Victoria Real Estate Market's cool conditions continue
A total of 329 properties sold in the Victoria Real Estate Board region this January, 23.7 per cent fewer than the 431 properties sold in January 2018 and a 12.3 per cent decrease from December 2018. Sales of condominiums were down 5.9 per cent from January 2018 with 111 units sold but were up from December 2018 by 7.8 per cent. Sales of single family homes were down 29.3 per cent from January 2018 with 152 sold.
"It's already an interesting year for local real estate. REALTORS® are keeping busy showing homes and writing offers, however actual sales are slower than we would expect in an average January," says 2019 Victoria Real Estate Board President Cheryl Woolley. "There are many reasons consumers are hesitant to purchase "For instance, changes to mortgage lending rules have decreased the amount of funds buyers can qualify for by up to twenty-five per cent. In turn, some consumers are re-evaluating their expectations and looking at condos and townhomes rather than single family homes; or they are looking at single family homes further outside the core. As well, many buyers appear to be waiting for new inventory to open up, while sellers are watching the market closely to see what their homes are worth and what the spring market may bring."
There were 2,057 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of January 2019, an increase of 3.5 per cent compared to the month of December and a 38 per cent increase from the 1,491 active listings for sale at the end of January 2018.
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in January 2018 was $840,100. The benchmark value for the same home in January 2019 increased by 0.9 per cent to $847,800, lower than December's value of $858,600. The MLS® HPI benchmark value for a condominium in the Victoria Core area in January 2018 was $471,300, while the benchmark value for the same condominium in January 2019 increased by 6 per cent to $499,700, slightly lower than December's value of $502,400.
"Over the past few years, demand in Greater Victoria has outstripped supply, putting upward pressure on pricing. While many of the new developments proposed for our region are being built for much needed rental and social housing units, it will provide little relief for buyers who are caught in the pinch between tougher lending rules and higher prices," adds President Woolley. "Moving forward, we anticipate continued interest in our region as people gravitate towards our mild climate, beautiful amenities and the lifestyle Greater Victoria offers."
REALTORS® Fergus Kyne and Dirk VanderWal announced today the release of a new report to Victoria real estate market observers, in print and digital editions. The inaugural quarterly publication delivers exclusive analysis and a uniquely informed take on last quarter’s market movements, near- term direction, specific trends, and prescient opportunities for buyers, sellers, and investors.
“Providing this deeper level of insight is a great way for us to provide more value to our clients, and we saw merit in sharing our research more widely,” notes VanderWal, one of The Q Report’s co-authors. His partner in the endeavour, Kyne, elaborates, “The Q Report is an overview of what’s happening in Victoria real estate, but many of the metrics we use to see these bigger trends can be applied to analyze an individual’s particular circumstances. We are positioned to use this data to help people make good decisions.”
The Q Report’s content is comprehensive and wide-ranging, bringing together market performance, policy, finance, outlook, and more. The just-released report charts numerous sales metrics for single family, multi-family, and luxury property classes across the Core, Westshore, and Peninsula, and includes analysis and explanation. A price index ‘leaderboard’ maps which areas have seen the most significant gains in their MLS® Home Price Index® value, those that haven’t, and the reasons why. The current edition of the report also applies a seasonal adjustment algorithm to recent sales figures, teasing out a number of compelling data points from the last few market cycles, and bringing the reader right up to date with trends as of Q4 2018. Finally, the authors define the best opportunities for buyers, sellers, and investors, based on their outlook for Q1 2019.
The project was inspired by a recent business trip to New York City for education and networking with fellow Christie’s International Real Estate associates, where Kyne came across a Manhattan broker who shared a number of her illuminating observations on their high-end property market. The idea of a locally-focused, quarterly market report that stepped out past the standard statistics was born, fellow Newport Realty associate Dirk VanderWal quickly partnered on the project, and the pair got to work on writing.
Kyne continues, “The Q Report is going to be an industry-standard document for our marketplace. Looking ahead, consumers and industry practitioners are going to look this to make sense of what’s happening in real estate around Victoria. We are excited to see what it’s going to evolve into.”
Anyone who is interested in getting a copy of The Q Report should point their browser to victoriaqreport.com.
Fergus Kyne, PREC, and Dirk VanderWal are REALTORS® with Newport Realty Ltd. in Victoria, BC. Newport is a proudly independent local company, serving Victoria for over 40 years, which has grown to nearly one hundred agents with offices in Downtown and Sidney, and is the exclusive regional affiliate of Christie’s International Real Estate.
Victoria Real Estate Market responds as expected to the changing market conditions of 2018
A total of 375 properties sold in the Victoria Real Estate Board region this December, 18.8 per cent fewer than the 462 properties sold in December 2017 and a 24.7 per cent decrease from November 2018. Sales of condominiums were down 24.3 per cent from 2017 in December with 103 units sold. Sales of single family homes were down 26.6 per cent from December 2017 with 174 sold.
A grand total of 7,150 properties sold over the course of 2018, 20 per cent fewer than the 8,994 sold in 2017. 2018 sales came in very close to the ten-year average of 7,351 properties sold. Condominium sales totalled 2,162 in 2018, compared to 2,783 in 2017. Single family home sales were down from 4,069 in 2017 to 3,187 in 2018.
"The story arc in real estate this year has been the impact of government influence on a market which was showing signs of levelling out through the latter part of 2017," says outgoing Victoria Real Estate Board President Kyle Kerr. "All levels of government turned their focus to try to make housing more affordable and attainable across the property spectrum. The federal government's change to mortgage lending qualification rules this year meant many consumers lost 20 per cent of their purchasing power, which contributed to slowing down the pace of the market. On a municipal level, we saw many councils activating how they can influence affordable housing by leveraging current land assets, acquiring new land and creating partnerships to bring new affordable units to market - and that's a very exciting thing for our market in the long term. The provincial government has also promised huge investments into new affordable developments. These developments are important to the long-term growth of our community, because the only way to make more affordable housing in our area is to build it."
There were 1,988 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of December 2018, a decrease of 15.2 per cent compared to the month of November but 43.6 per cent more than the 1,384 active listings for sale at the end of December 2017.
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in December 2017 was $832,000. The benchmark value for the same home in December 2018 increased by 3.2 per cent to $858,600, lower than November's value of $865,200. The MLS® HPI benchmark value for a condominium in the Victoria Core area in December 2017 was $464,300, while the benchmark value for the same condominium in December 2018 increased by 8.2 per cent to $502,400, slightly more than November's value of $500,500.
"The market in 2019 will continue to be quieter than in previous years, as buyers and sellers adjust to new market conditions and government policies," adds President Kerr. "Inventory is still quite low when you look at a longer range, which will continue to put pressure on pricing. Our overall economy is predicted to slow slightly, and that will likely mean a slower increase in interest rates but also slower growth. The good news is that savvy buyers will have more time to find their new homes, and that sellers will be under less pressure if they are planning to move within our market. Remember in evolving markets like ours, it's important to enlist the services of a REALTOR® to help you navigate what may be your largest transaction ever."
The Victoria real estate market chills out for winter
A total of 498 properties sold in the Victoria Real Estate Board region this November, 25.8 per cent fewer than the 671 properties sold in November of last year and a 16.7 per cent decrease from October 2018. Sales of condominiums were down 30.9 per cent from last year in November with 152 units sold. Sales of single family homes were down 20.8 per cent from 2017 with 267 sold this November.
"We certainly anticipated a difference this year in terms of sales for November compared to last year," says Victoria Real Estate Board President Kyle Kerr. "This time last year, the government announced plans to change mortgage lending qualification rules and our market saw a rush of activity as buyers tried to beat that new lending criteria which was rolled out January first. Our ten-year average of units sold for the month of November is 515, which is likely a better comparison than to the unusual market conditions we saw last year."
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in November 2017 was $832,800, while the benchmark value for the same home in November 2018 increased by 3.9 per cent to $865,200, lower than October's value of $881,000. The MLS® HPI benchmark value for a condominium in the Victoria Core area in November 2017 was $456,200, while the benchmark value for the same condominium in November 2018 increased by 9.7 per cent to $500,500, slightly less than October's value of $502,600.
There were a total of 2,343 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of November 2018, an increase of 32.8 per cent compared to November 2017 but 6.7 per cent fewer than the month previous.
"Inventory continues to be low compared to historic averages," adds President Kerr. "The ten-year average for active inventory in November is 3,204, so although it has improved compared to last year, we are still low on choice for buyers. At the same time, waning demand has meant that there is less urgency in our market right now, which can benefit buyers and sellers. The market tends to naturally slow down in the winter, so I'd expect we will have a more balanced market heading into the new year."
I have heard and overheard enough recent conversation around coffee houses, bars, social media, and of course real estate offices speculating about a price drop in Victoria’s real estate market that I thought it might be time to take a look at whether the data suggests that our real estate market is indeed in decline.
With the introduction of the B-20 stress test at the beginning of January, and several rounds of increases to mortgage lending rates starting last year, property buyers across Canada have seen their borrowing power (and hence their purchasing power) decrease significantly in 2018 - up to 20% in many cases. As the real estate and financial sectors widely predicted, the market has responded with what the media has widely termed a cool down. Voices from within BC’s real estate industry have tended to characterize the recent trends more as a ‘return to balance.’ In Victoria particularly I believe that assessment fits, as we have seen a levelling off, with significantly lower volume of home sales this year than we saw in the unprecedented activity of 2016-17, allowing inventory levels to build up a bit from where they were, and taking some of the acute pressure off the market.
But are house prices dropping in Victoria?
Take a look at the following two charts:
This first figure compares the average sale price (light blue line) with the number of sales (dark blue area), looking back over 5 years’ worth of market cycles to have a frame of reference. We can see that although volume is down significantly for 2018, the price trend is holding steadily up, keeping above the gains of the past two years and following the general trend line rather than reversing direction. One other note which I found interesting: this level of market volume for 2018 compares closely to 2014, where late 2013 had brought a bump in discounted 5-year fixed rates up to the mid-3% range, just a little under where current 5-year discounted rates sit.
The MLS® Home Price Index® is an amazing tool I use regularly in my practice. It makes plain sense out of a massive mountain of sales data. The composite index trend draws an even more explicit picture of the home price trend in the Victoria market area than VREB’s average sale price data over the same time period - a low-interest-rate-fuelled meteoric rise throughout 2016-17, indeed even into early 2018, with a flattening of that line since spring. By way of explanation on that spring point: bear in mind that every buyer with a 120 day rate hold was still able to apply and be approved under the ‘old rules’ (pre-B-20 stress test) as of December 2017, provided they purchased a property and closed on it before the end of April 2018.
So… definitely not a price drop in either chart. Transaction volume is down, and pricing has flattened, but is holding steady, and may even continue making incremental gains.
Of course, looking at a singular, large-scale view aggregated and averaged out to a single trend doesn’t tell the whole story. Within our market are in fact several smaller markets that sometimes seem to function independently of one another - condos, the luxury market (for the sake of convenience, let’s call that listings over $1m), and those ‘bread and butter’ family homes would be just a few examples. The latter and the former have tended to continue selling well throughout this year, and foreseeably will continue to do so, albeit without the frantic atmosphere and ubiquitous multiple offer presentations.
It’s those listings priced over $1m that have had a harder time moving this year. No surprise, really, considering the higher cost and difficulty in borrowing. Anecdotally, what I’m hearing is that most of these unsuccessful $1m+ sellers preferred to withdraw their listings than slash prices in order to effect a sale. This has come into sharp focus recently, as a number of purchase contracts in the market area have come undone when the prospective purchaser has been unable to complete due to their inability to sell their current property.
The real story here is there was a massive overall massive run-up in the number of higher-priced listings coming on the market in early 2018 in anticipation of seeing the upward pricing trend, low inventory, and high demand of the previous two years continue to extrapolate. Sadly, this significant increase in higher-priced listings was happening directly against those headwinds of tougher borrowing qualifications and higher interest rates. Note that the number of sales for homes over $1m has remained relatively consistent, but where the number of listings has been declining from late summer through fall of this year supports the notion that most of these listings are being taken off the market rather than selling - if they were selling, we would see the number of sales line turning upward to meet that listings line, increasing as the number of active listings declined.
Referring back to the MLS® HPI® benchmark value chart above, there have been instances In the course of the price flattening trend where the HPI® benchmark price shows a slight decrease month-to-month, which can read to consumers like “house prices are decreasing,” but we haven’t seen a single month yet which as posted a year-over-year loss. I personally suspect that what buzz there is in the marketplace about prices coming down is coming as a result of the news filtering in from neighbouring markets in Seattle and Vancouver, where real price declines are indeed underway. I’ve pointed out to a few local inquiries that both of those markets saw even steeper price gains than our own in the past few years - gains which pushed both markets well beyond the margin of affordability from an earnings/housing price perspective - and in turn gave those markets a wider margin for correction. The difference in Victoria is that although the opportunities are admittedly less than abundant, there is still enough product in our market at accessible price points to keep it moving. At this point, the numbers don’t tell me that a price drop has happened appreciably in Victoria in 2018. After the expected December/January slump, we will look for clues heading into the spring market, where if I had to guess, a relatively stable, balanced market awaits.
Why? As positive employment numbers continue to come in, and the Greater Victoria region continues to add new residents, the fundamentals of supply and demand suggest that housing isn’t going to fall off a cliff. Langford remains one of the fastest-growing cities in the country, with Victoria and Saanich each adding nearly equal numbers of residents year over year as well. Tighter financing is going to continue tempering housing demand somewhat, keeping us out of the red-hot selloff of 2016 and maintaining some level of listing inventory and a lower number of transactions than the past two years, but all those new faces are still going to need places to live. A steep incline in interest rates could further stall the market, but it would have to be significant to spur an appreciable price drop.
Do you agree? Disagree? Want to talk further about where the market’s heading and whether it’s the right time for YOU to make a move? Curious for a closer breakdown on your neighbourhood or property type? Send an email now, I’d love to start a conversation with you.
You're shopping for a new home. You drive to visit a recent listing. As you walk through the front doors, you're impressed. Every room looks fantastic. You see yourself relaxing on the spacious patio, cooking in the modern kitchen, and enjoying evenings with the family in the cozy living room.
Your emotions are on overdrive. This is your dream home!
Should you make an offer? Probably. In fact, you should make that decision quickly in case there are other interested buyers.
However, your decision shouldn't be guided purely by emotion. You want to make sure you take practical matters into consideration too.
For example, you'll want to consider:
Is the property within your price range?
Does it have everything you need?
Does the neighbourhood work for you?
How old is the property? Are there items, such as the furnace, that may need to be replaced soon?
Will it need any major repairs or upgrades?
What are the average monthly costs of carrying the home? (Property taxes, utilities, etc.)
Once you've considered the purchase of the home from a practical standpoint, you'll have a lot more confidence in your decision when you make an offer.
Want to talk to an expert who can make sure you're informed with a 360-degree view on any property? Get in touch today.
When you're having a garage sale, one of the toughest tasks is pricing your items. If you put a price tag on your old golf clubs that’s too high, no one will buy them. If you make the price too low, they might sell quickly, but you’ll spend the rest of the day wondering if you could have gotten more!
It's similar to selling your home — except with your home, the stakes are much higher. You want to price your property to sell, but you don’t want to leave any money on the table.
How do you accomplish that?
Setting the right list price for your home requires a combination of skilled calculation AND industry savvy.
Let's start with the "calculation" part...
When you work with me, I'll review recently sold properties that are similar to yours in type, size, features and location. Then, using that data, we’ll calculate a range that represents your property's "current market value."
For example, consider a spacious 15-year-old bungalow in a nice neighbourhood. If similar homes in the area have sold for $675,000- $750,000 in the last six months, then it's obvious that your home should sell in that range too. A list price above or below that range would be in the danger zone.
But skilled calculation is only half the task.
Setting your list price also requires expertise in the local market, combined with good old-fashioned gut instinct. That instinct comes from being on the front lines of many property transactions.
That's why working with a good real estate salesperson is so important, when you’re deciding on the list price for your home.
The Victoria real estate market's return to balance not linear, but also not unexpected
A total of 598 properties sold in the Victoria Real Estate Board region this October, 9.9 per cent fewer than the 664 properties sold in October of last year, but a 12.2 per cent increase from September 2018. Sales of condominiums were down 15.5 per cent from last year in October with 180 units sold, but up 20.8 per cent when compared to September 2018. Sales of single family homes were down 14.7 per cent from 2017 with 289 sold this October, 1.4 per cent more than the previous month.
"We continue to see the housing market shift into a more balanced state, though the trajectory is not smooth," says Victoria Real Estate Board President Kyle Kerr. "This month had slower sales compared to last year and a slightly lower level of inventory coming into the market, but it also had an increase in sales from last month, which may surprise some people. The moderating changes over last year have been punctuated with some competition and price pressure on lower and mid-priced homes while the upper end of the market has softened slightly. Right now pricing is key across all segments as we transition to a more balanced market."
There were a total of 2,510 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of October 2018, an increase of 31.8 per cent compared to October 2017 but 5.1 per cent fewer than the month previous.
"The market is definitely reacting to the changes in mortgage lending requirements," adds President Kerr. "Lending was made tougher to dampen the market and these measures have certainly had an impact on purchasing power. The threat of the looming Speculation and Vacancy tax has also cooled development in our area, which is unfortunate because the only way to create affordable homes in our area is to build them. We hope that moving forward the municipal, provincial and federal governments will work collaboratively to enable more supply at all levels of housing by funding public / private partnerships to support the increase of home stock in our area. We hope that aside from taxation and mortgage rules, governments will work together to ensure a future supply in our area to stabilize prices in the long term."
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in October 2017 was $830,100, while the benchmark value for the same home in October 2018 increased by 6.1 per cent to $881,000, slightly lower than September's value of $883,700. The MLS® HPI benchmark value for a condominium in the Victoria Core area in October 2017 was $457,500, while the benchmark value for the same condominium in October 2018 increased by 9.86 per cent to $502,600, slightly less than September's value of $503,000.
Ideally, you would like buyers to wait until they’ve viewed your whole property before they judge it. However, the reality is, buyers start forming an impression of your home as soon as they see it from the curb. So, it pays to do everything you can to improve your property's "curb appeal".
Here are some ideas:
You can improve the impact of your landscaping by trimming hedges, removing any unsightly weeds, and cutting the grass. Planting just a few fresh flowers can make a big impact.
If your main entrance door is old, a fresh coat of paint will make it look like new. In some cases, the effect is significant.
Remove any items that might distract the buyer from forming a good first impression. For example, garbage cans, stored items along the side of the property, etc.
Make sure the curtains and blinds on your front windows are open during viewings. That will make your home look more friendly and appealing.
If your driveway has grease stains and other blemishes, consider renting a power washer and giving the driveway a thorough cleaning.
Clean your front windows. If possible, also clean the exterior panes.
Finally, if possible, park your vehicles on the street and away from your home. Doing this will not only make your home look more inviting to buyers, it will give them a convenient place to park.
Most of these tips can be done in less than a day. Yet, they can make a big difference in your home's curb appeal. They are worth the effort!
Looking for any other tips on a successful, top-price sale of your home? Get in touch with me any time!
While the regularly released Real Estate Board statistics provide an immensely useful overview of the market on a monthly basis, many of my clients often stop me to ask, “Dirk, what’s really going on out there?" I’ll share the inside track here that I’d usually walk them through, hopefully in comprehensive enough detail to help you make some sense of where things are headed from where I sit. Of course, if you have any questions, you can always shoot me a text or an email.
Overall, the economy’s position in the credit cycle, with rates rising and borrowing becoming more difficult for consumers, coupled with government interventions designed to cool the market has lead to a somewhat balanced (or even stagnant) market in Victoria, with increased inventory compared to recent numbers, but still well below the 10 year average. The market for Single Family Homes in particular market has softened, especially listings over $1 million, as a result of the factors above. As a result, there is still some stale inventory that has failed to sell as the market has slowed. This is inventory is gradually being reduced as we see a number of these homes coming off the market, Attractive, reasonably priced properties are absolutely still selling well, sometimes even bringing in multiple offers. As of this fall, Victoria’s real estate market has far less inventory in the more affordable $750K-800K-and-under bracket than we have seen in recent years, which contributes to this pressure. Given their more accessible price point, condos continue to perform well.
In addition, More advanced softening in the Vancouver market has led to a drop-off in the number of ‘Vancouver Refugees’ selling off and purchasing properties on the Island. In fact, this declining real estate trend is happening elsewhere, not just here - price declines are showing up in the news from areas in Europe, Oceania, and the U.S.
In Canada and the U.S., interest rates are expected to continue to rise, further increasing the cost of borrowing and putting downward pressure on demand, however, broader economic fundamentals appear to be keeping steady, with inflation reaching its 2% target.
What does this all mean? Expect a slightly slower, cooler market in the next six months, particularly as active buyers and sellers who haven’t succeeded in their aims this year begin to back off toward winter and wait until spring. I expect that higher interest rates leading into 2019 will continue to impact demand and the shift away from a strong sellers’ market will continue. Prices should flatten out, although I don’t see a significant decline on the way. This should contribute to a little more inventory available in the upcoming spring market, so for buyers - particularly those who are less dependent on financing to purchase properties - there will be more opportunities.
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