Cheryl Woolley, president-elect of the Victoria Real Estate Board, says new real estate figures offer no reason to panic as market fundamentals remain strong.

Greater Victoria sees substantial drop in housing sales

Incoming VREB president says market remains strong despite decline in year-over-year sales

A local realtor warns against reading too much into figures that show a drop of 25 per cent in year-to-year sales.

According to new figures, the Victoria Real Estate Board recorded 755 sales in May 2018 – 25 per cent fewer than the 1,006 properties sold in May of last year. Compared to April 2018, sales dropped 2.8 per cent. But Cheryl Woolley, president-elect of the Victoria Real Estate Board, said these numbers tell only a part of the story.

While sales might be down, prices and the value of sales have continued to go up, she said. “Is the market going to crash? I don’t think so,” she said, pointing to strong fundamentals such as the desirability of the region at large.

So what accounts for the drop? While the market was bound for a slow down, recent changes in mortgage rules and the introduction of various measures such as the speculation tax have amplified this decline.

“It’s an artificial slow-down,” she said.

Elsewhere, Vancouver recorded a drop of more than 35.1 per cent in recorded sales over the same time last year.

Looking at specific categories of properties, condominium sales dropped 17.4 per cent in May 2018 compared to May 2017. Sales of single family homes dropped 23 per cent.

Local realtor Leo Spalteholz noted on his blog House Hunt Victoria that sales are “down substantially” from last year. He described this drop as “quite unusual” when measured against historical trends. Looking at monthly sales over 10 years, the general trend lines shows that single family homes sales start rising in January, with the general peak of sales happening around May. But this year diverges from this general trend line, with sales actually dropping in May. Sales for this year have also failed to match the average.

Spalteholz said this phenomenon happens in times when the market is slowing quickly enough that it overpowers the normal seasonal increase.

This said, the local real estate market continues to favour sellers with the ratio of sales to active listings hovering around 40 per cent – well into seller’s market territory, which starts above 20 per cent.

While supply is ticking up, inventory is still very low, said Spalteholz. “It is increasing more quickly in recent months but will still take quite a while to get even to the 10-year average, let alone to the highs of [five] years ago when there were nearly twice as many detached homes on the market,” he said.

The low inventory means that about 20 per cent of single family homes are selling over asking price, he said. “It’s like a pot that you’ve turned down from a roiling boil to a simmer,” he said. “Still not a great idea to stick your hand in there but at least the soup isn’t splattering all over the place.”

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