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.
Hey everyone! Let's dive into the numbers and take a closer look at the Victoria real estate scene. The latest data from September 1, 2023, is in, and here's the scoop: A solid total of 544 properties changed hands in the Victoria Real Estate Board region this August. That's a cool 13.8 percent bump compared to August 2022, and although it's an 8.6 percent dip from July 2023, we're still seeing some action.
Now, what else is happening, Condo sales? Yeah, those were up 10.8 percent from August 2022, with a sweet 164 units finding new owners. And single-family homes? They didn't lag behind either, boasting a 9.6 percent increase in sales compared to the same time last year, with a total of 273 detached homes finding their way into new hands.
According to Graden Sol, this month's real estate activity fits the bill for a typical late summer market. Things started off a bit slow, but as the month rolled on, sales picked up some serious steam. And the buzz isn't dying down just yet—those brisk sales might very well roll into September.
Now, let's chat numbers. At the end of August 2023, there were 2,490 active listings on the Victoria Real Estate Board Multiple Listing Service. That's a 2.9 percent hike from July and a whopping 16.5 percent jump from August 2022. Graden's got a clear message: We need to focus on beefing up that supply. Our inventory levels, while they've climbed since last year, are still playing catch-up. Back in the day, we had over 5,000 active listings in August. Yeah, times have changed.
But it's not just about quantity—it's the mix that matters. Most listings last month were single-family homes, which tend to fetch higher prices. The missing middle? Townhomes and condos. They made up only 37.1 percent of the listings for sale. And when it comes to townhomes, which many families are eyeing, they accounted for a mere 9.8 percent of the listings. That's like having a killer album with just a couple of standout tracks.
So, what's the consequence of this lopsided housing lineup? Well, it's simple economics—more demand, fewer options. And that can put the squeeze on those attainable price points, causing some potential price pressure. However, the bright side is that demand has been tapering out with the absorption rate down to about 29% from a recent high of 45% in May. Obviously, that is in large part due to the recent interest rate hikes which present another form of pain for buyers, but we'll get into that shortly. Next let's look at prices.
Time to break down some benchmarks, my friends. The Multiple Listing Service Home Price Index benchmark value for a single-family home in the Victoria Core in August 2022 was a cool $1,327,700. Fast forward to August 2023, and it dipped slightly by 0.3 percent to $1,323,900, although it's up from July's value of $1,318,800. And those condos? Back in August 2022, the benchmark value sat at $583,700. By August 2023, it ticked down 0.3 percent to $582,000. But keep in mind—July saw it at $578,000.
So what are the main things you should consider if you are looking to make a real estate move? Well, in this market I think necessity and need should weigh a lot heavier than simple wants and desires. Gone are the days of 1-2% mortgage rates. If you were lucky enough to lock down one of these bad boys, you probably don't won't want to part with it unless you absolutely have to. On the bright side the Bank of Canada has decided to hold interest rates steady for the month of September. A bit of a wait and see approach, so although rates could climb again in the future, at least for the time being we aren't seeing a third consecutive rate increase since June. I realize this is may be cold comfort for anyone who is currently priced out of the market. However, hopefully it's a sign that the end is in sight. We had a number of rapid increases last year, the fastest tightening cycle in history. This was followed by a pause earlier this year, and now another pause in September. If the trend continues, rate hikes may peak and begin to sputter out sooner than later. Fingers crossed!
So, what does this all mean for you? Well, for existing home owners thinking about moving up, depending on your situation, the cost of current rates could outweigh the benefit of selling to move up into something bigger. On the one hand, it's generally true that it's better to buy when interest rates are high and prices are lower, than wait for rates to drop and prices to rise. On the other hand, it all comes down to what you can afford. If you can safely and comfortably afford to move up despite current interest rates then by all means go for it. Whereas, if moving up is going to stretch your finances too thin then it might be better to hunker down for the time being and wait for this whole market fiasco to blow over. However, at the end of the day if you've outgrown your home and you've gotta move, then you've gotta move.
How about for first time home buyers? Well, that one is a bit more difficult to tackle. Unfortunately, you're in a bit of a pickle. If you buy now, it may feel like you're facing sky high interest rates towering over a newly acquired mountain of debt! However, if you wait for interest rates to fall, that is likely to spur on a new market surge which typically means prices climb higher. This is a harder decision for first time buyers than for existing home owners since the wait and see approach could get you priced out of the market completely. At the same time though, you don't want to stretch yourself too thin if you can't safely and comfortably afford the cost of a mortgage in today's market.
So, what to do? Well, if you can afford to be in the market and you don't own a home, the standard advice is to buy while interest rates are high, so you can capitalize on future appreciation when interest rates eventually subside. However, that only applies if you can comfortably afford to purchase right now. For those who would be stretched too thin, it's probably better to hold off. In general, if you are looking to buy, there's no need to rush in. The market appears to be cooling at the moment as we are heading into the Fall and Winter months. That means time is on your side, and it pays to be looking, but not in a rush to purchase.
Finally, what about retirees and downsizers? You lucky folks may be in the best of all worlds. If you own your home outright and you're looking for something smaller you're in a good position to sell your home and use the proceeds to get into something that is a better fit for your needs. You don't have to worry about interest rates if you're making a cash purchase, and there's a lot more options than there were a year ago. The world's your oyster, so go out there and get it!
And that's the lowdown, my friends. If you're considering a home sale or purchase in Victoria and the surrounding area, feel free to reach out and I'll get you in the know on the housing scene. Stay curious folks!
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.
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.
The increase in the value of a property over time due to various factors such as market demand, improvements, and economic conditions.
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank: