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.
With market demand continuing to fall we are approaching a point where a new trend is all but confirmed. Property absorption continues to fall from all time highs of 120% in March, down to 37% in June. Sales numbers continue to fall with sales in Victoria totalling 612 in June, done 35% from the 942 total sales in June 2021.
As many of you already know, an absorption rate of 15-20% is considered a balanced market, and anything above 25% is a sellers market. Or in other words, the market is considered balanced if for every 100 homes that are listed on the market in a given month, 15-20 sell within the same month. Whereas, a seller's market exists if 25 homes sell within the same month for every 100 homes that are listed. With that in mind, we have seen the absorption rate fall from 120% down to 37% in the last four months, making this an average decline of 20.75% per month
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.
For buyers this means ample opportunity to negotiate a deal today. It also means there is no longer a rush to find something before prices rise unlike the prevailing market sentiment last year or even just a few months ago. However, buyers in today's market have to be ready to stomach higher mortgage rates, so keep this in mind while you're shopping.
For sellers this means that although you may still have the market advantage right now, the opportunity to get top dollar for your home could be fleeting. Naturally this affordability factor is particularly impactful for first time home buyers who might not be able to afford the higher monthly rates. It's also discouraging investors who are reconsidering their options due to higher mortgages chipping away at their revenue potential.
For those looking to upsize or downsize, if you are selling first there is still an opportunity to get more for your home before we return to a balanced market, and if you plan things properly you may even be able to save some money on your next purchase too.
If the current trend continues, we can expect to be in a balanced market within 1-2 month's time.
Opportunities for ordinary people looking to get into their first home, or move up into one of the more affordable homes that are in and around the $1M or less range are still out there, it just takes a bit more 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.
Basis Points (BPS)
The term basis points (BPS) refers to a common unit of measure for interest rates and other percentages in finance. Basis points are used to show the change in the value or rate of a financial instrument. Everyone 100 basis points equals 1%. The use of BPS allows analysts to more clearly define changing interest rates.
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank: