FINANCIAL SAVVY: Buyer’s market looming?

A retired corporate executive, enjoying post-retirement as an independent Financial Consultant (www.dolezalconsultants.ca), Peter Dolezal is the author of three books, including his recent Third Edition of The Smart Canadian Wealth-Builder.

At the beginning of 2018, major Canadian residential markets were still clearly in seller’s market territory, with sales-to-listing ratios of 40 to 50 per cent. As the year unfolded and the full effect of new mortgage stress tests, foreign buyers’ taxes, vacancy taxes, and the imminent implementation of BC’s Speculation Tax emerged, the sales-to-listing ratios plummeted.

In Greater Victoria for example, the sales-to-listings ratio in March 2018 hovered near 50 per cent. By December it had dropped to around 20% – technically, still a balanced market. The rapid rate of decline however, has threatened the emergence of a Buyer’s market in 2019.

One of the primary drivers of residential real estate has always been the first-time home-buyer. A recent survey of its members by the B.C. Notaries Association confirmed not only fewer such buyers in 2018, but also that those buyers were relying on significantly greater external assistance than in past years, toward their down payments.

Having lost some 20 per cent of purchasing power due to new stress tests and rising interest rates, many first-time buyers, without extra family assistance, are now faced with major delays in their ability to enter the market.

An October, 2018 CMHC report revealed that 85 per cent of first-time buyers already spend the maximum they can afford on their first home purchase; this leaves little room for absorbing the impact of new lending regulations and higher rates.

When the pool of first-time buyers shrinks, new construction slows as inventory of unsold strata units increases; and existing strata owners are delayed in their ability to sell before moving up to a higher-value home. The upward-ripple effect on re-sales and purchases is felt at all price levels – impeding sales volumes, and eventually triggering a seller’s market until the downward cycle once again begins to reverse, and affordability increases.

Other than in the over-million dollar segment of Canadian residential markets in which prices have plummeted, prices nationally have not experienced significant declines. The full impact however, of new regulations and higher rates, will only be felt in 2019.

Regardless of how residential real estate fares in 2019, one thing is clear. In every major Canadian market, the spectacular price increases of the last decade will not be seen again for some years. That does not make residential real estate a poor long-term investment; however, in the shorter-term, we should be happy if we achieve even inflation-only levels of price increases.

A retired corporate executive, enjoying post-retirement as an independent Financial Consultant (www.dolezalconsultants.ca), Peter Dolezal is the author of three books, including his recent Third Edition of The Smart Canadian Wealth-Builder.

Just Posted

Sensitive Santa brings patient holiday cheer to Tillicum Centre

Those who need more time with Santa can book a session ahead starting Nov. 19

B.C. mom, kids on bike turned away from Tim Hortons drive-thru

Car-free for years, Charity Millar ‘felt gross’ being denied service

The Salvation Army rings in Christmas Kettle Campaign in Victoria

Goal is to raise $250,000 this year for Vancouver Island residents needing support

Body found in Central Saanich waste recycling facility deemed non-suspicious

Coroners Service investigating circumstances of death

Saanich mom on a bike turned away in Tim Hortons drive-thru

Car-free for years, Charity Millar ‘felt gross’ being denied service

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

B.C. to advocate for frustrated, confused, unhappy cellphone users, says premier

Maple Ridge New Democrat Bob D’Eith to advocate for more affordable and transparent cellphone options

B.C. man who killed Belgian tourist near Boston Bar gets life in prison, no parole until 2042

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

‘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. researchers

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

Port Alberni rallies for mill workers

Fundraisers helping ease the sting of five months without work

Island student lobbies school board for dress code consistency

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

Most Read