Whistler Blog

Squamish Real Estate Market Report: May 2018

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With the first 4 months of 2018 complete, we are starting to see a real estate market that is shifting. There are several factors that could be accounting for these changes.

At the beginning of the year, the Federal government made some fundamental adjustments to how buyers qualified for a mortgage. Prior to January 1, 2018 buyers who were purchasing with a down payment of less than 20% had to qualify under a stress test in case of an increase in interest rates. As of January 1, this stress test has now be applied across all mortgages in Canada. The fundamental impact of this change is that it reduces the borrower’s capacity to obtain funds by 20%. For example, if you qualified for a $500,000 mortgage in 2017, you would now qualify for a mortgage of only $400,000 under the new rules. This has made it very challenging for many buyers, especially first time buyers who move into the marketplace and allow sellers to move up or down in the purchasing cycle.

On the provincial side, the government has implemented several new taxation rules which increased the taxes charged to foreign buyers and implemented a speculation tax on investors. There is also a new school tax on properties valued over $3,000,000 which comes into affect this year. The rules around the empty home tax which has been introduced in the City of Vancouver may be causing some buyers in the area to feel less welcome and could therefore stalling buying decisions. All these factors create some uncertainty for many people who may be waiting on the sidelines to see what transpires.

Lastly, most of the major banks have just increased their lending rates. This will reduce the average borrower’s buying power in all areas of the market. There is still some discussion that the Bank of Canada may have at least one more rate increase to come this year – a hike which traditionally gets funneled into higher rates at the bank.

How have all these factors impacted the real estate market in Squamish so far this year?

Over the first 4 months of 2018, we have seen an increase in supply; however, there has not been any substantial changes in prices, which have continued to increase – albeit at a slower pace. As pressure from Lower Mainland buyers decreases and supply increases, we forecast that there should be a stabilization in prices moving forwards, and perhaps even a minor correction.

Overall, the total number of units sold in the first 4 months of 2018 decreased by 23%, from 231 sales in 2017 to 178 sales in 2018. Single-family homes and apartments saw the largest decreases in unit sales volume with drops of 24% and 23% respectively. Meanwhile, we saw only a 12% drop in townhome sales.

In terms of values, we have seen an 8% increase in single-family values year-over-year. Towhome values increased by 11% and apartments witnessed the greatest price appreciation of 20%. The majority of these increases, with the exception of townhomes, can be attributed to upward price momentum through 2017. The trend so far this year has been a slowing in the pace at which prices have been increasing.

It would appear that change is upon us in the real estate market. Now it is a matter of seeing how these changes will play out in the long-term throughout the remainder of the year and beyond.