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.
Welcome back everyone, let's chat about what's going on in the current Victoria real estate market. Brace yourselves for a data-driven rollercoaster. In November, a total of 394 properties changed hands, marking a 2.6% uptick from the 384 properties sold in November 2022. However, as to be expected this time of year, this is also a 3.2% decline from October 2023.
Now, when we drill down into the specific property types, we see some noteworthy trends. Condominium sales plummeted by a staggering 11.8% when compared to the same month last year, with a mere 120 units finding new owners. On the flip side, single-family homes experienced a surge, posting a robust 6% increase from November 2022, with 193 of these homes finding buyers.
Victoria Real Estate Board Chair Graden Sol weighed in on this market performance, attributing the sales slowdown to be expected given the prevailing interest rate environment. It's worth noting that these sales figures are lower than long-term averages, but the seasonality within these numbers aligns with historical trends for this time of year. In the backdrop of these numbers, there's a silver lining with a remarkable 25% increase in the number of listings on the market compared to the previous year, signifying positive signs as we rebound from the prolonged era of exceptionally low inventory.
As of the end of November 2023, there were 2,644 active listings for sale, marking a 4.1% decline compared to October but an impressive 25.2% increase from the same time last year. Sol further emphasized the significance of a balancing market, making transitions for both buyers and sellers smoother. As inventory increases, local homeowners in Greater Victoria who once hesitated to list their properties due to limited options as buyers, are finding themselves in a more favorable position.
Looking at the Home Price Index, the benchmark value for a single-family home in the Victoria Core in November 2022 was $1,248,600. Fast forward to November 2023, and we observe a solid 3% climb, with the benchmark value now standing at $1,286,400. However, this is still a slight dip from October's value of $1,305,900. For condominiums in the Victoria Core area, the benchmark value in November 2022 was $568,400, and by November 2023, it had risen by 1.6% to reach $577,400, though still down from October's figure of $585,600.
Bringing it all together, here are some macroeconomic trends to be on the lookout for. Economists have been forecasting that the Bank of Canada (BoC) will hold interest rates at 5%. A weakening economy and a 1.1% decline in Canada's GDP in the third quarter of 2023 suggest that interest rates are doing their job and should continue to push inflation closer toward the BoC's two-percent target. While we aren't out of the woods yet, if inflation does continue to fall, we can expect a continued pause in rate hikes followed by some gradual cuts in 2024. While no one should expect rapid change, some are calling for a total of 3 rate cuts next year which should begin to help the market recover.
What does this mean for home buyers, sellers, and investors? At the current moment, I think it's safe to say that all three should consider the same approach. Assess the market, and know what's out there, but take your time and be patient. We appear to be entering a buyer's market. Although the absorption rate is currently at 19%, typically considered the upper end of a balanced market (14-20%), prices are declining and inventory is building. First, we currently have about 6.71 Months of Inventory built up, compared to a slim 1.20 months of inventory at the top of the market in February 2022. Second, Victoria has seen a 17.4% decline in sales in October 2023 compared to October 2022, the most significant drop in sales of any major city in BC. Although the market hasn't collapsed, the fall in local sales is significant. Finally, benchmark prices have declined monthly for almost every product type since September. While the market could begin to turn around early next year, we shouldn't expect any sudden changes. Despite these current changes, it is worth noting that property prices have generally risen across the board for almost every property type since last year.
If you want to buy, now's a good market to browse what's out there, take your time and wait until you find something extraordinary. If you find the perfect home, don't hesitate to make big asks when negotiating prices and terms. Some sellers have been listed and waiting for a buyer for months. If you are thinking about selling, now is a good time to hold off and wait for better markets. While high-interest rates have driven out many buyers, they will return in droves once interest rates become more affordable in the next 1-2 years. If you can't afford to wait, you may want to sell sooner than later to avoid further market price declines. Although December is typically not a great time to list, perhaps consider January or February when the seasonal lift is on your side.
For investors, you have two options. For those wanting to be proactive, you can start writing aggressively low conditional offers on stale listings now and wait for something to stick. Then once you lock in a good price, start doing your due diligence and ensure everything checks out before committing to purchase. For those still feeling out of the market, you may be able to wait a few months and watch for prices to decline before jumping in. However, you won't want to wait too long and potentially lose the initiative. The best time to negotiate is when prices are still falling, and there's no confirmed end in sight.
In summary, the numbers in the Victoria Real Estate Board region reveal an intriguing interplay of market forces. While sales have exhibited some fluctuations, the increased inventory and balancing market conditions offer optimism for both buyers and investors. Sellers are in a tough spot, but those who can wait will do well in the longer term. As we approach the new year, now is an excellent time to engage with your trusted REALTOR® to start making plans for the year ahead.
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
Months of Inventory
Months of Inventory in real estate is defined as the amount of time (or months) it would take for all current MLS® listings to sell given that no new listings enter the market.
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Resources
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank: