Greater Victoria’s housing market has a “moderate” degree of vulnerability as brisk sales, rising prices and limited inventories continue during the pandemic.
In its latest assessment, the Canada Mortgage and Housing Corp. said low mortgage rates and rising incomes contributed to a lower level of overvaluation.
However, Thursday’s report says heightened demand for single-family homes and a dwindling selection of those properties are potentially concerning in the coming months.
The federal agency’s quarterly assessment assigns low, moderate or high vulnerability ratings to major cities based on four factors — overheating, price acceleration, overvaluation and excess inventories.
If those factors become imbalanced or risks increase in several areas at once, the agency said, markets could be more vulnerable to troubles and people could begin struggling with their mortgages.
Housing regulators have been watching the real estate market closely throughout the pandemic because many major cities have seen a lack of inventory but no shortage of buyers.
In Greater Victoria, the overall assessment rating, and each of the individual indicators, remained the same during the final two quarters of 2020. Ratings for overheating, price acceleration and excess inventories remained low while overvaluation was moderate.
“As the job market recovers, economic fundamentals along with a low mortgage rate environment continued to be the key factors supporting price growth,” said CMHC analyst Pershing Sun. “As a result, the overvaluation indicator lowered as the gap between market price and estimated price narrowed.”
She said the low supply of detached homes — the lowest in the area since 2015 — led to rapid price increases as demand continued to outpace supply, and there is potential for overheating if the pattern continues.
The real estate market in Victoria has sizzled as hundreds of buyers are viewing homes and putting in offers above asking prices, some waiving inspections. Home sales of all types hit a record 863 during February, smashing the previous monthly mark of 780 in 1992, and sailing past the 772 sales in 2016.
The average price of a single-family home in the capital region spilled over the $1-million mark last June and the inventory of available homes for sale has withered since.
February’s single-family home average price hit $1.16 million — up from $888,000 during the same month a year ago.
The Victoria Real Estate Board said the benchmark value — or median price without the high and low end of sales — for a single-family home in the region’s core municipalities in February increased year-over-year by 9% to $948,200, a 1.7% increase from January.
Last month, the benchmark value for a condominium in the region remained close to last year’s value at $525,400.
CMHC said 2020 marked the highest level of new condo listings since 2015 — and the first time since 2008 that active listings of condos were greater than detached homes.
Sun said potential buyers could see a continued increase in prices of single-family homes until new construction catches up with demand, “and that takes time.”
She said some buyers fear missing out, but they should take the long-term view when buying a home, with careful financial planning, as interest rates will eventually rise.
CMHC said the brunt of the risks in Canada have been shouldered by Toronto, Ottawa, Hamilton, Halifax and Moncton, which all had high levels of vulnerability based on price increases and overvaluation.
In 91原创, the quarterly pace of sales returned to levels not seen since 2017, leading to significant price increases, but the market is considered moderate.
— With files from The 91原创 Press
