Victoria property supply trends upward
The Victoria real estate market has been on a tear in recent years, with prices soaring to record highs. However, the market is now starting to cool, and there are signs that prices could fall in the near future.
In this article, we will take a look at the latest trends in the Victoria real estate market and forecast what to expect in 2023 and beyond.
The Recent Upswing in Prices
The Victoria real estate market has been on a tear in recent years. In January 2017, the benchmark house price in Victoria was $760,000; by June 2022 it had reached $1.3 million. Up 70% in four and a half years! After dropping to $1.1 million by March 2023 the benchmark has recovered some value, but it is short of the previous peak.
There are a number of factors that have contributed to the recent upswing in prices. These include:
A strong economy: The Victoria economy has been strong in recent years, with low unemployment and rising wages. This has made it more attractive for people to move to the area, putting upward pressure on prices.
A shortage of inventory: The supply of homes for sale in Victoria has been tight in recent years, contributing to rising prices.
Population Growth: According to a report by the Chartered Professional Accountants of British Columbia (CPABC), the Capital Regional District (CRD) added 9,466 new residents in 2022, bringing the total population to 439,950. If we assume immigrant households are younger and have an average of 2.5 people per household, the region would need roughly 4,000 new homes for the new arrivals. That’s roughly the number of homes built in 2020 and 2021, but 2022 fell short. Victoria is on track for 4,000 in 2023.
The Recent Cooling of the Market
The Victoria real estate market might be starting to cool, and there are signs that prices could fall soon. This is due to several factors, including:
Rising mortgage rates: Interest rates have been rising for the past two years, and it takes 6 to 8 months for rate increases to impact the market. That’s because many people have pre-approved mortgages with rates locked in up to 4 months in advance. Higher mortgage rates reduce how much people can borrow, which could lead to declining homebuying budgets. People will still make offers to purchase, but their maximum bid will be lower. Will sellers accept submissions that are 10% lower?
A slowdown in the economy: The Canadian economy is expected to slow down in the second half of 2023 or early 2024, which could lead to a decline in demand for housing.
An increase in inventory: The supply of houses listed for sale in Victoria has been increasing, and a record number of homes are under construction. Increased supply could lead to price softening.
What to Expect in 2023 and Beyond
It is difficult to say with certainty what will happen to the Victoria real estate market in 2023 and beyond. Prices could continue to rise, driven by population growth. However, based on the current economic and financial trends, it is likely that prices will cool. It is also possible that prices could fall, but this is not guaranteed.
If you are thinking about buying a home in Victoria, it is important to be aware of the current market conditions. It is also essential to have a realistic budget and to be prepared to act quickly if you find a home that you like. It is a seller’s market.
Conclusion
The Victoria real estate market is a complex one, and it is difficult to predict what will happen in the future. However, based on the current trends, it is likely that prices will continue to cool in the near future. It is also possible that prices could fall, but this is not guaranteed.
If you are thinking about buying a home in Victoria, it is important to be aware of the sub-market conditions. Consult a real estate agent and ask for details of recent comparable homes bought in the area where you want to look. You can then apply the regional trends to get a feel for where your home’s prices might be today and in a few months. Unless you intend to buy downtown condos, there often aren’t enough recent comparable transactions in a sub-market to draw statistically significant conclusions about price, demand and supply trends.
