The market for detached properties on Bowen Island has slowed dramatically as we enter 2019.
Compared to 2017, length of time on the market increased 64 per cent in 2018 and number of sales decreased 13 per cent.
The dramatic change in market activity are a reaction to taxes introduced in B.C., including the foreign buyer’s tax and the speculation tax (although Bowen Island is excluded from the speculation tax), the school tax increase for properties over $3 million and increases in Property Transfer Tax.
As we enter 2019, perhaps the biggest impediment to domestic buyer is the mortgage stress test which has effectively reduced the ability of many to qualify for the financing they need.
The stress test was introduced to reduce mortgage default rates although industry statistics demonstrate that “default rates are sensitive to job losses, not interest rate changes.” (Haider-Moranis Bulletin)
Headlines continue to proclaim “Housing Prices Down,” and readers who rely on the headline rather than reading the article, miss the fact that ‘housing’ refers to the luxury homes and condo market.
The Real Estate Board of Greater Vancouver MLS® statistics for detached homes indicate that overall, compared to 2017, the market in 2018 saw only a 1 per cent drop in Median Sales Price and a 0.1 per cent increase in MLS®HPI (Home Price Index or benchmark price).
Given these stats include the luxury market which experienced deep discounts, the market for more modest homes on the mainland saw slight price increases.
While Bowen Island experienced a similar slow down in activity compared to 2017, with a 13 per cent drop in the number of sales and a 12 per cent drop in the dollar volume of sales, our Median Sales Price was up almost 1 per cent and our MLS®HPI was up almost 10 per cent.
What sold in 2018? The highest price for a property (detached home) was $3.58 million and the lowest price was $450,000. The 58 homes purchased in 2018 on Bowen totaled $66.7 million. Thirty homes sold in the range of $800,000 to $1.4 million, 17 at less than $800,000, and 11 over $1.4 million.
At 31 December 2018, on Bowen Island, the Average Sale Price was $1.14 million, the MLS®HPI price was $991,720, and the Median Sale Price was $966,000.
Entering 2019, patience will be a virtue for sellers, as the median number of days on market has increased, and given public perception of the market on the mainland, listing prices will likely reflect values set in 2018, perhaps with modest increases over the year. (In 2018, sold prices averaged 97 per cent of the list price, suggesting that buyers were relatively comfortable with sellers’ prices.)
Buyers are not likely to see price reductions but will likely see more choice as the pace of new listings outstrips the pace of sales.
Predictions are all over the map with some suggesting very modest recovery in 2019 and others suggesting further downward pressure for the next couple of years.
Although most predictions see prices increasing substantially over the next decade, no surprises are anticipated for the Bowen Island market in 2019.