Vancouver Island Real Estate Board president Ian Mackay says while a few more homes are hitting the market, it’s not nearly enough.

“Inventory has risen slightly which helps but still, we’re a long way off from having the supply that will meet the current demand,” he said. “It’s a real issue. I think the first of June, here, we have a two-month supply here on Vancouver Island and typically we carry a six-month supply so we’re down two-thirds in our inventory.”

He says low inventory “creates some urgency for buyers.”

“I just don’t see that going away anytime soon.”

Mackay says more development would help open up the market, adding that the shortage isn’t a case of developers lagging behind, “it’s usually approvals at the local and regional government levels.”

“Things that would promote more development and development of the right mix of properties. It’s not all single-family homes that seems to be where the highest demand is. Certain areas of the mid-island, I would say there is definitely a shortage of patio homes, townhomes and that type of housing.”

He says the market has calmed a bit from what’s been a record-setting spring.

“It’s not quite as chaotic as it was in March, April, early May.”

May saw sales of 534 single-family detached properties, island-wide, compared to 590 in April, a dip of nine per cent. 

In the condo apartment category, 150 units sold last month versus 133 in April, up by 13 per cent. 

In the townhouse market, sales dropped by 11 per cent, with 94 units selling in May compared to 106 the previous month.

Mackay says there are signs on Vancouver Island of it becoming a more balanced market – but not for a while, yet.

“I suspect the statistics that we’re seeing right now are not going to find us in a balanced place until early next year.”

Making it all the more challenging for buyers are the new tougher, mortgage rules that came into effect today.

They will raise the minimum qualifying rate, which gauges whether buyers can afford payments, should interest rates increase.

The minimum rate for uninsured mortgages (mortgages with a down payment of 20 percent or more) will be the greater of the mortgage contract rate plus two percent or 5.25 percent, whichever is higher.

The stress test currently has a minimum qualifying rate of 4.79 percent, nearly 50 basis points lower.

Mackay says time will tell if this new stress test will have a cooling effect on the market.

“I’m not sure that it’s going to have the whole effect that ratepayers would like,” Mackay said. “We’re seeing a real shift in wealth from generation to generation and I think first-time buyers who might have been more affected by the mortgage stress test, are finding other ways to finance their home purchase. So first time buyer and low ratio loaning doesn’t seem to be affected. 

Not helping things is the rising cost of houses across the island.

The benchmark price of a single-family home hit $692,600 last month, up by five per cent from April and 27 per cent higher than in May 2020. 

The benchmark price of an apartment reached $355,000, a year-over-year increase of 16 per cent and three per cent higher than in April. 

And the benchmark price of a townhouse rose by 29 per cent year over year and by four per cent from April, climbing to $527,200.

In Campbell River, the benchmark price of a single-family home hit $614,400 in May, up by 30 per cent from the previous year. 

In the Comox Valley, the year-over-year benchmark price rose by 29 per cent to $735,200. 

The Cowichan Valley reported a benchmark price of $671,600, an increase of 26 per cent from May 2020. 

Nanaimo’s benchmark price rose by 26 per cent, hitting $710,500, while the Parksville-Qualicum area saw its benchmark price increase by 25 per cent to $797,700. 

The cost of a benchmark single-family home in Port Alberni reached $442,700, a 30 per cent year-over-year increase. For the North Island, the benchmark price rose to $347,800, a 34 per cent increase over last year.