VREB: Bumpy Road to Balanced

As the year slips by us, the real estate market here in Victoria continues to trend towards a more balanced market; however, it isn’t exactly taking a straight path.

Year over year, the numbers are showing signs of decreasing, but month over month, they’re actually increasing. Last month, a total of 598 properties changed hands, not only 9.9 per cent fewer than October 2017 but also 12.2 per cent higher than September 2018.

In terms of the mix of properties, we saw 180 condos sell last month, down 15.5 per cent over October 2017. That number, however, increased by a whopping 20.8 per cent over September 2018. This microcosm is a perfect example of the bumpy path the market is following to get back to a balanced market. Unlike condos, though, single-family homes were down 14.7 per cent from last night and down 1.4 per cent over last month.

The biggest factor for this pressure is the change in mortgage lending requirements. Couple that with a rate hike in the last month, people’s buying power has diminished significantly. Prior to these change, people were still shopping in a much wider range of price brackets, spreading out the spectrum of options. Now, as more and more people are concentrated in the lower price points, we are still seeing competition on lower and middle-range properties. Above the $1M mark, inventory is abundant, but a lot of people suddenly can’t afford to shop in that price point, effectively creating demand on the lower priced properties.

The other trouble is the incoming Speculation and Vacancy Tax the provincial government is bringing in, curbing development in the area for the time-being. Unfortunately, the only way to ease the pressure on the lower market is to build.

Victoria Real Estate Board President Kyle Kerr says, “We hope that moving forward the municipal, provincial and federal governments will work collaboratively to enable more supply to all levels of housing by funding public/private partnerships to support the increase of home stock in our area.”

The MLS Home Price Index benchmark value for a single-family home in the Victoria core was $881,000 for October 2018, slightly lower than September’s value of $883,700. The benchmark value for a condo in the same area was $502,600, slightly lower than September at $503,000.

To read the full stats package, you can find it here: www.vreb.org/current-statistics.

We have talked for a long, long time about inventory being one of the biggest culprits in the pressure on the Victoria real estate market, and that still rings true. Although inventory numbers are increasing, with 2,510 active listings last month, we still are lacking affordable options for a growing number of buyers.

We’re trending in the right direction, but it’s going to be a bit of a bumpy ride to get there. If you have been giving some thought to listing or purchasing, it remains important to work with an advisor you trust and who knows the market. We can help guide you through this tumultuous time, either selling for the best price or purchasing for the best price.

Until next time!

Kaley + Mike