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Market Insight Series - February 2024

Updated: Feb 6

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 the 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.





Ladies and gentlemen, it's 2024, and the real estate market in Victoria is starting to move toward a more ordinary seasonal cycle. We're talking balance, opportunity, and some serious data-driven insights coming your way. Get ready because we're diving into the most recent stats.


In January 2024, a rising 341 properties changed hands in the Victoria Real Estate Board region. That's a decent 22.7 percent increase compared to January 2023, where we only saw 278 properties sold. And sales in January 2024 also saw a 3.6 percent uptick compared to December 2023.


Now, let's break it down even further. Condos? Demand is starting to grow. We've got 112 units sold in January 2024, marking a solid 10.9 percent boost from January 2023. Single-family homes? A big increase of 35 percent in sales compared to the same month last year, with 162 detached homes finding new owners.


However, that doesn't mean a return to business as usual. According to Laurie Lidstone, the 2024 Victoria Real Estate Board Chair, we're not in the pressure cooker we've seen in recent years. Mortgage rates have leveled out, and inventory is crawling back up. At the end of January 2024, we had 2,140 active listings, a 0.4 percent increase from December 2023 and a large 23.1 percent jump compared to January 2023. That's an encouraging change, my friends.


Chair Lidstone is feeling optimistic, and I'm with her on this one. Balance and stability are the name of the game right now. Buyers and sellers listen up – you've got more time to make decisions, and the pricing pressure is easing off. It's like a breath of fresh air.


Now, let's talk numbers on home values. The MLS® Home Price Index benchmark value for a single-family home in the Victoria Core in January 2023 was $1,224,000. Fast forward to January 2024, and we're looking at a 1.6 percent increase, landing at $1,244,000. A small increase, but the value is up from a year ago.


But here's the kicker. Condos are on their own path. In January 2023, the benchmark value for a condo in the Victoria Core was $562,200. By January 2024, we're seeing a slight dip, a 0.6 percent decrease, settling at $559,000. It's a subtle move, but it's all part of the game.


In terms of expert forecasting for 2024, we're seeing different expectations. RBC is expecting a gradual increase in demand as we get into the latter half of the year. Nothing earth shattering, but potentially a steady move toward strengthening markets as interest rates decline, affordability improves, and consumer confidence begins to rise once again. On the other side, we have a much more optimistic view for sellers coming from a report by Royal Lepage. Their position is that we should expect a strong resurgence in demand this year, leading to a return of pandemic-level pricing by the end of the year. Their current estimate is a 10.5% rise in average home prices in 2024! Rounding out our forecasts, the Canadian Real Estate Association is estimating a more moderate 2.3% rise in average home prices this year. While these are extremely divergent views, the general theme is a return to market optimism and price growth.


It's important to note here that the above forecasts aren't just pie-in-the-sky wishful thinking. There are very strong market dynamics at work that can be reasonably expected to push the Canadian housing market higher this year. Prior to the Bank of Canada's (BoC) rapid tightening cycle, home prices were getting completely out of control. However, soon after the BoC started raising interest rates, market demand started to collapse. This put us in a much cooler market than before.



Since then, we've seen a moderate bump in demand over the Summer of last year, but nothing like the recent years of market mania. However, the current lull won't last forever. In fact, in some ways, the current market may be like the eye of a storm. While everything is cool and calm for the moment, our country is still in the middle of a larger housing shortage. So, although current supply may dwarf current demand for the time being, that could start to reverse fairly quickly if mortgage rates drop and buyers begin returning to the market in force.


When it comes to the topic of mortgage rates, the BC Real Estate Association is anticipating a fall in average 5-year mortgage rates from 5.99% in Q4 of 2023 down to 5.05% by the 4th Quarter of this year. Although a less than 1% drop may not seem like a whole heck of a lot, consider this: an interest rate of 5.99% on a typical $1,115,300 Single Family Detached home in Victoria would cost approximately $5,703.31/month. However, if mortgage rates dropped to 5.05% by the end of this year, the monthly mortgage of that same home could be as low as $5,214.74/month. That's a savings of $500/month!



Whether we see a steady return to demand, a surge in consumer confidence, or something completely different, buyers and sellers should keep a few things in mind. First, there's still time to plan and assess. So, don't feel like you have to rush into making a move. Instead, take this opportunity to evaluate the market, consider your current needs, and plan out the next steps. It may be best for some people to jump in now while there is a lull in the market. For others, it might make more sense to save a little more or start doing your homework. In either case, don't rush! Instead, start taking the appropriate steps to assess what your needs are, determine an appropriate timeline, and get your ducks in a row.


Second, while you don't need to rush, don't procrastinate either. We don't know how long the current market will remain calm; now is the perfect time to start planning ahead. If you want to purchase this year, figure out your finances, get pre-approved, and start checking out some homes now so you know what's available when you're ready to start seriously shopping. As we've seen in recent years, waiting for the market to heat up can mean 6-12 months of losing out on homes and paying a much higher price. Don't procrastinate and be last in line; do yourself a favor and get on the fast track now.


So, folks, the Victoria real estate market is finding its equilibrium. Balance is the word of the day. If you're considering making moves in this market, connect with a local Realtor to get the lowdown on your opportunities. And remember, in real estate, it's all about those numbers – and right now, the numbers are looking promising.


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.


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


Title

When you purchase a home, one of the documents that you will receive and be required to sign is a title. A title gives the person the right to or ownership of a certain piece of real estate property. Once you have found a piece of property that you are interested in purchasing and you reach an offer that is acceptable to both the seller and the buyer, you can get a preliminary title report. This will take about a week to receive. The title company will complete the preliminary title report. The title company is selected by either the buyer or the seller -- or by the lender who is going to finance the purchase. The title report shows ownership of a specific piece of land/property as well as any liens on that property. This report will also show any title defects that might not be known about otherwise. Alternatively, you can have your lawyer do a title search and review to assess and uncover the same information.


Read More:

Resources


1. VREB Insight:


2. Mortgage Calculator:


3. Mortgage Rate By Bank:


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