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.
Alright folks, listen up! We're diving deep into the Victoria property market, and looking at a welcome change in pace. Whether you're buying or selling, there's some good news here for everyone.
In April 2024, a whopping 678 properties were purchased in the Victoria Real Estate Board region. That's a juicy 6.4% jump from the same month last year and a staggering 15.3% leap from March 2024. Condos? Yeah, they're moving too, with a modest 1.5% increase compared to last April, totaling 208 units sold. But wait, there's more! Single-family homes are also in the game, boasting a 3.7% hike from last April, with 337 homes finding lucky new owners.
Currently, the benchmark for a single-family home in the Victoria Core has dropped a mere 0.9% from last year, clocking in at $1,284,600. Condos? They're holding steady, showing a modest 0.7% increase to $567,800.
Now, let's talk inventory. At the end of April 2024, we're looking at a solid 3,017 active listings on the Victoria Real Estate Board Multiple Listing Service®. That's a meaty 14% spike from March and a whopping 47.7% surge from April 2023. Chair Laurie Lidstone isn't just blowing smoke when she says this market is becoming more balanced.
This is a big improvement from a year or two ago. Remember last year? Interest rates seemed like they might rocket upward forever. Additionally, 2022 was a nightmare for inventory, leaving buyers and sellers in a pressure cooker. And let's not even talk about the chaos of 2021! But hey, 2024 is a different story. We're swimming in inventory, prices are slowly rising, but steady like a seasoned yogi, and interest rates? Well, they aren't making big changes just yet, but there is good reason to be optimistic here as well.
There are a couple of important factors to be aware of in the current market. The first one has to do with interest rates and the overall economic climate driving these values. For fixed rates it's a bit of a simpler story. When the Bank of Canada (BoC) starts dropping rates, this will mean that buyers, and folks looking to renew their mortgage should start to be in an increasingly better position. However, this is different with variable rates which tend to follow the market more closely. While a drop in Bank of Canada interest rates should improve variable rates as well, that isn't the whole story. While Canada has seen a serious slow down in inflation and needs a drop interest rates in order to start supporting it's economy, the story down south is completely different.
In the US, the Federal Reserve (Fed) is still struggling to get inflation rates under control. This combined with a robust economy and low unemployment means that not only is the Fed not ready to drop interest rates, but this move also won't be very helpful right now. This is important because what happens in the US has an impact on our housing market, one example is the state of bond yields. Governments and companies issue bonds as debt instruments to pay for expenses today, and the interest these deliver to investors is referred to as the bond yield. Since government debt is secure and typically treated as 100% guaranteed, and private bonds are more risky, private bonds need to offer an additional premium in order to incentivize investors to jump ship. With that in mind, when bond market yields rise, this pushes up the cost of borrowing since lenders, too, need to make a higher premium to justify lending versus buying secure government bonds. Because the bond yield has been rising, we shouldn't expect variable rates to change to quickly even if the BoC does start cutting their interest rates.
The second important factor is the recent ban on short-term rentals. This combined with the new federal changes to the capital gains tax is likely to lead to a lot more condos on the market. With the new changes to provincial legislation, short-term rentals (i.e., Airbnb, VRBO, etc.) are banned in BC unless you are renting out a part of your primary dwelling (i.e., a secondary suite in a house. Additionally, the increase in the taxable portion of capital gains from 50% to 67% is likely to motivate investors to begin offloading their properties before the deadline hits.
These recent changes are moving a lot of investors to sell their rental property leading to a glut in smaller condo units. This combined with the new federal changes to the capital gains tax could fuel a continued expansion in condo lists. If that happens it will give condo buyers a lot more leverage in negotiating the purchase price.
So there you have it, folks. The Victoria property market is alive and kicking, and if you're smart, you'll ride this wave straight to your dream home.
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
Gentrification
The process by which a deteriorated neighborhood is revitalized through investment, leading to an influx of higher-income residents and changes in the community's character.
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Resources
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank: