PETER DOLEZAL: Housing prices — a turning tide for buyers

Housing activity and prices continue to decline by most measures

Despite both the latest press release by the Victoria Real Estate Board that the Greater Victoria market is flat and a recent newspaper article reporting housing affordability in the region has improved, down to 42.2 per cent of family income for a detached bungalow, the facts are clear.

Housing activity and prices continue to decline by most measures.  August unit sales of all properties were down by 17 per cent compared to a year ago, while listings were up two per cent. At this rate.

Housing affordability has indeed improved. However, it is important to realize that it remains difficult to obtain a mortgage if a family borrows more that 32 per cent of family income for the projected cost of ownership – fully 10 percentage points below our current “improved” level of affordability. The key reasons for the improvement in affordability are the softening prices, combined with a dramatic decline in mortgage rates.

Locally, all categories of housing have now returned to a their approximate price levels of August 2010. The modest price declines this year have been tempered by the historically-low interest rates. In early September, the best rate available through Mortgage Brokers for a five-year closed mortgage was 2.89 per cent; for seven years, it was 3.59 per cent. With rates this low, a mortgage with a five-year term and a 25-year amortization will result in payments of only $468 per month for each $100,000 borrowed.

While these low rates are the key reason for our relatively modest price declines, they also highlight the vulnerability of future house prices to rising interest rates. Significant increases are probably several years off, but they will inevitably occur.

It is not my intent to spread doom and gloom about our housing prospects. Rather, it is to ensure sellers understand the market and price realistically, if they expect their home to sell.

Buyers need to realize they have moved to the driver’s seat. It is clearly a buyer’s market; they need not be rushed into making a deal. A buyer’s patience is far more likely to be rewarded.

The real estate tide is turning; it has not reached its low point.

A retired corporate executive, enjoying post-retirement as a financial consultant, Peter Dolezal is the author of three books. His most recent, The SMART CANADIAN WEALTH-BUILDER, is now available at Tanner’s Books, and in other bookstores.

 

 

Just Posted

Peninsula firefighters spend the summer in intensive training

No rest for personnel as they improve high tower, role-plays and marina fire fighting skills

VIDEO: RCMP officer killed in the line of duty remembered ‘through the laughter of children’

Sarah Beckett Memorial Playground opens with ceremony in Langford

B.C. police watchdog investigating high-speed crash in Victoria

Police watchdog called in after dramatic early morning crash at Bay and Douglas intersection

Westhills Stadium launches expanded stadium with ceremony, excitement

expanded stadium accommodates 6,000 spectators

NCAA basketball comes to UVic this fall

Eight-team tournament features top university women’s basketball teams Nov. 28-30

Trudeau to meet with U.K. and Japanese prime ministers ahead of G7 summit

French President Emmanuel Macron, this year’s G7 host, has little expectations of a unified front from the leaders

B.C. RCMP plane chases fleeing helicopter as part of major cross-border drug bust

The helicopter eventually landed at a rural property near Chilliwack

Vancouver Island man dead after reported hit-and-run incident

Oceanside RCMP seek public’s help gathering information

Thousands cycle to conquer cancer

The 11th annual Ride to Conquer Cancer took place Saturday morning, Aug. 24 in Surrey, B.C.

PHOTOS: Brazil military begins operations to fight Amazon fires

Amazon fires have become a global issue, escalating tensions between Brazil and European countries

Racist confrontation in Richmond parking lot caught on camera

Woman can be heard yelling racial slurs, swear words at woman in apparent parking dispute

Groups ready campaign to help young voters identify ‘fake news’ in election

The media literacy campaign to focus on identifying misinformation and suspicious sources online

Big rally in northern B.C. draws attention to continuing lumber crisis

Mayor Joan Atkinson says about 400 workers have been directly affected by the closure of the Canfor mill

Orangeville Northmen take Minto Cup at Langley Events Centre

Swept best-of-five series 3-0 over Victoria Shamrocks

Most Read