Weekly stats update courtesy of the VREB via Marko Juras.
|Wk 1||Wk 2||Wk 3||Wk 4|
|Sales to New Listings||78%||79%||78%||75%||
|Months of Inventory||
Small bump in inventory this week, now only down 38% over last year but fundamentally nothing has changed.
Let’s be clear: The market is still stupidly hot and despite seasonal slowdowns there is no hint in the stats that anything is cooling off significantly. However I would not go so far as to say that everything is peachy and we are set for another year of huge price increases because global risk and unknowns are increasing quickly.
Real estate is mostly local, and our extended period of roughly flat prices helped immensely to de-risk our market, such that even the astonishing upswing this year was not enough to move us into a range that has historically been correlated with market corrections. However compared to previous price runups, several things are different this time:
- We are out of sync with Vancouver. As they exploded from 2008 to 2014 we did nothing. As they deteriorate at an alarming rate we are still hot.
- After almost a decade of incorrect calls of the bottom, both fixed and variable rates finally seem to be either poised to move up or already have.
- Governments at all levels seem determined to reign in our national housing monster. During the explosion in prices between 2000 and 2008 the government was stoking the fire by loosening CMHC regulations and making credit easier to access. Since 2008 the CMHC has taken the opposite tack, but now provincial and municipal governments have joined in and are working if not as a team, at least towards the same goal.
- Consumer and mortgage debt loads are higher than ever and that has a worrying correlation with subsequent recession.
- Real estate and related industries are a very large portion of our GDP, and when Vancouver melts down you can be assured that there will be spillover into Victoria. As the geniuses at Manulife found out in their poll, it’s difficult to pay a mortgage without a job.
- International stability is looking more tenuous with citizens rejecting the establishment in several countries including our closest neighbour.
I don’t think the risks above are catastrophic yet, and if I was planning to stay in a house for 10 years or more I would still buy in Victoria at today’s prices, but I am not quite as certain it’s a good time to buy as I was 9 months ago. The picture is changing very quickly and if there’s one thing we can expect from the government, it’s that they’ll probably act with just as little thought when tightening the regulations as they did when they loosened them in the first place.