When the year started, nobody could have envisioned that a virus outbreak would shut down the global economy and lead to widespread devastation. Canada and its many industries were not immune from the coronavirus pandemic, forcing all three levels of government to impose unprecedented and extraordinary measures to shield the public from a financial collapse. The city of Victoria faced the same effects as other places across the country.
In the first half of March 2020, real estate activity in Victoria was typical: new listings, multiple offers, and a steady increase in sales. Then, as Victoria Real Estate Board (VREB) President Sandi-Jo Ayers told a local newspaper, “the world changed.” Like other Canadian housing markets, Victoria endured a severe rough patch in the immediate aftermath of the COVID-19 pandemic. In weeks after Ottawa announced the country would be shutting down, many local real estate experts were uncertain about the spring and summer in Victoria.
But that level of unpredictability might be fading as the expected housing downturn is waning across British Columbia. Is Victoria witnessing a V-shaped recovery, or is the provincial capital still lingering from the impacts of COVID-19?
Real Estate Activity in Victoria
In June, Victoria real estate sales rose 76.8 per cent more than the previous month, according to new VREB data. Compared to the same time a year ago, home sales advanced at a healthy clip of 9.2 per cent. Although the condo market witnessed a 3.2 per cent drop in properties sold year-over-year, single-family homes surged 16.8 per cent from June 2019.
The Home Price Index benchmark value for a single-family home in the Victoria core increased four per cent to $896,200 in June, up 1.2 per cent from the previous month. The HPI benchmark for a condominium edged up 1.3 per cent to $525,600, slightly down from the 1.6 per gain in May.
By the end of June, there were 2,698 active listings on VREB’s Multiple Listing Service®. This represents an 11.3 per cent decline from last year, but it is up 6.1 per cent month-over-month.
Victoria’s real estate market felt the impacts of the coronavirus crisis and fell off a cliff. In March and April, home sales were down five per cent and 59 per cent, respectively, from 2019. Single-family homes and condominium prices also slipped in both months. A couple of months later, it turns out that Victoria is experiencing a V-shaped recovery.
VREB President Sandi-Jo Ayers is pleased by the upward trend, but she urged the industry, as well as buyers and sellers, to practice caution.
“This June we saw competing factors from all different sides of the real estate equation,” said the head of the real estate association. “If all we do is look at numbers, we see a fairly normal June, in the midst of a very not normal world. The impact of COVID-19 on our entire economy continues. And while some buyers and sellers are slow to emerge from isolation, others have been highly active since the start of Phase 2 of BC’s Restart Plan. Because of the pandemic, an eviction order that prohibited a landlord from ending a tenancy was introduced. The order may have kept some homes from going to market. The portion of this order that prevented a seller from providing vacant possession of a tenanted home was lifted late this month, which may bring some listings to market that had been stalled. Due to the pandemic alone, we have multiple factors influencing the inventory and sales in our market.”
Local REALTORS® are warning that the buying and selling experience will be different today than pre-pandemic. The province has moved to phase three of reopening. Still, the real estate industry will continue to leverage technology for virtual tours and abide by the government’s health and safety guidelines during in-person open houses.
CMHC Outlook and Market Optimism
Before the public health crisis, the Canada Mortgage and Housing Corporation (CMHC) listed the Metro Victoria housing market as a high-risk market. In a report to the Parliamentary Standing Committee on Finance, CMHC CEO Evan Siddall delivered a pessimistic forecast of the nation’s real estate prospects, sounding the alarm of as much as an 18% slide in housing prices in the coming 12 months.
Is this a case of being overly pessimistic? Based on the outlook from real estate professionals on the ground in some of these cities, CMHC’s consternation might be overblown.
British Columbia Real Estate Association (BCREA) Chief Economist Brendan Ogmundson thinks there will likely be a decline of around 5% in the short-term. In a recent BCREA conference, Ogmundson likened prices and sales to the Nike swoosh: a quick decline and then a recovery over a longer period. That is, as long as the coronavirus pandemic is not prolonged.
The conference call panelists shared the view of Bank of Canada (BoC) Governor Tiff Macklem that the economic recovery will likely be gradual. These experts do not see the recovery completing until 2021.
With many COVID-19 restrictions being loosened across the province and borrowing costs never been lower, Victoria REALTORS® see more interest on the ground. This assessment is supported by the jump in new and active listings. Many Victoria REALTORS® are also seeing multiple offers on quality, single family home listings under $1,000,000 in the core area. Suffice it to say, more confidence is returning to the housing market and the Greater Victoria real estate market is projected to perform as well, or even better than other Canadian cities!