What does the current Victoria real estate market look like?
As part of our monthly Market Insight Series, I am excited to continue to bring you regular insights into Victoria and Vancouver Island market trends, so you can make better buying and selling decisions. Below I will jump into the most important market numbers to look into, I will provide glossary term definitions, and will conclude with resources if you want to further research current trends and stats. If you want to see what the Market Insight for the previous month was click here.
Alright, folks, let's dive into the numbers and see what's happening in the Victoria real estate market. In July 2023, a total of 595 properties were sold in the Victoria Real Estate Board region. That's a solid 16.7% increase compared to July 2022 when only 510 properties were sold. However, we did see a 15.6% decrease in sales from June 2023. Now, let's break it down by property type. Condo sales were up, showing a 16.3% jump from July 2022 with 200 units sold. Single-family homes also experienced a 15.4% increase in sales from the same period last year, with 293 homes sold.
In short, sales have increased year over year, but they are starting to decline since the previous month. But hey, don't sweat it! The slowdown in activity during the summer season is no surprise at all. It's just part of the regular seasonal patterns we've seen in the Victoria market over the years. And guess what? We've got good news! Inventory is on the rise, with 2,419 active listings for sale at the end of July 2023. That's a 3.3% increase from June and an impressive 11.9% jump from July 2022. More choices for buyers, although this does mean more competition for sellers. On that note, it's also worth noting that the property absorption rate has now dropped to 31%. Although, that's still high and leaves us in a seller's market for the time being, that may not last for long. We had a 46% absorption rate just 2 months ago when the market was really starting to pick up, followed by a 7% drop last month, and an 8% drop this month. If the trend continues, we may be in a balanced market by the end of September.
Now, let's talk numbers on home prices. The benchmark value for a single-family home in the Victoria Core area in July 2023 was $1,318,800. It decreased by 3.5% compared to July 2022 but rose from June's value of $1,310,100. As for condos, the benchmark value in July 2023 was $578,000, which is down by 3.7% from July 2022 but up from June's value of $573,800. In general real estate prices have increased or remained flat in most areas. However, it's reasonable to expect this to change as we head into the Fall and Winter. This is due to two reinforcing trends rising inventory, and rising interest rates. Rising inventory creates more options for buyers, and more competition for sellers making it hard for sellers to drive a high price. Whereas, rising interest rates create more cost and uncertainty for buyers dampening demand. Its no surprise that rising cost lowers demand, but perhaps even more impactful is the return of uncertainty to the market. As buyers see a return of rising rates, this creates fear that interest rates will continue to go higher, and it creates fear that rising rates could lead to another housing price correction.
So, what does this mean for buyers and sellers? Well, first the obvious points. If you are planning to sell your home, it would be wise to list sooner than later since the market is still on your side for now, but watch out. It likely won't be as strong as we head into Fall and Winter. Alternatively, if you are planning to buy, you can start to relax again and take your time. If you find the right home at the right price now, great! But if you don't, no sweat. It's likely that you'll be able to negotiate an even better price as we enter the Fall and Winter months.
Now, the less obvious point. Although rising interest rates have returned, this is no reason to panic. That's because, the actions taken by the Bank of Canada (BoC) and other central banks is largely driven by inflation. Although entering a recession is never good, the BoC has many tools to manage that kind of problem, and few to manage out of control inflation. For that reason, it has chosen to err on the side of caution in continuing to raise rates even as inflation has been falling. The last two hikes were a strong response to a small recent uptick in inflation. Since then total inflation has continued to fall to 2.8% as of June. While, the BoC is generally willing to tolerate a range between 1-3% inflation, it's current goal is to get back to 2% as soon possible. This response may be an overcorrection, but time will tell. With that in mind, if inflation continues to fall, as it has been doing, we are likely to see an end to rising interest rates sooner than later. So, there you have it! That's the latest scoop on the Victoria real estate scene.
Below is a table that outlines the current housing benchmark pricing along with a sample calculation that can give you an idea of what it might cost you to own a home.
Opportunities for ordinary people looking to get into their first home, or move up into an affordable nicer home are still out there, it just takes a bit of diligence, and ideally the support of a committed agent.
The goal is to give you insight into what the overall market view looks like in Victoria and Vancouver Island. I have included more Resources below so that you can dive in and read more at your leisure. I will also make sure to include a new Glossary Term each month, and define it to add to your knowledge of common industry terms.
Feel free to contact me if you want to learn more or if you have any questions about the broader market trends.
An easement in real estate refers to the legal right granted to someone who is not the landowner, allowing them to use a specific portion of the land for a particular purpose. Easements can impact land value and are established with a specific use in mind. The landowner with an easement cannot fully control the property's use. For instance, a "right of way" easement enables utility companies to access roads for servicing neighborhoods. Different types of easements include those related to historic districts, which may restrict changes to historical buildings, and recreational easements that allow public use for activities like biking or fishing.
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank: