Canada Mortgage and Housing Corp. is putting a cap on the amount of mortgage-backed securities sold by banks that it is willing to guarantee.

A spokesperson with CMHC confirmed media reports Monday that the national housing agency will, effective immediately, limit banks and other mortgage lenders to $350 million worth of new mortgage-backed securities per month. The decision comes in the wake of "unexpected demand" for the guarantees, a spokeswoman for CMHC said in an emailed statement.

http://www.cbc.ca/news/business/story/2013/08/06/business-mortgage-banks.html

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Yes, we sure all like to buy a product when it is on sale.  Whether we are talking shirts, groceries, or houses - a bargain draws in the buyers like nothing else!  

In many ways, you could argue that real estate in Victoria is a bargain right now. Ok, I am not completely crazy and I do realize that we have some of the highest home prices in the country.  But, that really is nothing new for our fair city.  We have always had very high home prices relative to the average income and relative to other Canadian cities. But, our great quality of life, climate, and natural beauty means that people have always chosen to dedicate a higher portion of their income to housing so that they can live here.  Prices will go up and down, but the benefits that Victoria offers will endure.

However, don't take my word for it!  Even in the face of increasing interest rates and tighter lending rules, as soon as we have a small drop in pricing, local buyers take the opportunity to move up market, buyers move back to the core from the suburbs, and non-locals pick up their dream home.  This is exactly what is happening right now.  Prices for homes remain slightly below historical levels, right now down about 3% from last year.  While some other cities can swing up and down 20% or more, a 3% discount is enough to drive many more sales in Victoria where our market is quite price inflexible.  For example, over the last 30 days, we saw 320 single family home sales - 26% more than last this period last year and a brisk pace of sales compared to any 30 days period in the year!  A little discount is big news here in Victoria.

In the condo market, however, a small discount is not proving enough to drive sales.  Prices are down 9% compared to last year but the volume of sales is also down over 10%.  First time buyers are still having a tough time getting into the market and this shows up in this market segment.  While Victoria is extremely attractive to those with deeper pockets, younger buyers even with a good job have a tough time buying a piece of the rock for themselves.  We hear time and time again that they can afford the mortgage payments easily, but they don't have the $10,000 or more for a down payment that is necessary.  

Here are the raw stats:

Over the last 30 days, 320 single family houses were sold, up by 26 houses from last week.  The median price is up $1,000 to $531,000. The average house was on the market for 44 days.  In the last 30 days, 121 condos were sold, down by 5 condos from last week.  The median price is down $7,500 to $258,000. The average condo was on the market for 54 days.

There are now 2,144 houses for sale, down by 102 from last week.  Condo inventory has fallen by 51 to 930 suites. 

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