The local real estate market is still vulnerable to various harmful shocks, but is becoming less so as housing prices have dropped and incomes have risen. (Black Press File)

Greater Victoria housing market remains vulnerable to shifts

CHMC’s Housing Market Assessment finds Victoria at risk to overheating and price acceleration

First the bad news. A new report from Canada Mortgage and Housing Corporation (CMHC) finds that Victoria’s real estate remains unbalanced. Now the good news. The market is moving towards greater balance.

These findings appear in CHMC’s Housing Market Assessment for the third quarter of 2019. The market assessment is a framework that assesses the vulnerability of any housing market along four factors: overheating, price acceleration, overvaluation and overbuilding.

RELATED: CHMC defends mortgage stress test changes amid calls for loosening rules

The framework also takes into account demographic, economic and financial determinants of the housing market such as population, personal disposable income and interest rates to detect vulnerability.

Turning to Victoria, the report finds a “high degree of overall vulnerability for Victoria” as [price] overheating and price acceleration” remain dominant signals. “Moderate evidence of overvaluation [also] continues to be detected,” it reads. This said, Victoria’s average price dropped by 5.8 per cent in the first quarter of 2019 from a year ago after rising for 15 consecutive quarters, so almost four years.

The real question is whether this drop will remain a downward blip on a line that has been trending upwards, or the start of a larger trend.

RELATED: CMHC reports pace of housing starts in Canada jumped higher in June

The report also offers good news in other ways. The income of would-be buyers has risen, as prices have fallen. Buyers, in other words, have more resources at their disposal. With prices falling and greater peace of mind concerning financial matters, buyers are less likely to rush into the market for fear of being left behind if they do not.

Looking at the broader picture, Victoria remains among a trio of markets (Toronto and Hamilton are the others) with a high degree of vulnerability. “But, conditions of overheating, price acceleration and overvaluation are showing signs of easing in all three centres,” it reads.

Vancouver, once a synonym for an overheated housing market, now shows a moderate degree of vulnerability.

“While home price growth over the past few years significantly outpaced levels supported by fundamentals, these imbalances have narrowed through growth in fundamentals, and lower home prices in different segments of the resale market,” it reads.

Unsaid in the report are two other aspects that have contributed to the decline in the vulnerability: tighter restrictions on mortgages (which have shrunk the number of would-be buyers) and higher housing starts. This said, the region remains among the most unaffordable in Canada.


Like us on Facebook and follow us on Twitter

wolfgang.depner@saanichnews.com

Just Posted

Grease fire in Saanich prompts reminder to have proper fire extinguisher on hand

One woman was involved in the incident and treated on-scene for smoke inhalation

Lau’Welnew Tribal school students rock Mary Winspear Centre

Thursday’s Rock the Salish Sea show starts at 7 p.m.

VicPD warns local businesses of new scam

A man posing as a homeowner has been requesting painting services to try to get banking information

CRD warns commuters of traffic interruptions planned for Interurban Road

Wastewater treatment project construction expected to affect traffic for one week

Film crews in downtown Victoria producing upcoming TV series

‘Significant economic contributions to the area’ coming from production

POLL: Do you plan on making any purchases on Black Friday?

We’ve all seen the images. Shoppers rioting outside of a store in… Continue reading

‘Very disrespectful’: B.C. first responder irked by motorists recording collisions on cellphones

Central Cariboo Search and Rescue deputy chief challenges motorists to break the habit

Daily cannabis linked to reduction in opioid use: B.C. researchres

Researchers looked at a group of 1,152 people in Vancouver who reported substance use and chronic pain

B.C. man gets 23 years for murder of Belgian tourist near Boston Bar

Sean McKenzie pleaded guilty to second-degree murder of 28-year-old Amelie Christelle Sakkalis

Island student lobbies school board for dress code consistency

Jaylene Kuo contacted school trustees after seeing dress guidelines at brother’s school

Bids down, costs up on Highway 1, B.C. independent contractors say

Rally protests NDP government’s union-only public construction

Members of little people community applaud change to drop ‘midget’ term

‘It’s not about sensitivity,’ says Allan Redford, the president of the Little People of Canada

Little progress in preventing sudden infant deaths since last report: BC Coroner

Coroners panel studied 141 sleep-related sudden infant deaths between 2013 and 2018

Most Read