One analyst describes the real estate market in Greater Victoria as “mixed” as sales remain strong and other factors determine future developments.
Leo Spalteholz, a local real estate agent who analyzes the housing market at househuntvictoria.ca, said all parts of the market will remain in what he calls the “extreme sellers’ market area” after the Victoria Real Estate Board (VREB) released new sales figures . They show that brokers operating in Greater Victoria and the Southern Gulf Islands sold 1,049 properties in May 2021, up 129.5 percent from May 2020, but six percent less than in April 2021. Sales figures too were down 4.9 percent from March in April, leading to predictions that the market may slow down.
While Spalteholz said the surge in sales towards the end of May surprised him, it is clear that “affordability restrictions” are affecting the market. “Despite these super-hot market conditions, there may not be much room for maneuver in single-family prices in the short term,” he said.
In other words, prices will remain high but will not significantly exceed current levels.
Spalteholz says the future of the market depends in part on life after the COVID-19 pandemic. “The pandemic has sparked this explosion in demand, and as vaccinations rise rapidly until restrictions are completely lifted, it will be fascinating to see how far the pendulum of life swings back,” he said. “Lots of people have made big life choices because of the pandemic, but if I were to place a bet I think the new normal is pretty close to the old normal.”
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He assumes that most employees (including those in the technical area) will be back in the office full-time or part-time by the end of the summer, which will lead to longer commuting times. “That could later lead to a decline in the share price in the peripheral regions, which were driven up above average,” he said.
Looking at the other important coordinates of the market, the stock remains low with 1,450 apartments on the market, the lowest stock since May (the second highest in May 2017 with 1,896 apartments) combined with the second highest sales rate, after split timber.
The prices rise accordingly. According to the VREB, the Home Price Index (HPI) reference value for a single-family home in the Victoria Core region was $ 1,036,100 in May, up 17 percent from May 2020 and 3.9 percent from April 2021. The corresponding HPI for a condominium was $ 526,000 in May, up 5.2 percent year over year.
Overall, Spalteholz sees a weakening of the market, but slowly.
“For now, however, the slowdown is small and orderly and we are far from market conditions that would result in immediate price declines,” he said.
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