Market Intelligence - May 2023

May 2023

MARKET RESILIENCY

There’s rarely a dull moment in the real estate market and this past month was no exception!

We are at the beginning of our Spring market, where we see a familiar pattern emerge, whereby most sales for the year occur. We had an increase in sales over the previous month and with a continuation of low inventory levels and new properties slow to come onto the market, our prices have stabilized for now. Our market desperately needs more inventory in order to balance the supply against robust buyer demand.

The BC real estate market has continued to exhibit resilience in the face of various multi-level government interventions on the demand-side. They have aimed all policies to make housing more affordable for the average Canadian.

Here’s a short list of demand-side policies in recent years:

• Foreign buyer tax

• Mortgage Stress Test

• BC Speculation Tax

•

Empty Homes Tax (Vancouver & Toronto)

• Expanded Mortgage Stress Test

• Increased Foreign Buyer Tax

• Outright Foreign Buyer Ban

• 400bps increase in interest rates in 12 months

• Under-used Housing Tax

An increase in housing supply is much needed in order to solve our housing crisis and address affordability. We need to entice new construction...reducing development charges, speeding up permit approvals and increasing density would certainly help. However, most times, policy makers are actually doing the opposite.

* CMHC announced a 100-200% increase in their development fees on their rental construction financing program. We desperately need rental purpose-built townhomes and condos.

* Metro Vancouver Board of Directors approved a motion to re-work its budget to ease the rising property tax burden on residents—and instead will raise development fees on new housing construction.

Meanwhile, in Ontario, the taxing of new homes now accounts for about 30% of the cost of a new home. If a new home in Ontario costs $975,000, then $292,500 of it is taxes.

Affordability remains a significant issue for many potential homebuyers, as rising property prices have outpaced income growth. Concerns about housing speculation and its impact on the market have

Number of Sales

All Property Types - Greater Victoria

led to calls for further regulatory measures.

In response to concerns about age discrimination and the need to create more inclusive communities, the BC government recently introduced changes to the Strata Property Act. Under the amended legislation, strata corporations are now prohibited from restricting the sale, rental, or occupancy of a strata lot based solely on the age of the occupant, except for developments specifically designed to accommodate seniors.

This change is expected to have a significant impact on the real estate market, particularly in areas with a high concentration of age-restricted communities. By opening up these communities to a broader range of potential buyers and renters, the amended Strata Property Act could stimulate increased demand for properties within these communities. With the latest change to the Act, an owner, renter or occupant moving into a 55+ age-restricted strata corporation, or section, must meet the age criteria. However, the age-restriction does not apply to a spouse, partner or children, including adult children. This change opens the door to an even larger pool of buyers for age restricted buildings.

The Bank of Canada has maintained its target for the overnight rate unchanged, inflation has dropped from its peak of 8.1% last year to 4.3% in March. We expect it will decline to around 3% this summer. With rates holding steady, purchasers have a more realistic grasp on borrowing power, which helps buyer sentiment.

The BC real estate market has showed a re-

Fig.

markable level of resilience but is not without its challenges, including affordability issues and the potential impact of regulatory changes.

The market remains a complex landscape, with many factors influencing its performance. By understanding the impact of recent changes to the Strata Property Act, as well as the role of interest rates and multilevel government policies, industry professionals and potential homebuyers can better navigate this dynamic market and make informed decisions.

Being a part of our boutique brokerage means benefiting from the strength of the whole. It means coming together with fellow real estate professionals who are constantly rethinking industry norms and pushing themselves further through technology, design and service.