The Neal Estate Team's Victoria Real Estate Update for September 2021

Inventory continues to decline in the Victoria Real Estate market amidst decreasing sales volumes and increasing prices. The slow downward momentum from July seems to have continued into August 2021 as we saw 831 total transactions in the latter month representing a half a percent decrease. Compared to August 2020, the decrease in sales was more noticeable at 15.1% below the same month in the previous year.

By property type, single family home sales were down (9.8% from July and 29.9% from last year) and condos were up (21.5% from July and 31.7% from last year). Condo sales are benefiting from a higher inventory than other property types and the segment is picking up buyers who are being priced out of the limited number of single family homes available.

The end of August saw 1,120 active listings in Victoria which was an 11.8 decrease from the end of July (and 56.7% down from Aug 2020). Considering there was half the inventory this August compared to last, it is not a surprise and not necessarily an indicator of lessening demand that sales decreased.

Benchmark Home Prices for single family homes increased 0.7% from last month and 22.4% year over year to hit $1,089,400. Condos hit $540,600, an 11.8% increase from last year. To put that in perspective, according to the Home Price Index, the price of condos have increased $57,200 in a one-year period while single family homes have increased $199,500 in the same period. As we have previously said, these numbers in particular are delayed and we have seen condo sales consistently on the rise as they become the only option for many buyers.

Mixed news for landlords has been released by the BC government as they announced that the long (18 months) imposed rent freeze will be lifted in January 2022 but will be capped to a 1.5% increase next year. For perspective, as of August 8th Canada’s official inflation rate was 3.6%.

It is certainly positive to see so much conversation happening about affordability in the upcoming election. With all of the parties advocating their specific solutions and incentives it is easy to forget that the real issue is one of supply. Whatever tax breaks, mortgage terms, stress test changes, foreign buyer restrictions, etc, are put in place, there will still be an affordability issue if there is not enough inventory and it won’t be the politicians out there with hammers and nails. Many of the significant barriers that are impeding and de-incentivizing developers and home builders are on a local and regional level and many organizations including VIREB, VREB and BCREA continue advocating with policymakers to speed up the development process so that municipalities can expand supply more quickly to meet demand.

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The Neal Estate Team
Your Victoria & Vancouver Island Real Estate Experts
“Let our experience be your guide
www.RonNeal.com
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