We can’t help but think that there is great opportunity for buyers in the Victoria real estate market. Historically, our market has been one of the most stable in the country with much smaller swings, up or down, in pricing than other major centers. Taking a snapshot today, we see that prices are down over 5% from earlier this spring and down nearly 10% compared to last spring. For Victoria, this is a large price decrease. The last time we had a drop of this magnitude was back in 2008 when the recession hit. At that time, prices dropped by 12%, stayed down for 3-4 months, and then quickly jumped right back up. Those with the cash and the courage necessary to make a purchase pocketed a quick and substantial profit. The question is, are we seeing the same negative bubble again?
Of course, there are always the negative “experts” out there that say our homes in Victoria are overpriced and a big drop and permanent drop in prices is coming. It seems that no matter what the market, we have heard this from the same people, constantly, for the last 10 years. Too bad that they didn’t quiet down, buy a home 10 years ago, and enjoy the 100% price increase since then!
We could go on for pages and pages explaining why a large price correction is unlikely for Victoria, but we won’t. Suffice it to say that there are many geographical, economic, and political factors that work to keep our prices high and stable. It is our expert, or not as you may think, opinion that we are all going to look back and ask ourselves why we didn’t take advantage of this price drop and make a purchase. History shows us that Victoria is a sought after region and that price drops here have always been temporary. With prices down right now, and inventory levels very high, there are not only great deals out there, but a lot of properties to choose from.
If you are looking for an investment property, a larger home, or your first home, you could do very well to take advantage of this temporary period of instability. We bet that you will be happy that you did.
Over the last 30 days, 329 single family houses were sold, up by 13 houses from last week. The median price is down $1,125 to $532,750. The average house was on the market for 40 days.
In the last 30 days, 153 condos were sold, up by 2 condos from last week. The median price is up $3,000 to $272,500. The average condo was on the market for 38 days.
There are now 2,487 houses for sale, up by 26 from last week. Condo inventory has risen by 8 to 1145 suites.
Canada’s annual inflation rate eased in May to 1.2 per cent, down significantly from the 2-per-cent pace of April, and the slowest since June, 2010, according to Statistics Canada figures released Friday.
That came just one day after Finance Minister Jim Flaherty tightened up mortgage regulations to help tame Canada’s high consumer debt burden, also taking pressure off the central bank to try to slow borrowing by raising its benchmark overnight rate from its current low level of 1 per cent.
Coupled with that is a string of recent weak economic readings, from retail and manufacturing sales.
“This simply drives home the point that there is now precisely zero urgency to tighten,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns, referring to Friday’s inflation report.
Bank of Canada governor Mark Carney was not expected to tighten policy soon at any rate, but economists now see him moving even later.
The so-called core rate of inflation, which excludes volatile items and helps guide the Bank of Canada, now stands at 1.8 per cent.
“Ottawa’s significant step to tighten insured mortgages this week should address the bank’s biggest domestic concern – the buildup of household debt, and the related strength in home prices,” Mr. Porter said.
“This fourth round of non-rate tightening will act like a targeted rate increase, and should dampen the housing market in a timely manner. It was probably no coincidence that the measures were announced the very day after the Fed unveiled the extension of Operation Twist for another six months. The government had likely been assuming Bank of Canada rate hikes would act to dampen housing later this year; but with the Fed still moving in the opposite direction, any chance of 2012 Canadian rate hikes seemed to fly out the window.”
An extension of the 1-per-cent overnight rate would stretch out the longest period of stable borrowing costs in Canada since the 1950s even further.
The 2.3-per-cent drop in year-over-year gasoline prices that pushed down inflation in May could also play into consumer prices over the next couple of quarters, Emanuella Enenajor, an economist at CIBC World Markets, said, but inflation will trend toward 2 per cent by the end of the year.
From the Globe and Mail, June 22, 2012