Greater Victoria’s housing market has, for some time, been running in the “overheated” range, with sales far outpacing the number of listings available.
Members of the Victoria Residential Builders Association, who have been doing their best to supply units for the increased demand in the region, heard that point at their recent 2017 Crystal Ball Housing Forecast dinner at Royal Colwood Golf Club.
Canada Mortgage and Housing senior market analyst Braden Batch, one of three industry professionals who presented at the event, illustrated how today’s market continues to strongly favour sellers. The Victoria area has not seen a truly “balanced” real estate market, he said, since 2015, although the overly high ratio of sales to listings started to ease later in 2016.
Batch, like the previous presenters, sounded uneasy with the idea of looking into a “crystal ball” and predicting what this year would hold. But he did say that mortgage rates, despite a “very slight uptick” this year, can be expected to remain “at historically low levels.”
That said, Batch noted the cost of home ownership continues to rise in the Greater Victoria market. That point was borne out this week by the 2017 Demographia International Housing Affordability Survey, which classified Greater Victoria as the “least affordable smaller housing market in Canada,” given its ratio of 8.1 times the median income of $67,300 required to buy a home with a median cost of $542,400.
Much of Batch’s presentation backed up information given by Mike Nugent, past-president of the Victoria Real Estate Board. He told the group that while 2016 saw a strong year in all categories of housing sales, inventory remains low for the start of 2017.
Addressing the question of who is buying real estate in Greater Victoria, he said, “Sixty-five per cent of our buyers are local, which has remained pretty much a constant year over year.”
He referenced a recent proposal by Victoria city councillors Ben Isitt and Jeremy Loveday, that the City ask the province’s permission to impose a foreign buyers’ tax, similar to that put in place in Vancouver to deal with vacant homes. Nugent said the difference between the Victoria and Vancouver markets is that the majority of foreign buyers here are living in the homes they’ve purchased.
Nugent has, in past, downplayed the effect of foreign buyers on the region’s house prices. The lack of inventory and the simple properties of supply and demand have had more of an impact, he noted.
As to local pricing trends, the so-called “bidding wars” continue, with sellers able to field multiple offers from buyers with relatively little to choose from.
“I don’t see the buyer demand diminishing,” he concluded. “With inventory so low, we’ll have a tough time matching (the sales figures of) 2016. Buyers are still chasing a small number of homes.”
Residential construction continues apace, however, with the West Shore due to lead the creation of new units in 2017 based on projects in the various stages of completion.
As a foreshadowing of that activity, Nugent said 1,000 acres of land have changed hands in the past year on the West Shore alone in preparation for future development.
Steven Hurst with Yellow Sheet Analytics, a construction industry data company for Vancouver Island, gave some stark numbers to indicate how much busier the industry is than in past recent years.
Looking at projects in the “pipeline,” his simplified version of the residential development process, he compared the 2014 building permit total value of $237 million for the Capital Regional District with the projected value of $623 million for 2017.
His records showed 16,092 units currently in the pipeline, anywhere from the site planning and approvals stages up to the under-construction phase.
He pointed out that 53 per cent of all units in the development pipeline are rental apartments, with Langford and Victoria leading the way in that category.
Taking into account only those projects under construction, Batch showed how those two jurisdictions make up well over half of the total units in the region: Of 2,993 units being built at the end of 2016, Victoria had 945 and Langford 858 of them. Saanich was third with 449 units, followed by Sooke with 151, Colwood at 148 and Sidney with 102.
In construction of single family detached homes, Langford led the way with roughly one third (303) of the total of 910, followed by Saanich at 123, Sooke at 102 and Colwood with 92.
