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.
In addition to the growing impacts of rising interest rates on buyer demand, many have speculated that we should anticipate demand exhaustion from disillusioned buyers who begin to exit the market in droves. If the prevailing trend continues it will lend growing support to this view.
Property absorption continues to fall from all time highs of 120% in March, down to 53% in May, much faster than any declines we've seen since the start of the pandemic. Likewise, sales numbers have been persistently down this year with a total of 761 property sales in May down 27.5 percent from 1049 in May 2021
Below is a table that outlines the current (June 2022) housing benchmark pricing along with a sample calculation that can give you an idea of what it might cost you to own a home.
In continued effort to quell inflation, the Bank of Canada is discussing another 50 basis point increase to the benchmark interest rate. One Scotia Bank economist even suggests that there is a solid case for a 75-100 point increase.
With the shifting parallels of falling demand and rising cost, many buyers and sellers are having a more difficult time figuring out how to price each property. Especially during a time when inventory is still low, but quickly rising. As the market continues to react to rising rates and anticipated rate rises banks are quickly pushing up the price of mortgage rates to keep pace.
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.
However, this growing uncertainty is not only increasing urgency for sellers, it's also opening up some opportunities for buyers to have stronger negotiation power on things like price and conditions. 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.
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
Open Mortgage
An open-end mortgage is a type of mortgage that allows the borrower to increase the amount of the mortgage principal outstanding at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money. Interest rates for open mortgages are generally higher than for closed mortgages because of the added prepayment flexibility.
Read More: https://www.investopedia.com/terms/open-end-mortgage.asp & https://www.rbcroyalbank.com/mortgages/mortgage-types.html
Resources
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank: