It’s finally possible local real estate could be heading towards a buyers’ market as sales slowed last month due to the new mortgage “stress test,” according to the Chilliwack and District Real Estate Board (CADREB).
There were 324 sales of all types of residential homes in May, which compares to 511 for the same month in 2017.
“With all other variables being fairly constant such as a strong provincial economy and moderate hikes in interest rates, the drop can be attributed to the more stringent lending rules introduced by the federal government early this Spring,” said Chilliwack and District Real Estate Board (CADREB) President Lori Maier.
Maier said that given B.C.’s economy remains strong during a month when home sales are typically at their strongest, the sales dip points only in one direction: the new mortgage rules.
Under the new regulations, potential home buyers need not only qualify for the amount borrowed on a new home, but have to be able to withstand any future mortgage rate interest hikes.
“This likely has caused some first-time buyers especially to put their home-buying plans on hold,” Maier said. “The recent issues of a trade war [between Canada and the U.S.] isn’t helping to instill confidence either.”
And while sales last month at 324 represent a 36 per cent drop over May 2017, that number is still higher than the 10-year average for that month. Since 2009, the average number of sales for May was 314.
Sales may have dipped year over year, but prices are up a lot. The average price of a home sold last month was $538,999 up 18 per cent from the average or $457,956 in May 2017.
That despite the fact that single family home and townhouse sales dropped considerably, with apartment sales staying level.
“At 63, apartment sales were strong, indicating stronger demand for lower price points,” CADREB said in a press release.
The high end of the market continues to prove popular too, however, with 14 sales over the $1 million mark, including one over $2 million.
Of the 324 sales posted last month, the highest number (40) were in the $550,000 to $599,999 range followed by 39 in the $450,000 to $499,999 range.
After several months of well-below average listings, the supply of homes for sale is increasing to a healthier level, with 1,277 homes on the market at the end of May, compared to 936 in May of last year.
“With decreased sales, it has shifted the local real estate landscape from a seller’s towards a buyer’s market,” Maier said.
Realtors are seeing price reductions on some listings due to slowing sales, so the relative affordability of the Chilliwack and area market remains attractive to buyers, particularly those from the Vancouver area, according to Maier.