Victoria real estate is cooling down as fewer listings and fewer sales were reported in October 2017. However, when it comes to assessing the current market, opinions are torn. While according to some, this slowdown is an indicator of the market levelling off in a controlled manner, others claim that the end of high prices and demand is nowhere in sight.
Victoria’s Housing Market Shows Some Signs of Slowdown
Only 664 properties were sold in October, indicating a 10 percent drop on a year-over-year basis. Over the same period, the number of active listings for sale also dropped by 1.7 percent, from 1,938 to 1,906. Compared to September 2017, there were 3.6 percent fewer active listings.
According to Ara Balabanian, president of the Victoria Real Estate Board, the decline in home sales was foreseeable. In spite of this, the market still remains very active as sales last month were 17.1 percent above the 10-year average of 567 properties for October. Balabanian claims that this controlled drop after a turbulent year is, in fact, an indication of how stable the Victoria real estate market is.
As inventory levels will match the traditional slowdown in buyer and seller behaviour, the VREB also expects a continuation of these balanced market conditions for several months.
Home Prices Reach Unprecedented Heights
Chris Markham, managing broker at Century 21, does see an improvement in the fact that instead of building new inventory, the market is matching new listings with sales. However, with home sale prices reaching an all-time high, affordability in Greater Victoria has become a problem, especially for the younger generation.
And while the construction of new condos might help increase the 0.5 percent rental vacancy rate, there’s not much to be done in terms of pricing. The benchmark price for a single-family home grew by 9.3 percent, from $752,000 in October 2016 to $821,900 in October 2017.
A survey conducted by Century 21 shows that the price per square foot for a typical single-family home has grown by 238 percent over the past 10 years to more than $424. Over the same period of time, the price per square foot increased by 173 percent for condos, reaching $435, and by $173 for townhouses to $354. Taking everything into consideration, Century 21 claims that these increases are natural.
According to Markham, however, the increase is comparable to that in Toronto and Vancouver, the latter of which boasts a 400 percent growth to $1,210 per square foot, and it shows just how much the Victoria housing market has changed.
Markham believes that two of the main factors driving up prices are increased building costs and the scarcity of skilled tradespeople. Besides this, foreign investments have also played an important role.
Overall, foreign investment in Victoria makes up only 4.3% of all transactions. But because of foreign investments in Vancouver, which have sent prices haywire, many Vancouverites are relocating to Victoria, transferring the market pressure there to the housing market of the province’s capital.
According to Markham, there’s no saying when the market will slow down. Even if extreme measures were to be applied, such as jacking up interest rates, he does not foresee a deceleration in the market’s momentum anytime soon, with favourable conditions such as a low unemployment rate, low-interest rates and strong in-migration keeping both prices and demand high.
Source: Times Colonist