An analyst describes the Greater Victoria real estate market as a “mixed bag” as sales remain strong with other factors shaping future developments.
Leo Spalteholz, a local realtor analyzing the housing market at househuntvictoria.ca, said all parts of the market remain in what he calls “extreme sellers’ market territory” after the Victoria Real Estate Board (VREB) released new sales figures. They show realtors working in Greater Victoria and on the Southern Gulf Islands sold 1,049 properties in May 2021, an increase of 129.5 per cent compared to May 2020, but six per cent fewer than in April 2021. Sales figures had also dropped in April, down 4.9 per cent from March, prompting predictions that the market might be slowing down.
While Spalteholz said the uptick of sales toward the end of May surprised him, it is clear that “affordability constraints” are impacting the market. “Despite those super-hot market conditions there probably isn’t much headroom left on single-family prices in the short term,” he said.
In other words, prices will remain high but won’t significantly surpass current levels.
Spalteholz says the future of the market depends in part on life after the COVID-19 pandemic. “The pandemic triggered this demand explosion, and with vaccinations rapidly ramping up to where restrictions will be completely lifted, it will be fascinating to see how far the pendulum of life swings back,” he said. “A lot of people have made big life decisions based on the pandemic, but if I were to make a bet, I think the new normal will look quite close to the old normal.”
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He expects most workers (even those in technology) will find themselves back at the office full or part time by the end of the summer, leading to longer commuting times. “That could cause a price pullback later in the outlying regions that were driven up more than the average,” he said.
Looking at the other major coordinates of the market, inventory remains low, with 1,450 homes on the market, the lowest level of inventory for any May on record (the second-lowest being May 2017 with 1,896 homes) combined with the second highest sales rate, according to Spalteholz.
Accordingly, prices are rising. According to VREB, the Home Price Index (HPI) benchmark value for a single-family home in the Victoria Core region was $1,036,100 in May, an increase of 17 per cent compared to May 2020 and 3.9 per cent from April 2021. The corresponding HPI for a condominium was $526,000 in May, an increase of 5.2 per cent compared to the previous year.
Overall, Spalteholz sees the market slowing down, but slowly.
“For now though, the cooling is slight and orderly and we are far from any market conditions that would lead to imminent price declines,” he said.
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