FOREIGN BUYERS IN 2017 – SOME CONTEXT
There has been a lot of media coverage on the impact of foreign buyers on the real estate market in Canada. Last summer the BC government implemented a 15% property transfer tax on foreign buyers in Metro Vancouver. More recently, the Ontario government introduced a number of measures to cool the real estate market in the “Greater Golden Horseshoe” area. Included in the measures was a 15% non-resident speculation tax. Closer to home, Victoria City Council narrowly missed passing a resolution that would have called on the BC government to implement a foreign buyers tax of 15% in Victoria.
Amid concerns with escalating home prices in Metro Vancouver, the BC government began to gather data on the number of property transfers involving foreign buyers. It released the initial figures for the period Jun 10-29, 2016. In Metro Vancouver, the figure was 5.1%. The next set of figures released by the BC government included the period Jun 30 to Jul 14. The number of property transfers involving foreign nationals jumped to 14.9% in Metro Vancouver. These figures appear to have prompted the BC government to implement the 15% property transfer tax on foreign buyers in Metro Vancouver effective Aug 2, 2016. Following the implementation of the foreign buyers tax, the percentage of foreign involvement fell dramatically to 1.3% for the period Aug 2 to Sep 30. However, it seems clear that many foreign buyers were able to move the completion date of their purchase from the Aug – Sep period to the Jun – Jul period.
Foreign buyers appear to have been involved in perhaps as much as 8% of the property transfers between Jun and Sep 2016 in Metro Vancouver. Between Oct 2016 and Feb 2017, foreign involvement has averaged 3.9%. While sales fell in Metro Vancouver after the implementation of the foreign buyers tax, many involved in the real estate market in Vancouver argue that sales were in fact slowing well before the government acted, largely because of a lack of supply. What seems clear is that the implementation of the foreign buyers tax has not had a significant impact on home prices. The average sale price fell a modest -2.2% from $953,293 in the period Jun to Sep 2016 to $932,685 in the period Oct 2016 to Feb 2017. Prices have since recovered. Metro Vancouver recorded an average sale price for a residential property of $1,110,376 in May 2017, a record high. There are many factors that affect the real estate market. The influence of foreign buyers seems negligible.
In the Capital Regional District, foreign buyers were involved in 3.7% of the property transfers between Jun and Sep 2016. Since then, there has been a small, and very likely inconsequential, up-tick in foreign involvement. Foreign buyers were involved in 5.7% of the property transfers between Oct 2016 and Feb 2017.
THE VICTORIA MARKET
After a record-breaking year in 2016, it is not surprising that we are witnessing a slowdown in sales in Victoria this year. The extraordinary demand of last year has eased. However, it still remained a strong seller’s market in the 2nd Qtr of 2017. Although sales are down from last year, prices are up significantly from the 2nd Qtr of 2016. The ratio of sales-to-listings (a measure of market strength) remained strong. Properties took less time to sell and they sold for an average of about +0.6% above the original list price. Indeed, multiple offer situations are not uncommon, more than half of the homes sold at, or above, their list price.
As shown in Table 1, the number of new listings was 3,781, in the 2 Qtr of 2017, down -4.5% from 3,959 a year ago. Sales of nd residential properties (i.e., all types of housing, excluding lots/acreage and commercial) through the Victoria Real Estate Board’s MLS® totalled 2,756 in the 2nd Qtr of 2017, down -22.2% from 3,543 in the 2nd Qtr of 2016. The sales-to-new-listings ratio was .73 in the 2 Qtr of 2017, down from .90 a year ago but still nd in seller’s market territory. Homes that sold in the 2nd Qtr of 2017 were on the market for an average of 23 days, down from 36 days last year. Both average and median sale prices continue to trend upward. The average sale price of a residential property in Greater Victoria and other areas was $658,003 in the 2nd Qtr of 2017, up +11.0% from $592,712 in the 2nd Qtr of 2016. The median sale price was $575,000, up +12.8% from $510,000 last year.
The figures for Victoria compare with average residential sale prices and year-over-year percentage changes of $1,110,376 (+5.2%) in Vancouver, $740,438 (+2.2%) in the Fraser Valley, $863,910 (+14.9%) in Greater Toronto and $485,444 (+1.8%) in Calgary for the month of May 2017.
THE MARKET INVENTORY
There were 1,271 properties (including lots and acreage) active on the VREB’s MLS® database for the Greater Victoria area (i.e., excluding the Malahat, Up-Island and the Gulf Islands) on July 1, 2017, down -7.5% from 1,374 a year ago. It should be noted that the inventory was 2,796 two years ago
SINGLE FAMILY DWELLINGS (SFDs)
Sales of SFDs in Greater Victoria totalled 1,400 in the 2nd Qtr of 2017, down -27.5% from 1,931 sales in the 2nd Qtr of 2016. The average sale price of SFDs in the 2nd Qtr of 2017 was $856,939, up +12.9% from an average of $759,197 in the 2nd Qtr of 2016. Moreover, the median sale price was $755,000, up +16.2% from $650,000 in the 2nd Qtr of 2016. As shown in Chart 3, sale prices have shown sizeable and steady increases since the 4th Qtr of 2014. SFDs that sold in the 2nd Qtr of 2017 were on the market for an average of 18 days, down from 28 days last year. The sales-to-listings ratio eased to .71 in the 2nd Qtr of 2017, still in seller’s market territory, but down from .94 last year.
Condominium sales totalled 877 in the 2nd Qtr of 2017. This was down -12.9% from 1,007 sales in the 2nd Qtr of 2016. The average sale price for a condo was $415,713 in the 2nd Qtr of 2017, up +17.6% from $353,456 in the 2nd Qtr of 2016. The median sale price was $365,000, up +17.0% from $312,000 last year. As shown in Chart 4, the average and median sale prices have shown a steady upward trend since the 3rd Qtr of 2015. Condos took an average of 18 days to sell in the 2nd Qtr of 2017, down from 34 days last year. The sales-to-listings ratio was .86, down slightly from .88 last year.
There were 283 townhouse sales in the 2nd Qtr of 2017. This was down -13.7% from 328 sales in the 2nd Qtr of 2016. The average selling price in the 2nd Qtr of 2017 was $565,630, up +23.8% from $456,829 in the 2nd Qtr of 2016. The median sale price was $497,500, up +17.1% from $425,000 last year. Townhouses took an average of 16 days to sell in the 2nd Qtr of 2017, down from 38 days last year. The sales-to-listings ratio was .85. This ratio was 1.02 last year.
There were 61 lots/acreage sold in the 2nd Qtr of 2017, down from 112 sales in the 2nd Qtr of 2016. The average and median sale prices were $608,122 and $435,750 respectively, compared to $519,491 and $402,900 last year.
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Real Estate in Victoria …Keeping You Informed: I provide this newsletter to clients, customers and friends to help them keep informed of developments in the real estate market in the Victoria area. If you do not want to receive this newsletter in the future, please let me know. It is not intended to solicit or interfere with existing listings or Agency relationships. The information contained herein is based on sources which are believed to be reliable, but it is not guaranteed. The content of this newsletter is copyright©. The data and information outlined herein was derived from a number of sources including: the VREB, the BCREA and the CREA. The Publisher is responsible for the analysis of the data and any opinions expressed herein.