Editorial: Real value in real estate

Since last summer, Canadians have had to follow tighter lending criteria in order to purchase a home.

Since last summer, Canadians have had to follow tighter lending criteria in order to purchase a home.

The change was meant to cool off hot housing markets in major cities like Toronto and Vancouver.

It’s these kind of strict regulations that protect us from the drastic sub-prime-mortgage delinquencies and foreclosures that we saw in the U.S. over the past few years.

The regulations meant banks could only offer loans up to a maximum of 80 per cent of a property’s value, down from 85 per cent previously. Along with that, amortization for government-insured mortgages dropped from 30 years to 25 years, after falling from a high of 40 years in 2008.

The changes meant Canadians would borrow less over a shorter period of time, thereby lowering the amount of interest over the life of the loan. The changes also meant homeowners would have to make higher monthly mortgage payments to pay for their loan.

The old adage, what goes up, must come down is coming true as we see the correction in the marketplace, with sales beginning to slow and housing prices drop in Victoria.

As many in the financial industry will tell you, the housing market is a good snapshot of the local economy. We can see that any extra cash new homeowners have is now tied up in mortgage payments, rather than making its way into local coffers.

To put the numbers in better perspective, over the past decade Victoria home prices increased by 128 per cent, so a two per cent drop in the last year is nothing to worry about if you’ve owned your home for a while.

As recently as 1992, an average-priced home in Greater Victoria sold for $222,415. Last month that same house sold for $576,720.

Anyway you look at it, owning a home in Greater Victoria is still a good investment in the long term. The challenge now for sellers and first-time buyers is in the short term. Sellers may have to wait longer and expect lower bids, while buyers will have to lower their expectations, too.

Just Posted

WATCH: Marine security company posts live seal cam at Oak Bay Marina

Seals tend to loiter near the fish-cleaning table

Victoria woman experiencing homelessness wants systematic changes as she faces losing her truck

Willi Boepple fears losing one of her last possessions after being inundated with parking tickets

UPDATED: Two-sailing wait at BC Ferries Swartz Bay terminal

Passengers destined for Tsawwassen without a reservation should allow for extra time at terminal

End of an era as Buddies Toys leaves Oak Bay Avenue

Victoria location merges with parent shop in Sidney

Tour de Victoria: The downlow on detours in the region

Thousands of cyclists participating in ninth Tour de Victoria

WATCH: Family dog missing after fire tears through Metchosin home

Firefighters continue to monitor for hot spots

Victoria Shamrocks open WLA finals at Q Centre in Colwood

Team is evenly matched in championship series against Maple Ridge Burrards

‘Easy Rider’ star Peter Fonda dies at 79

Actor and writer was nominated for an Oscar for co-writing the 1969 psychedelic road trip movie

Excavators help cute kid who copied their dig with his toys stay “safe at work”

Carson Carnegie wakes up at 7:00 am every morning to watch construction work on his street

Bob Lenarduzzi out as Vancouver Whitecaps president

MLS team is at the bottom of the Western Conference standings

B.C. daycare operator denies negligence in death of ‘Baby Mac’

Infant died in early 2017 after biting an electrical cord, according to a lawsuit filed by his mom

BC SPCA reopens animal cruelty investigation at Abbotsford pig farm

Additional alleged footage released from Excelsior Hog Farm sparks new investigation

RCMP on Vancouver Island seek information on alleged ‘breaking out’ bandit

Man alleged to have hid in Nanaimo business washroom ceiling overnight, took monitors

Greater Victoria wanted list for the week of Aug. 13

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

Most Read