Local real estate sales continue in a cooling trend that began six months ago, soon after the changes to the mortgage qualification rules came into effect.
Sales in the Chilliwack and District Real Estate Board (CADREB) area in August dropped to levels not seen in five years with just 197 homes sold, down 44 per cent from the 351 sales in August one year ago.
And CADREB president Lori Maier blames the government’s new lending rules.
“New mortgage qualification rules were put into effect in the new year,” said CADREB president Lori Maier. “Not only do Canadians need to qualify for the mortgage amount they are currently seeking, but they need to be able to withstand any future rate hikes up to a level prescribed by the Bank of Canada.”
While sales cool, prices remain hot with the average cost of a home sold last month at $533,612. That’s up 11.7 per cent per cent from the average for August 2017 of $477,515.
The average sale price in July was $490,652, the difference compared to August being that single family homes dominated the market last month with 115 sales.
There were just 42 townhouses sold and 31 apartments.
The average sale price of a single family home sold last month was $595,203 a drop from $634,450 in March, pointing to buyers reaching for more affordable options in the face of the stricter lending rules.
And while those rules are pushing those who buy into lower price brackets, they are pushing some potential homebuyers out of the market altogether, according to the CADREB President.
“Generally, housing markets across the country have faced a downturn, but that causes a more balanced market, so we are expecting to see recovery by the end of the year,” Maier said. “In the meantime, it is definitely leaning towards a buyer’s market.”
Of the 197 sales in August, the highest number (32) were in the $450,000 to $499,999 range, followed by 20 sales in the $550,000 to $599,999 range. There were six sales over the $1 million mark.
What has increased noticeably is the number of active listings on the market. At the end of the last month, there were 1,404 listings, compared to 894 at the same time last year.
The local real estate situation mirrors other provincial markets as the mortgage stress test is causing the B.C. Real Estate Association (BCREA) to forecast a 21 per cent decline in residential home sales this year after recording 103,768 sales in 2017.
With a forecast of 88,700 sales for 2018, that’s still above the 10-year average of 84,800.
The BCREA has drastically downplayed its expected forecast for CADREB for 2018 and 2019 from its first quarter report compared to the third quarter report issued in August.
In March, the BCREA predicted 3,850 sales in CADREB in 2018 with an average sale price of $498,000, and 3,750 sales with an average of $520,000 in 2019.
Today, the BCREA forecasts there will be just 3,050 sales this year and an average of $514,000. For 2019, the prediction is that will drop to 2,900 sales with prices remaining steady at $515,000.
Realtors say its a buyers’ market with increasing listings and steady prices.
“With the cost of rent rising, buying your own home still makes a lot of sense, and remains one of the soundest long term investments you will ever make,” Maier said.