VICTORIA — Real estate sales picked up in Greater Victoria and Vancouver Island last month compared with January but still lagged behind February of last year.
Continuing low interest rates and national job growth are credited with supporting Canadian housing demand, but the market will likely soften this year and into 2012, Scotiabank Group said in a Tuesday report.
The number of properties sold last month in the capital region rose by 44 per cent to 488 in February compared with 339 in January, the Victoria Real Estate Board said Tuesday.
Total sales for the region trail February 2010 when 621 properties changed hands. However, last year’s real estate market had an exceptionally strong start.
Back in February 2007 when the Greater Victoria real estate market was smoking hot, 707 sales were closed. At that time, there were 2,919 properties listed for sale. Now there are 3,714 in a market that is recovering from the blast of the 2008 global economic crisis.
Board president Dennis Fimrite said, “It is common to see the market pick up following the December-January holiday period and last month’s signficiant increase in sales, along with relatively stable prices, demonstrates ongoing confidence in the market by both buyers and sellers.”
The average price for a single-family house in Greater Victoria last month was $610,975, up from $603,401 in January. The median was $564,950.
As usual, there were several high-end sales. A total of 14 single-family properties sold for more than $1 million, including one in the Gulf Islands.
Among the 264 single-family homes which sold in February, Saanich East and West combined tallied 76 sales, followed by 37 in Langford, where developers are putting up houses on small lots, and and Victoria with 33.
Victoria led the way in condominium sales last month, with 65 properties changing hands.
The average price for the 134 condominiums sold in February inched up to $323,844 from $323,002 in January. The median was $285,444.
In the townhouse category there were 52 sales and the average slipped to $415,591 in February compared with $447,792 in the previous month. The median was $393,000.
The total value of all residential, acreage, and commercial sales through the Victoria board’s multiple listing service was $230.3 million in February.
For the area of the Island north of the Malahat, single-family sales rose 36 per cent in February to 280 from 205 in January. Last month’s sales were down three per cent compared with 289 in February 2010.
The average price of a single-family home last month came in at $338,882, up by 5.4 per cent from January’s average of $321,489, the Vancouver Island Real Estate Board said. February’s average was down one per cent from the same month last year when it was $342,047.
Year-over-year, the number of February sales rose by 19 per cent in both the Comox Valley and Nanaimo. Sale numbers dropped by 24 per cent in the Cowichan Valley, by 16 per cent in Campbell River, by 14 per cent in Port Alberni and the western Island, and by 13 per cent in the Parksville Qualicum area.
Jim Stewart, board president, said, “We are seeing the market returning to normal conditions with sales and listings trending towards balanced conditions. Homes that are properly priced are seeing quite a bit of action and selling in reasonable length of time.”
Guy Bezeau, the board’s president-elect, said what although consumers are getting used to current low interest rates, “We are being told it is not a matter of if we will see them begin to rise but when.”
Nationally, Scotiabank expects sales volumes to edge down modestly in 2011, which places sales 15 per cent below the 2007 peak but in line with the 10-year average.
B.C. housing starts have picked up compared to 2009, but are projected to be flat through 2012, at levels below those of 2006 to 2008. Housing starts are projected to number 28,200 units this year, compared to 39,200 units in 2007.
Further tightening of mortgage lending rules will dampen Canadian real estate activity, as will reduced affordability. Average home prices relative to incomes are at historic highs and affordability will be strained as the cost of borrowing goes up, Scotiabank said.
Also, there is a lack of pent-up demand following the decade-long housing boom, and the report says home ownership in Canada is at a “cyclical and structural peak.”
While Canadian home values are overvalued based on a number of housing valuation metrics, the risk of a U.S.-style housing collapse is “highly unlikely,” the report said.