July real estate sales brisk but constrained by low inventory

The pace of selling homes may have slowed slightly, but with limited inventory the heat was still turned up high on the Victoria real estate market in July, according to figures released Tuesday by the Victoria Real Estate Board.

The market set another record in July with a total of 972 properties sold, an increase of 22 per cent compared to the 796 properties sold in July last year. It was, however, a 17.2 per cent drop off from the number sold in June.

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“Though we saw the seasonal slowdown that we expect this time of year, we had another record breaking month,” board president Mike Nugent said in a statement. “The last time we saw a July this busy was in 2009, when 933 properties sold.”

Inventory levels are part of the problem with 2,161 active listings on the Multiple Listings Service at the end of July, 45 per cent fewer than the 3,942 active listings at the end of July 2015.

The board is concerned about the effect of new tax legislation targeting foreign buyers and what that could mean for the Victoria market. “At this time we can only guess how a foreign investor’s tax in the Metro Vancouver region will impact sales here in Victoria,” said Nugent.

At first blush, it seems the tax — a 15 per cent tax on foreign buyers purchasing property in the Lower Mainland, which is meant to cool off that housing market — would have a minimal effect in Victoria. Foreign buyers accounted for 10 per cent of all real estate transactions in B.C. through a six-week period ending in mid-July, with 86 per cent of that spent in Vancouver. The province’s figures showed only three per cent of all transactions in the capital between June 10 and July 14 involved foreign nationals.

“Does this mean international demand will spill over into Victoria and other areas of B.C.? We won’t know until we see the data,” said Nugent. The capital region “saw two per cent out-of-country buyers in 2015. Although this is a small percentage of our buyers, anecdotally foreign buyers do tend to favour the same core neighbourhoods and therefore can have an impact on those areas.”

The housing markets on the rest of the Island showed similar results in July, according to the Vancouver Island Real Estate Board.

Home sales cooled last month, with 650 homes sold north of the Malahat, compared to 712 sold in June, but it still meant a 19 per cent increase over the 512 sold in July 2015.

Like Victoria, inventory levels on the mid and north Island hit a record low with 1,577 active listings in July, down 34 per cent from the 2,391 reported in July 2015.

“The housing market is usually slower in the summer months, but we believe that sales might be beginning to normalize,” said Cameron Muir, chief economist with the B.C. Real Estate Association. “If so, that would allow inventory to build up and ease pricing pressure a bit.”

Margo Hoffman, president of the Vancouver Island Real Estate Board, said low inventory levels are choking sales activity.

“Although we’re in a seller’s market, homeowners are holding back because they’re worried they won’t find another home to purchase,” she said. “We’re beginning to see more inventory, but buyers snap up available properties quickly.”

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