When will prices stop falling in the Victoria BC Real Estate Market? September 2022
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- čas přidán 13. 07. 2024
- When will prices stop falling in the Victoria BC Real Estate Market? September 2022
The Victoria BC Real Estate Market has pivoted a full 180 degrees from the peak of the pandemic market frenzy that occurred in February and March of this year. Low rates and low inventory fuelled a tremendous amount of demand that put pressure on prices in Victoria BC Housing. Cheap mortgage rates from Canadian Banks that pulled massive demand forward seems to have come to an end and prices are seeing significant declines as the market returns to more balance.
A similar story is unfolding across most major Canadian Real Estate Markets but Victoria BC historically has seen less fluctuation over the last 15-20 years because of limited supply. As an example, the Home Price Index for a detached home in Canada has fallen by 12% this year from the peak, but Victoria has only seen a 4% draw down. Why is that?Although Victoria BC has different supply and demand dynamics that other cities in Canada, in this video I contend the nature of the index doesn’t tell the full story for how much prices have corrected in the Capital of BC (ie. Average and Median Sales Data). I also make some assertions about the direction of the market and what is helping prices to stay resilient.
There are a few things I’m watching as we move into the Fall Market in Victoria:
Intro: 00:00
1) Dispelling HPI misinterpretations 00:55
2) Decline of median in detached homes 01:27
3) Variable and Fixed Mortgage Rates exploding since the Spring 01:48
4) Impact of changes to policy rate to combat inflation in 2022 and expectations for next meeting 02:19
Despite the fears that the Bank of Canada pushing interest rates higher too quickly could cause a recession, they seem to have a high level of conviction in doing what is required to reign in inflation and bring it back within their target rate of 2% by 2024. On June 1 we saw a 50bps interest rate increase pushing the policy rate to 1.5%. Prior to the pandemic rates had stabilized around 1.75% and following a massive 100 bps interest rate adjustment on July 13th the Bank of Canada’s policy rate now sits at 2.5%. On September 7th we saw the Bank of Canada raise the policy rate by an additional 75 bps bringing it to 3.25%. Although earlier in the year analysts believed we would see a 3.5% policy rate by the end of 2022, expectations have grown considerably to now eclipse that number at the next meeting in October. Affordability is not getting any better, but the Bank of Canada has their eyes set on one thing, inflation.
On the positive side of the mortgage rates expectations discussion, 5 year fixed mortgage rates have stabilized just above 5% for most major Canadian Banks and we may see them hover or drop as inflation begins to become reigned in.
5) Rental market still exceptionally strong 03:46
6) Slight downtick in new listings 04:05
7) Ratio between sales to active listings getting sticky 04:32
8) Sales data (median) not suggesting prices are falling as quickly 05:07
9) What I’m seeing on the ground 05:32
10) Analysis of price trajectory based on mortgage rates and affordability 06:05
11) Rates up, for how long? 07:33
12) Outro / Victoria BC remains a desirable place to live 08:22
Canadian Real Estate Investing is in a challenging position but overall my perspective as a BC Realtor and Victoria Realtor is that over a 5+ year time horizon our beautiful city will continue to appreciate. Vancouver Island Real Estate is some of the most desirable real estate in Canada. You are investing in a lifestyle as much as you are investing in an asset class. Nevertheless, Victoria BC isn’t so valuable that it is insulated from the effects of massive changes to interest rates and demand. Real estate is sensitive to interest rates and it will be interesting to follow events over the next 6 months.
What do you think will unfold in the Victoria BC Real Estate Market in 2022?
Let me know in the comments below if you have ay questions about living in Victoria BC, moving to Victoria BC, or Victoria BC Real Estate. Feel free to reach out to me directly as well, I would be happy to answer your questions about Vancouver Island and the Victoria Housing Market.
______________________________________
Alex Carroll is a licensed real estate professional in the province of British Columbia serving the Greater Victoria Real Estate Market
Alex Carroll PREC*
Licensed Realtor
Engel & Völkers Vancouver Island
carrollgroup@evrealestate.com
alexcarroll.ca
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Do you think home prices in Victoria BC will continue to be more resilient than other cities in Canada?
Man your videos are bang on - appreciate the mix of stats and your opinion on how this will shake out. Really well spoken to. Keep em coming!
Thanks Greg! Appreciate the feedback. Will keep them coming for sure!
Great info! Thanks.
You’re more than welcome. Will keep content like this coming!
I really don’t understand how prices could plummet with such a high demand propping them up
I suppose it depends on your interpretation of the word plummet. Prices certainly have declined steeply from earlier in the spring
everything's still about 1M Dunno how I'm ever going to buy anything
It’s definitely still an expensive place to live regardless of market segment (condo, townhouse, detached).
Who do you think can afford Victoria’s housing market????
Great question. It seems that those with high incomes or those who have built up significant equity in other markets prior to moving here are able to purchase in our market (almost 6000 purchases YTD). Side-by-side it remains largely more 'affordable' than Greater Vancouver & Toronto.
I have been following real estate in victoria and langford.sellers havnt reduced the price. Houses over million dollar most of the detached one are the same except a few. I think there is a big mismatch as the sellers are adamant on the price that they have seen their neighbourhood sold during the peak whereas buyers arent willing to pay the price.
Hi Harpreet, this is a fair analysis but I would comment that I have seen more price reductions over the last 4 months than in the last 2 years preceding it. I think you could say that this gridlock between buyers and sellers is leading to the lack of sales activity.
Prices need to come down!
I’m looking for first time buyers home! Are you thinking good time for buying home ? Where’s good place Langford , close Sanich , cook st, I’m looking for 1 bed . Thank you
Hey Hatem, there are tons of great communities throughout Victoria. You can always drop us a line at:
carrollgroup@evrealestate.com
5:20 are you walking through a graveyard?
Yes this is the Chinese cemetery at Harling Point.
Alex the real rate increases haven't started yet, next year 3 times higher!,
What makes you say that? Markets now pricing in 4% as terminal rate
Hey, I just send you a message on your Instagram, and email for a question about your channel can you check it?
Awesome thanks we will check it out!