Extreme lack of inventory continues to be a significant factor in our market with the number of available listings for sale down to 1,815 at the end of November, the lowest I recall seeing in 25 years. That’s 38.5% fewer than the 2,952 for sale than at the end of November last year. It’s hard to imagine the supply shrinking any further, but seasonally we normally see selection diminish at this time of year before turning around and picking up as the New Year begins.
The number of sales declined understandably given the lack of choice available for sale. There were 599 properties sold in November, down from 735 the previous month and still slightly more than the 573 properties sold in November last year.
We have seen an increase in the number of foreign buyers, including a significant number from south of our border and especially in higher end properties. I’m nervously holding my breath waiting to see if our government will introduce a foreign buyer tax as they did in Metro Vancouver and resulted in a dramatic decrease in foreign buyers.
This undersupplied and overheated market has led to upward pressure on prices in our market. Most recent Home Price index stats show the year over year increase in prices for single family homes in the Greater Victoria core of 23.9% to now $753,800 up from $608,600 in November of 2015. The balance of supply and demand and shift in prices varies considerably by area, property type and price range. Please contact us for information relative to your own neighbourhood or click here for your Free Market Snapshot.
As with real estate for sale, we are also experiencing literally a zero vacancy and critical shortage of rental property in our marketplace which as with real estate for sale, is pushing prices up. A major contributing factor to the rental shortage seems to be coming from many owners converting their rentals to furnished short term vacation rentals. As rental returns increase real estate becomes more attractive to investors adding to the demand. I’ve seen cases of properties recently vacated re-renting for more than 20% over the prior tenant’s rent.
Calming the rush to purchase real estate, recent new mortgage rules and general tightening by lenders is knocking many would be buyers out of the market. I’ve never seen so many collapsed sales where buyers were prequalified and expected to be able to purchase and ultimately failed to get approved for the financing they were seeking. It’s vitally important to be preapproved (credit check completed, income and other important variables verified by lender), not just prequalified (a conversation with a lender or from an online mortgage calculator) and still the lender will need to approve the actual purchase contract and property. If you are considering a real estate purchase or a mortgage renewal, please contact us for an introduction to an experienced and excellent mortgage broker for a Free Consultation.
We are almost completely sold out of listings and are working with many qualified and motivated buyers. If you are considering selling now or in the near future, please contact us for a FREE consultation and analysis of your own property’s market value and advice on preparing for sale with no obligation of course.
Thank you for reading my report, I hope you enjoy them! I encourage you to please ask questions and post your comments.
Wishing you and yours a very Merry Christmas and a healthy and Happy New Year.
Ron Neal, Broker/Owner, Team Leader
The Neal Estate Team, RE/MAX Alliance Victoria
Full VREB News Release
High Demand Continues as Inventory Shrinks in the Victoria Housing Market
December 1 2016, Victoria, BC
A total of 599 properties sold in the Victoria Real Estate Board region this November, 4.5 per cent more than the 573 properties sold in November last year.
Inventory levels remain lower than last year, with 1,815 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of November 2016, 38.5 per cent fewer than the 2,952 active listings at the end of November 2015.
"Our current housing market is in a strong cycle due to many factors, including our current positive economic conditions, baby boomers retiring here, millennial buying cycles, a low Canadian dollar keeping folks closer to home and our favourable living conditions," notes Mike Nugent, 2016 President of the Board. "These factors and others, in combination with ongoing low inventory mean demand for housing is up, particularly in those areas close to the core and amenities."
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in November 2015 was $608,600. The benchmark value for the same home in November 2016 has increased by 23.9 per cent to $753,800.
"Foreign buyers are another factor that affects our local housing market. The provincial government is considering implementation of a local tax on foreign buyers to ensure pressure on pricing from that source remains mitigated," adds President Nugent. "While October data shows an increase in foreign buyers into the Capital Regional District compared to previous months, their 6.3 per cent of property transfers indicate that these buyers are one factor in the marketplace. A much larger factor affecting affordability and availability right now is the lack of inventory. An effective method to address housing affordability issues could be through efforts to increase the supply of housing, either through adjustments to zoning or density."
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