While the mortgage stress test, introduced in January, made purchasing a house more challenging and slowed the real estate market, it didn’t have that effect for retirees who don’t need mortgages.
According to the Vancouver Island Real Estate Board, over 50 per cent of home buyers north of Victoria were retirees in 2017.
Chief Economist with the B.C. Real Estate Association, Cameron Muir said retirees, who move here from other parts of the country may decide to put their plans on hold if there’s a downturn in the Canadian economy.
“You have to realize that when housing markets or economies take a downturn in the source cities, neighbourhoods and communities or retirees oftentimes they may not sell their homes and move to the Island for a while because they may wait to see if the market improves in order to obtain a better price on their existing home. ”
As long as the economy remains relatively strong, Muir says retirees are expected to be the foundation in housing demand in our regions for the next decade.
Muir says millennials are also expected to play a part in housing demand over the next few years as they look for housing affordability, especially in urban areas.
In the meantime, Muir says he expects housing starts to slow in our region.
He says the lack of housing supply prompted homebuilders to go full out and that housing will soon be on the market, however, the mortgage stress test, introduced in January, has put a real damper on demand.
“Given that demand has come off, given that they are already working at capacity and there’s a record number of units under construction, I think many builders are looking to get their current project complete and sold in the marketplace before undertaking any significant additions to their inventory.”
Muir expects home prices to remain relatively stable next year after climbing 12 per cent on Vancouver Island last year.