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 discuss the most important market numbers to consider, provide glossary term definitions, and conclude with resources if you want to research current trends and stats further. If you want to see the Market Insight for the previous month, click here.
Alright, folks, let's break down the Victoria housing market for July 2024, and trust me, the numbers are pretty fascinating. First, total property sales in Victoria hit 650 this July. Despite being a slight dip (-1.7%) from June, that’s still a solid 9.2% increase from the 595 properties sold in July 2023.
When you look at the most common property types, single-family homes led the charge with 319 sales, marking an 8.9% increase from last year. Condominiums saw a 6.5% rise, with 213 units sold, and townhomes went up 9.5%, totaling 81 sales.
So, what does this all mean? Well, Victoria’s real estate market is holding steady. Laurie Lidstone, the Victoria Real Estate Board Chair, pointed out that July’s numbers align with June’s, which bucks the usual trend of summer slowing things down due to vacations and whatnot. We did see a bit of inventory shrinkage—down 3.2% from June, though up 38.4% from July 2023, with 3,348 active listings by the end of July.
Here's a crucial number: despite inching slightly above June’s $1,295,500, the benchmark value for single-family homes in Victoria Core dropped by 2% to $1,296,100 from last year’s $1,322,800. Condominiums also saw a minor dip, with the benchmark value falling 0.6% to $567,800, down from $571,500 last year and just a touch below June’s $567,900.
And let’s not ignore the broader context here. There’s been a lot of government intervention recently, particularly with the changes to the Residential Tenancy Act, adding complexity to buying or selling rental properties. The province of BC had originally changed its policy requiring landlords and home buyers to give renters four months' eviction notice when a home is being reclaimed for personal use. However, after pushback from the public, the province revised this requirement to three months' notice. This is up from the previous 2 month notice requirement. Although the recent change will give renters increased protections, it will also make it more challenging for first-time home buyers to purchase a new home where the home is already tenanted.
Beyond the local market, some interesting market rumbling is occurring across Canada. The Bank of Canada (BoC) is indicating that more rate cuts are still to come. With two more interest rate cuts still anticipated for the remainder of this year and the potential for an even larger cut in September, this is one sign of positive change. However, analysts predict that the BoC's dovish tone is mainly formed in response to a weakening economy.
The BoC has been following a policy mandate that requires it to balance controlling inflation and avoiding recession. Since the recent fiscal tightening cycle, it has been navigating this path well, but that does not guarantee that the road ahead will remain steady. We need to remember that a wave of Canadian mortgages is up for renewal by 2025. this increased cost burden on households is bound to put downward pressure on the economy by reducing household consumer spending. A report by Royal LePage suggests that as many as 3.4 million Canadians have a mortgage set to renew by March 2025. With these competing forces, it's up for debate which way the Canadian housing market will go next and how that will impact local prices.
Benchmark Price Performance over Time
Price $
Overall, we're entering a period where household inventory has been rising, and interest rates have been declining. Both of these movements are good news for buyers. However, we also see a weakening economy and a rising unemployment rate. Additionally, while some more affordable markets remain balanced, we're also seeing prices declining in larger markets like Vancouver and Toronto. So, while Victoria remains a balanced market for the time being, it's likely that the market will start to shift up or down sooner or later. If you think the market will break upward, you're counting on falling interest rates, limited supply, and increasing affordability to carry the day. Alternatively, if you think the market will break downward, then you may be anticipating a weaker economy, strong economic headwinds from mortgage renewals, and an increasing rise in household inventory from homeowners who are forced to sell.
It's difficult to say where things will go next, but one thing is certain: interest rates are on a downward swing, which is good news for everyone. That's it for now, but keep your eyes on these numbers and trends. They’re crucial for understanding where the market is heading and making informed decisions.
Below is a table that outlines the current housing benchmark pricing and 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.
Conclusion
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.
Glossary Term
Comparative Market Analysis (CMA)
An evaluation of a property's value based on recently sold comparable properties, helping sellers and buyers determine a fair price. The preferred approach for this analysis is to get as close as possible in terms of the most important comparison variables including: similar neighborhood, similar home type, similar age, similar home size, similar lot size, similar features, similar number of beds, baths, suites, etc.
Read More:
Resources
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank:
4. Tenant Notice Policy Change:
4. Royal Lepage Report: Mortgage Renewals
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