Known as “The Garden City”, Victoria is located on the tip of Vancouver Island off Canada’s Pacific Coast. Victoria has a large population of retirees who come here to settle down, enjoying the benefits of the mild climate, golf courses, and relaxed pace of the city.
With its beautiful shorelines and beaches, it is no wonder that Victoria attracts an influx of tourists each year, as well as potential home buyers looking for a chance to enter the housing market. But with the rise of the COVID-19 pandemic infiltrating economy and markets across Canada and all over the world, we are left to wonder how Victoria’s real estate market will be affected.
Lets look back at the market predictions for 2020, according to the 2020 Victoria Housing Market Outlook. The Victoria housing market was expected to remain balanced this year, with “sellers market” like conditions, meaning houses would spend only a few days on the market along with multiple offers.
Housing affordability was a challenge in 2019 for buyers due to lack of supply, and many first-time home buyers were increasing the demand for condos as they prove to be more attainable and affordable than detached homes. Top neighborhoods in Victoria for sales included Saanich, Langford, Oak Bay and Sidney.
Home buyers were finding it difficult to attain an affordable mortgage in Victoria, which led to a drop in sales across British Columbia nearing the end of 2019. In addition, the introduction of the mortgage stress test in 2019, as well as increasing interest rates, resulted in more home buyers becoming priced out of the market.
Baby Boomers to Add Supply
Baby boomers have the potential to add supply to the Victoria housing market in the coming years. It is expected that over the next ten years, baby boomers who have most of their retirement savings tied up in the homes they own will eventually sell those homes to free up income and downsize to smaller residences such as retirement homes or condominium apartments. As they do so, they will add supply to the housing market in Victoria. However, if younger buyers are not able to buy these homes, this may lead to the risk of an excess in housing supply.
Spring Housing Market Impacted by COVID-19
The spring market is slowly starting to see the effects of the COVID-19 pandemic. The beginning of March 2020 saw higher year over year sales in Victoria for the first few weeks of the month. However, this has taken a turn since the COVID-19 pandemic started creeping into the area. A state of emergency was declared in Victoria on March 18th, with shops, businesses and schools forced to shut down and social distancing put into place. Since then, we have seen a downturn of sales in the market. When we compare data from March 2019 to this year, there is 6.8% drop in sales, and new listings have dropped by 15%.
Also interesting to note, the number of real estate transactions that went pending from mid to the end of March saw a decrease of 33% when compared with last year’s numbers. This is an indication of how buyers and sellers are behaving in the market, and this tells us that a good percentage of buyers are putting their buying and house hunting on pause for the time being.
The Need for Home Buyers and Realtors to Adapt
According the Victoria Real Estate Board, it is hard to predict what the spring market will end up looking like in the end, but it will probably be very different than in recent years. The entire community has slowed down to stay healthy and safe, with businesses being forced to shut down and non-essential workers ordered to keep their social distance and stay home. While buyer interest was high in the first three months of the year, the market will likely see a slowdown now that traditional open houses are being suspended.
In order to adapt to the current situation, realtors in Victoria are learning to do business another way in order to continue selling homes during this unprecedented time. Religiously using hand sanitizer and alcohol wipes has become the norm, along with requiring declarations that confirm that a buyer or seller has no symptoms of the virus. In addition, technology is serving realtors well to bring buyers and sellers together through the use of video home tours and virtual showings, versus traditional open houses.
Support During the Pandemic
In an effort to protect against a housing crash, the Canadian government has put in place certain support measures to protect the housing market and the economy. Normally, a mortgage deferral allows for the suspension of mortgage payments for one to two months. This has been extended for up to six months to give homeowners some relief during the pandemic. The BC government has also suspended the enforcement of home evictions and will not issue any new eviction orders for the time being. Finally, in May of this year, BC’s Corporate Beneficial Ownership Registry will come into effect, which may help to reduce proceeds of money that is transferred into Canada illegally.
Good Time to Sell or Buy?
Prices have increased significantly over the past few months in Victoria, which is good news for home sellers, and not so great if you are looking to buy a new home. It should also be noted that due to the recession and the COVID-19 pandemic, home prices may take a dip soon, so it may be in sellers’ best interest to sell at this time.
With the increase in house prices, unfortunately some home buyers will be priced out of the market this year. However, while prices are on the upswing now, the effects of the COVID-19 pandemic and recession will likely lead to a downturn in prices. And with the seasonal real estate cycle usually favouring buyers in late summer, there may still be a chance for determined home buyers to still dip their toes into the market.
If you are interested in delving into the housing market, always make sure that you work with a qualified and experienced RE/MAX REALTOR® who can help guide you through the market during this unique time.