With the new year underway and year-end stats now on hand, we’re able to provide an update on the local housing market.
2018 Closes with Underwhelming Home Sales
BC’s fourth-quarter sales remained underwhelming with a further 4.1% fall in sales volume after November showed a 5.2% decline in home sales.
Vancouver Island, excluding greater Victoria, showed the greatest decline with a 15.5% drop in sales
The GVRD dropped 8%
Okanagan-Mainline is down 4.2%
Victoria slows by 4%
The consensus on total BC year-end sales numbers is 79,000 – 80,000 units, which is below the 10-year average of 84,800 units. This being the first decline in sales since 2012, prices are adjusting. The difference between the low-end and high-end markets is continuing to compress which is rewarding buyers who are patient.
We suggest that move up or first-time buyers consult with a real estate professional who is an expert in the area they are interested in. The reason is there can be significant differences in local markets and property types. The decision to wait or buy now depends on where, and what you are looking for.
New Taxes and Rising Interest Rates
Political intervention, such as taxes and the implementation of a qualification stress test, along with rising interest rates are being cited as the main causes of 2018’s slowdown. This, in our opinion, makes 2018 an adjustment year as the market responded to the new rules.
We remain fortunate that BC continues to attract new residents and has a strong economy. With positive demographics and last year’s green light for the $40B LNG project, BC’s economic forecast remains positive. A strong economy and positive migration will translate to continued housing demand.
Barring any unforeseen economic shocks, we expect 2019 will see a small uptick in sales volume. We concur with many analysts that overall house prices will remain flat, with increases and decreases in some locales balancing each other out.
The Vancouver Vacancy Tax
Find out if you need to declare your home.
Vacancy rates remain exceptionally low with rental rates increasing as demand continues to outstrip supply. In Vancouver, it’s noteworthy that only 2,500 homes were assessed the vacancy tax last year. While this contributed $38,000,000 to the city coffers, the number of vacant homes estimated by the former Mayor and Council are much less than anticipated. Bottom line, there is no magic fix to Vancouver’s housing dilemma.
Watch for Your Speculation Tax Notice
We also pass along an important reminder: the BC Ministry of Finance recently issued their speculation tax notice by regular mail to all BC Homeowners. It is the responsibility of all homeowners to apply for their exemption by March 31st. Those who fail to do so will be assessed the speculation tax, due and payable by July 2nd. People who pay mistakenly can apply for a rebate within 6 years according to the ministry. Please keep an eye out for your notice!
Canadians Carry a High Debt Load
A recent survey by the MNP accounting firm shows Canadians are feeling the pressure of their debt loads. The study concluded that less than 2 out of 5 surveyed had confidence in their ability to face major life-changing events such as a change in relationship status (36%), prolonged illness of 3 months or longer (33%), unexpected auto repairs (31%), loss of employment (30%), death of an immediate family member (30%), paying for their own or someone else’s education (29%). 51% respondents indicated their life has become more difficult as a result of rising interest rates.
Bond Have Remained Stable
Bond yields are stable and show no signs of upward movement after China announced its 2018 growth of 6.6% was its lowest in 30 years. The IMF has in response downgraded its expectations for global growth to 3.5% from 3.7%.
The combination of slower than expected growth in China, ongoing US government shutdown, and uncertainty of an orderly and structured Brexit makes for continued market volatility. World leaders who are meeting in Davos Switzerland are expressing worry that trade wars and polarization of politics are undermining not only their own economies but the rest of the world’s economies as well. In its recent statement, the IMF doesn’t see a recession on the horizon but indicated the growing trend of risk factors is becoming a greater concern.
Capitalize on Lower Home Prices
We expect interest rates to stay near current levels and continue to see excellent opportunities for buyers who want to capitalize on lower home prices in certain segments.
For those who have home equity and concerns about cash flow, we may be able to help by consolidating other debt into a lower monthly payment.
Our team remains committed to your financial well-being and appreciates your amazing support!
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