Greater Victoria home prices hit record high: RBC
Sean Burke’s strategy to avoid a frenzied bidding war when buying a house in Saanich has paid off. He mapped out a plan before starting his hunt in a market that is now the third least-affordable in the country, after Vancouver and Toronto, according to a new affordability study by RBC.
Bidding wars are seeing houses in popular areas sell at thousands of dollars above their asking price. “I think it just gets out of control,” said Burke. A key part of his strategy was looking at houses that had been on the market for at least seven days.
After seven weeks, Burke found the Maplewood house, which had been listed for 10 days. He sealed a deal for $670,000, a little below the asking price, working with real estate agent Daniel Clover of Re/ Max Camosun.
Burke takes possession July 8. “I can’t wait,” he said. “It’s very central, quite a beautiful area.”
The three-bedroom, 1985-built house is a little smaller than Burke had hoped for, but it has a large garage, which was on the wish list. Burke thinks the house was available because it needs some upgrading, such as painting and repairs to the wooden deck. Also, it does not have a suite, something that many buyers seek to help with mortgage payments.
He’s in an enviable position in today’s market because he owns a rental house in Saanich, which he is holding onto while watching the market. “I think it is going to go up for a few more years.”
The average price of a single- family house in Greater Victoria reached a record high of $763,517 in May. Financing rules often insists that mortgages not exceed about 30 per cent of income.
An RBC housing report said the affordability measure for the capital region means that it costs 53.6 per cent of a household income to cover ownership costs for a single-family house. The measure is the proportion of median pre-tax household income required to pay the mortgage, property taxes and utilities based on the average market price. It is based on a 25-year mortgage and a 25 per cent down payment.
If that seems high, consider Vancouver, where 120 per cent of income is needed to cover costs for a single-family house, and where the average price of a detached house is more than $1 million.
The rate for all types of housing in Greater Victoria is 47.4 per cent, behind Vancouver at 87.6 per cent and Toronto at 60.6 per cent. Nationally, the rate is 47.1 per cent for all categories of housing.
“The affordability of single-detached homes in Victoria is quite stretched compared to most cities across Canada, while the affordability measure for condo apartments eroded only slightly in the first quarter,” Craig Wright, RBC chief econo- mist, said. Condominiums are more affordable at 31.9 per cent.
Clover, the real estate agent, recently sold a house listed for $888,888 for $1.158 million. The seller received eight offers and a local resident was successful. One of the offers came from two couples from Vancouver who ferried over to view the house. Their offer was not successful, but they had wanted to share it, as a way to afford a house, Clover said. He is also seeing parents buy a house with room for adult children and grandchildren.
John Byrne, a real estate agent with the Sutton Group West Coast Realty in Victoria, said single-family homes in the core of Victoria are “getting out of reach for a lot of people starting out. So, certainly townhouses, duplexes, and condos are becoming options for them.”
Some will purchase a condo so they can get into the housing market and start building equity, he said. “They see we are probably nowhere near our peak and they want to get in before it rises further.”