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.
In October 2023, the Victoria Real Estate Board reported a total of 407 properties sold, marking a 15.2% decrease compared to the 480 properties sold in October 2022 and a significant 17.4% decline from September 2023. Condominium sales were down by 7.2% from October 2022, with only 141 units sold, while sales of single-family homes saw a substantial 16.1% drop from the previous October, with 193 units sold.
These declining property sales in October can be attributed to the prevailing high interest rates, reminiscent of levels not seen in nearly two decades. Victoria Real Estate Board Chair, Graden Sol, noted that uncertainty surrounding the mid-October Bank of Canada rate announcement likely led some buyers to postpone their purchases, unsure whether rates would rise further or remain stable. Typically, static interest rates instill consumer confidence in the market, as seen earlier in the year when rates plateaued and sales increased. However, the resurgence of rising rates has caused a decline in consumer confidence.
At the end of October 2023, there were 2,756 active property listings for sale, reflecting a 2.1% increase compared to September and a substantial 25.7% surge from the number of listings in October 2022. This increase in available properties is favorable for buyers, offering them a wider selection compared to recent years. While the real estate market usually slows down during late fall and winter, a substantial number of active buyers remain. If you're looking to buy I recommend consulting your local REALTOR® to formulate a sound strategy for navigating the market during the colder months.
Examining the Home Price Index, the benchmark value for a single-family home in the Victoria Core area increased by 3.9% from October 2022 to reach $1,305,900 in October 2023. However, this figure is slightly down from September's value of $1,312,200. Similarly, the benchmark value for condominiums in the Victoria Core area increased by 1.8% from October 2022 to October 2023, reaching $585,600, but showing a decline from September's value of $589,600.
Taking a longer view, it was recently reported that Canada has now, likely, entered a mild technical recession. Two-quarters of negative growth in the economy. Although the advanced estimates are mild, estimates suggest that the Canadian economy has contracted by 0.2 percent in the second quarter of 2023, and may be on track to contract by another 0.1 percent this quarter.
While no one wants a recession, in some ways this could be good news. The Bank of Canada (BoC) is aiming to reduce inflation and will be more motivated to ease up on interest rates if the economy starts to enter a recession. Both to avoid causing severe economic harm and likely anticipating that a cooler economy will continue to push inflation down. Once the economy starts to cool off and inflation is under better control the BoC will be in a better position to start reducing interest rates which will help to support a market recovery. However, these are still early days, and we shouldn't expect a sudden overnight change. It's likely we won't see any major changes until late into 2024.
In summary, the Victoria real estate market in October 2023 experienced a decline in property sales, likely influenced by persistently high interest rates. However, the market saw an increase in available properties, providing more options for buyers. The Home Price Index revealed moderate price increases for single-family homes and condominiums over the past year, albeit with some fluctuations in recent months. Buyers and sellers should stay vigilant and seek guidance from their local REALTOR® to navigate these market dynamics effectively.
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
Fiduciary
“Fiduciary” is a term that refers to a legal relationship that is confidential between two parties. This relationship gives one party the right to act and make important decisions for the other party. In the world of real estate, the real estate agent and his or her clients (buyers or sellers) participate in a fiduciary relationship. The two parties enter into a signed agreement in which the client puts trust in the real estate agent to work with their best interests in mind. The real estate agent’s responsibility is to protect the interests of their clients and help them navigate the buying/selling process with care and caution.
Buyers might wonder why they need a real estate agent. What they do not realize is that the road to buying a home is full of twists and turns. For this reason, it is a good idea to have someone who knows what they are doing in your corner. Even if you think you can find the home of your dreams by yourself searching online with different websites, once the actual purchase process starts, you might wish that you had some help navigating it. Your real estate agent’s most important job will be to help you make decisions, with your best interest kept in mind. The first job will be to guide you to find homes you might be interested in purchasing. You will need to give your agent specifics regarding what you want as well as your budget. Your agent should educate you about what is available in your area and what the comparable sales look like in that area.
An experienced agent sometimes knows what homes are available before they are officially listed. He or she will also have a network of trusted individuals who can provide support throughout the home buying process. Throughout the entire process, including negotiations and closing, your real estate agent should keep all of your information (personal and financial) private. The agent has the responsibility to make decisions on your behalf. It is critical that you hire a real estate agent you can trust.
Read More:
Resources
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank: