FINANCIAL SAVVY: Buyer’s market looming?

A retired corporate executive, enjoying post-retirement as an independent Financial Consultant (www.dolezalconsultants.ca), Peter Dolezal is the author of three books, including his recent Third Edition of The Smart Canadian Wealth-Builder.

At the beginning of 2018, major Canadian residential markets were still clearly in seller’s market territory, with sales-to-listing ratios of 40 to 50 per cent. As the year unfolded and the full effect of new mortgage stress tests, foreign buyers’ taxes, vacancy taxes, and the imminent implementation of BC’s Speculation Tax emerged, the sales-to-listing ratios plummeted.

In Greater Victoria for example, the sales-to-listings ratio in March 2018 hovered near 50 per cent. By December it had dropped to around 20% – technically, still a balanced market. The rapid rate of decline however, has threatened the emergence of a Buyer’s market in 2019.

One of the primary drivers of residential real estate has always been the first-time home-buyer. A recent survey of its members by the B.C. Notaries Association confirmed not only fewer such buyers in 2018, but also that those buyers were relying on significantly greater external assistance than in past years, toward their down payments.

Having lost some 20 per cent of purchasing power due to new stress tests and rising interest rates, many first-time buyers, without extra family assistance, are now faced with major delays in their ability to enter the market.

An October, 2018 CMHC report revealed that 85 per cent of first-time buyers already spend the maximum they can afford on their first home purchase; this leaves little room for absorbing the impact of new lending regulations and higher rates.

When the pool of first-time buyers shrinks, new construction slows as inventory of unsold strata units increases; and existing strata owners are delayed in their ability to sell before moving up to a higher-value home. The upward-ripple effect on re-sales and purchases is felt at all price levels – impeding sales volumes, and eventually triggering a seller’s market until the downward cycle once again begins to reverse, and affordability increases.

Other than in the over-million dollar segment of Canadian residential markets in which prices have plummeted, prices nationally have not experienced significant declines. The full impact however, of new regulations and higher rates, will only be felt in 2019.

Regardless of how residential real estate fares in 2019, one thing is clear. In every major Canadian market, the spectacular price increases of the last decade will not be seen again for some years. That does not make residential real estate a poor long-term investment; however, in the shorter-term, we should be happy if we achieve even inflation-only levels of price increases.

A retired corporate executive, enjoying post-retirement as an independent Financial Consultant (www.dolezalconsultants.ca), Peter Dolezal is the author of three books, including his recent Third Edition of The Smart Canadian Wealth-Builder.

Just Posted

Canadian Coast Guard breaks ground on permanent search and rescue station in Victoria

Victoria-based SAR will do all rescues in local harbour and parts of the Strait of Juan de Fuca

Police actions under investigation following Langford arrest

IIO investigates officer-related incidents that result in serious harm

Sidney loses prominent businesswoman to cancer

Sandy Bayton was a risk-taker but always had ‘a sound business plan’

Good Samaritans rescue Sidney senior trapped under mobility scooter

78-year-old broke her pelvis and spent a week in hospital after the accident

Victoria woman, 76, challenges alcohol-screening laws after failing to give breath sample

Norma McLeod was unable to provide a sample because of her medical conditions

WATCH: Cougar saunters through Metchosin yard

Spring cougar sighting caught on camera

Wanted by Crime Stoppers

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

POLL: Do you think the Notre Dame Cathedral in Paris should be rebuilt?

Images of one of the word’s most iconic landmarks were seared into… Continue reading

‘B.C. cannot wait for action’: Top doctor urges province to decriminalize illicit drugs

Dr. Bonnie Henry says current approach in ‘war on drugs’ has criminalized and stigmatized drug users

New report on 2017 wildfires calls for better coordination with B.C. First Nations

Tsilhqot’in National Government documents 2017 disaster and lists 33 calls to action

B.C. youth coach banned amid sexual harassment, bullying scandal: Water Polo Canada

Justin Mitchell can’t take part in Water Polo Canada events or clubs

Wilson-Raybould: Feds want to just ‘manage the problem’ of Indigenous Peoples

Former federal justice minister speaks at First Nations Justice Council meeting in B.C.

Island Cup set for East Sooke on May 3-5

Off-road racing event expected to attract over 50 racers

Female real estate agents warned of suspicious man in Metro Vancouver

The man requests to see homes alone with the female agent, police say

Most Read