The final batch of sales figures from the Victoria Real Estate Board (VREB) for 2022 round out the downward trend for sales and read like an indictment of new federal and provincial rules for 2023.
VREB’s present Karen Dinnie-Smyth said in a release that the federal government’s two-year-long ban on foreign ownership of residential properties (with some exceptions) effective since Jan. 1 will not make a difference.
“This is a disappointing, politically motivated action in the theme of government trying to slow demand, rather than addressing the more lengthy and less politically popular process of building more housing supply,” said Dinnie-Smyth. “The cost of housing is unlikely to be affected by this ban because we know from the government’s own data that foreign buyers represent only a handful of transactions in our region in recent years.”
According to Brendon Ogmundson, chief economist with British Columbia Real Estate Association (BCREA), the highest month for real estate sales in Greater Victoria involving at least one foreign party was April 2022 with 19.
Only two other months in 2022 generated a sufficiently large number of sales, which did not lead to the suppression of data for privacy reasons.
In 2022, 0.5 per cent of all sales in British Columbia involved foreign parties, he said earlier.
“With the foreign buyer ban, it is just not a significant driver of the market,” he said. “Clearly, foreign buyers aren’t the cause of the problem in our housing market. It (the policy) is kind of pointless in terms of market impact.”
Dinnie-Smyth also finds that the rescission period — familiarly known as cooling-off period allowing buyers to withdraw from a purchase agreement for up to three days — is questionable after coming into effect on Jan. 3.
“The Victoria market has already cooled off, which leaves this legislation at least a year out of date and toothless in terms of public protection, as standard condition terms are often longer than the three-day legislated term,” said Dinnie-Smyth.
The provincial government said in a release that extra time will help buyers fully consider whether a purchase is right for them under any market conditions, including in the face of rising interest rates and any high-pressure sales.
Katrine Conroy, minister of finance, said buying a home is one of the biggest decisions people make in their lives.
“This is an important milestone as we lead the way in protecting people and strengthening public confidence in the real estate market,” she said.
The cooling-off period includes a cancellation fee of 0.25 per cent of the purchase price, or $250 for every $100,000.
Leo Spalteholz, an independent Victoria-based analyst, who operates househuntvictoria.ca, sees the new rules as a protection for buyers in high-pressure sales or future overheated markets.
Ogmundson agrees with some but not all aspects of that argument.
“It’s useful in an overheated market, but not in the market that we are right now,” he said.
In fact, it could even add volatility into market, both on the way up and the way down, because buyers can easily rescind their offers.
Volatile is certainly one way to describe 2022.
Spalteholz described 2022 as a “tumultuous” year that ranged from “epic bidding wars and mania” to the “biggest drop in prices the Victoria market has seen in 40 years” thanks to rapid interest rate increases by the Bank of Canada, the latest one having come just before the middle of December 2022.
The overnight rate now sits at what Spalteholz calls a “staggering” four per cent.
“This year was another one where no one saw what was coming, which is that interest rates absolutely clobbered the market,” he said.
The sales figures for December 2022 as well as the year overall confirm this observation.
Realtors sold 320 properties in December 2022, 26.9 per cent fewer than the 438 properties sold 12 months earlier and 16.7 per cent less than in November 2022. Sales of condominiums were down 38.2 per cent from December 2021 with 94 units sold,while sales of single family homes decreased 24.6 per cent from December 2021 with 156 sold.
But Dinnie-Smyth also sees an upside — for buyers.
“Slower sale activity has resulted in inventory levels rebounding from historic lows, which means there are more opportunities for buyers in our market this year than in recent years,” she said.
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