in the VIREB area are close to 2014 levels, and current market conditions are expected to continue into the fall.
VIREB president-elect Kevin Reid said the market has shifted on the island.
“We’ve definitely moved from a sellers’ market to one that is more balanced,” said Reid, who is a realtor with Royal LePage in the Comox Valley.
The board said the mortgage stress test (Guideline B-20) continues to hurt housing sales throughout B.C., including on the island.
“Although the B.C. economy continues to be highly supportive of housing demand, the negative shock to affordability and purchasing power created by the stress test is making it extremely difficult for some buyers, particularly millennials, to enter the housing market,” a board release said.
“Prospective buyers who can afford monthly mortgage payments are unable to qualify because Guideline B-20 has eroded their purchasing power by as much as 20 per cent.”
Reid said tighter mortgage rules is impacting buyers who can afford to make mortgage payments, “but unfortunately, the B-20 Guideline is eroding their purchasing power.”
Regionally, the market has moderated.
In Campbell River, sales of single family homes jumped in May compared to April.
A total of 52 homes changed hands last month, while there were 43 sales in April.
A 40 minute drive south to the Comox Valley, and single family home sales held steady over the past two months, from 77 in April to 75 in May.
But compared to May 2018, sales dropped 32 percent in the valley and 10 percent in Campbell River.
Meanwhile, the average sales price of single family homes on the North Island have been relatively flat year over year.
The benchmark price of a single-family home in the Campbell River area hit $428,900, an increase of four per cent over May 2018.
In the Comox Valley, the benchmark price reached $518,400, up by five per cent from a year ago.
Even further south, Duncan reported a benchmark price of $469,400, an increase of two per cent from May 2018.
Reid said inventory is rising, with listings at a three-year high. This, he added, is putting pressure on prices.
“I find when we see market corrections like this, the sale prices will shift, say, one percent, but really there is more opportunity for the buyers to have a choice of better locations, perhaps some more negotiating opportunities… so it turns into a very balanced market between buyer and seller.”
He said this is a good thing for the market, “because a balanced market is a competitive market.”