Housing Market adjustment that may affect Greater Victoria Real Estate Market

Posted on February 25, 2019 by Ray Kong

Housing Market Adjusts to Mortgage Stress Test
BCREA 2019 First Quarter Housing Forecast Update

Multiple Listing Service® (MLS®) residential sales in the province are forecast to increase 2 per cent to 80,000 units this year, after recording 78,345 residential sales in 2018. MLS® residential sales are forecast to increase a further 6.9 per cent to 85,500 units in 2020. The 10-year average for MLS® residential sales in the province is 85,800 units.

“The negative shock to affordability and purchasing power created by the B20 stress test on mortgage borrowers is expected to continue constraining housing demand in the province this year,” said Cameron Muir, BCREA Chief Economist. “Favourable demographics along with continuing strong performance of the BC economy is expected to underpin housing demand over the next two years.”

The policy-induced demand shock has contributed to an increase of the inventory of homes for sale in most regions of the province. As a result, market conditions are expected to provide little upward pressure on home prices this year, with the average annual residential price forecast to remain essentially unchanged, albeit up 0.5 per cent to $716,100. Modest improvement in consumer demand is expected to unfold over the next two years as households further adjust to the mortgage stress test.

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Attention Victoria Real Estate:

Posted on February 15, 2019 by Ray Kong

Study Reveals ‘Starbucks Effect’ on Home Prices.

Having a Starbucks open near a neighbourhood could increase nearby home values, potentially by a few thousand dollars, a new study from Harvard Business School finds. The study’s authors focused on the gentrification of neighbourhoods using Yelp data but discovered the “Starbucks effect” during their research.

A cappucino with the foam showing a smiling creature

lauramusikanski - Morguefile

Using Yelp data to find the entry of each Starbucks in a ZIP code, researchers found a 0.5 percent increase in housing prices within a year after a Starbucks opens.

Harvard economics professor Edward Glaeser says he believes the home price rises are not due to the actual Starbucks opening but may be more of an indicator of affluent customers in the area.

"The presence of a Starbucks is far less important than whether the community has people who consume Starbucks," Glaeser notes in the paper. "Consequently, we think that this variable is likely to be a proxy for gentrification itself. … The most natural hypothesis to us is that restaurants respond to exogenous changes in neighbourhood composition, not that restaurant availability is driving neighbourhood change.”

Overall, gentrification, according to the paper says, is “strongly associated” with increases in the numbers of grocery stores, cafes, restaurants, and bars.

Source:

“After a Starbucks Opens in Town, Housing Prices Tend to Rise, Harvard Study Finds,” CNBC (Sept. 4, 2018)

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