In the aftermath of the first wave of the coronavirus pandemic, the Victoria real estate market theme had been pent-up demand. By the end of the year, it had been clear that this pent-up demand had been exhausted, leaving industry observers to locate the next dominant trend that will drive prices and sales activity in 2021.
The Victoria real estate market is going through exorbitant growth right now because it is enduring declining inventory levels. With growing demand for housing in British Columbia’s capital, stocks have failed to keep up, leaving buyers to participate in heated bidding wars. This development is beginning to seep into nearby neighbourhoods, too, potentially making B.C. one of the most expensive real estate markets in the Great White North.
Amid a paucity of new construction projects, the Victoria real estate market could maintain its status as a seller’s market for quite some time. Whether this will lead to officials intervening remains to be seen, but prices and transactions are increasing. But by how much?
Dwindling Inventory Pushes Prices Upwards in Victoria’s Real Estate Market
It looks like the early spring market is getting started in British Columbia’s capital as demand continues to outpace supply.
According to the Victoria Real Estate Board (VREB), residential sales advanced 53.3 per cent to 863 units. Condominium and single-family home sales led the way, soaring 65.7 per cent and 43.9 per cent, respectively.
Real estate prices popped in February. The Multiple Listing Service® Home Price Index (HPI) benchmark value for a single-family home gained nine per cent year-over-year to $948,200 – this was also up 1.7 per cent from January. Benchmark valuations for condos endured a 0.38 per cent drop from the same time a year ago to $525,400.
Local industry experts are monitoring listings in Victoria. At the end of February, the number of active listings dropped by an annualised rate of 38 per cent to 1,318. However, month-over-month data suggests that listings have stabilised since there were only three fewer properties listed for sale in February.
“Our early spring market is in full swing carrying on from a fast start in January,” said Victoria Real Estate Board President David Langlois in a news release. “Our market remains one with tightly constrained inventory and high demand. The good news is that we have seen some stabilization in listings and condo pricing between January and February, but we continue to see huge pressure on single family homes – new listings are snapped up as soon as they are listed. As a result, the pressure on single family homes continues to ramp up. There is significant competition for desirable homes – and in our marketplace most homes are desirable – and people competing for properties pushes prices up.”
But are falling inventories something to be worried about? VREB thinks it is such a concerning trend that it recommends the public to encourage the municipal government to fast-track consultation.
Until then, there may not be any relief on the way. New numbers from the Chartered Professional Accountants of British Columbia (CPABC) show that housing starts tumbled 12.37 per cent in 2020 from the previous year. Officials blamed the decline on the coronavirus pandemic as housing starts had increased prior to the COVID-19 public health crisis.
“Going forward, major capital investment will help repair the economic damage resulting from the 2020 recession,” the group concluded. “Greater Victoria should actively encourage and invest into developments that enhance our recovery, build important infrastructure, and improve housing affordability.”
Demand is Only Going Higher in the Victoria Housing Market, and Beyond!
Over the last year, the Victoria real estate market has seen an enormous influx of homebuyers competing for a low supply of housing units. The demand is so fierce that homebuyers are submitting bids well above the asking price and waiving inspections to increase their chances of securing the property. And this could be the theme throughout 2021.
It is not only Victoria witnessing these trends. From major urban centres to rural communities, many housing markets are experiencing bully offers and skyrocketing valuations.
In an environment of ultra-low interest rates and evolving consumer patterns, it was inevitable that the housing market would be on fire. Is it sustainable? The Bank of Canada (BoC) has signaled that historically low rates are here to stay for the next couple of years, making borrowing cheaper than it has ever been.
In the end, the patterns unfolding in the Victoria real estate market are being seen in other places, and much of this strong activity is helping to support the national economic recovery.
Until new housing stocks come online, this is how the broader Canadian real estate market will function throughout 2021, and potentially 2022.