The spectre of high interest rates continued to weigh down the Victoria real estate market in October, as the pace of sales activity dropped off significantly.
According to figures released Wednesday by the Victoria Real Estate Board, sales fell 15.2 per cent to 407 in October compared to the same time last year, and were down 17.4 per cent from September 2023.
The sales figures are well below the 10-year average of 657 units sold in October.
Graden Sol, chair of the board, said the drop is likely due to consumers having to deal with the highest interest rates they’ve seen in nearly 20 years.
“The uncertainty around the direction of the Bank of Canada rate announcement in mid-October may have caused some buyers to push their purchasing plans into the future because it was unclear if rates were going to be hiked again or remain stable,” he said.
“Generally speaking, when we have periods of static interest rates, consumer confidence returns to the market.”
The central bank held the line on interest rates in October. The bank maintained its key interest rate at five per cent, though it did not rule out future rate hikes as its latest projections show inflation remaining higher in the short term.
Sol said the interest rate clearly has an effect on the local market as sales increased when rates held steady earlier in the year, but when rates rose again, buyers’ confidence started to falter.
Last month, sales of single-family homes dropped 16.1 per cent to 193 over the last year, while condo sales dropped 7.2 per cent to 141 units over that same time period.
While the number of sales was dropping, prices weren’t.
The board’s benchmark value — which it considers a more accurate reflection of the market — for a single-family home in the region was $1.162 million in October, just a fraction below the September benchmark of $1.169 million, and up from the $1.13 million benchmark last October.
In the core — Victoria, Esquimalt, Oak Bay, Saanich and View Royal — the benchmark price for a single-family home was $1.3 million last month, compared with $1.31 million in September and $1.25 million at the same time last year.
The benchmark value for a condominium in the region in October was $582,500, a slight drop from the $584,500 mark hit in September, but up from the $574,600 benchmark in October last year.
The townhouse benchmark hit $773,100 in October, down from $785,600 in September but only a slight change from the $774,700 benchmark in October last year.
The number of active listings was also on the rise in October, with 2,756 active listings available at the end of October, up 2.1 per cent from September, and up 25.7 per cent increase from the 2,192 active listings for sale at the end of October 2022.
“This additional inventory is positive for buyers, who will have more selection than they’ve experienced in recent years,” said Sol.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
