Welcome back to my market updates post! I will continue to update this Victoria, British Columbia, real estate market page at the beginning of each month.
This post’s data, housing prices, statistics, and property information are from the Vancouver Island Real Estate Board Region. Alright, let’s get to it!
In total, 320 residential properties sold in the Victoria Real Estate Board region during December 2022, which is 26.9% fewer properties than the 438 properties sold in December 2021 and a 16.7% decrease from the previous month of November 2022.
Condo sales in December 2022 were down 38.2% compared to December last year (2021), with 94 units sold.
In addition, sales of single-family homes in December 2022 were down 24.6% from December 2021, with 156 houses sold.
At the end of December 2022, there were 1,688 active listings for sale on the Victoria Board MLS®. There was a decrease in inventory of 423 properties compared to the previous month of November, with 2,111 active listings.
2022 began with record low housing, high demand for properties, and higher-than-average home sales. Near the middle to end of 2022, we saw rising interest rates and buyer demand decrease since many potential home buyers are having difficulty qualifying for homes. As a result, market activity slowed down.
The continuous and substantial increase in interest rates throughout the year has reduced buyer demand as affordability is impacted since borrowing is more expensive.
A total of 6,804 properties were sold in 2022, 32.3% fewer than the 10,052 properties that were sold in 2021. The 2022 sales came closest to 2014’s sales year when 6,698 properties were sold.
Two new legislative changes were implemented at the beginning of January 2023. On the federal level, there is a new two-year ban on foreign buyers from purchasing property in Canada. Foreign buyers only represent a small fraction of the sales in Canada based on the government’s data, so it will be interesting to see if this ban has any affect on housing affordability in Canada.
In BC, the Home Buyer Rescission Period (HBRP), also known as the “cooling off period,” came into effect on January 3rd, 2023.
The Home Buyer Rescission Period is intended to give home buyers an opportunity to rescind their offer up to three business days after their offer was accepted.
The three business days begin the day after the accepted offer is signed. For example, if the offer is accepted on Monday, the buyer’s rescission period would end at 11:59 p.m. on Thursday.
Suppose subject conditions are included in the offer (such as buyer financing, home inspection, strata document review, etc.). In that case, these conditions will run concurrently with the three-day home buyer rescission period.
The seller, buyer, or their representatives can’t waive the rescission period. During the rescission period, a homebuyer can withdraw from the signed contract (for no reason), but the cost of the rescission fee is 0.25% of the purchase price. For a purchase price of $500,000, the buyer rescission fee would be $1,250.
Although interest rates have increased, this market can be a great opportunity for home buyers. Buyers can purchase a home with less competition compared to 6 months to a year ago. Even though monthly mortgage payments will be higher due to the higher interest rates, homeowners often can refinance at a lower rate when interest rates eventually go down again in the future.
On the supply side, high building costs, limited availability of construction workers and labour in general, zoning restrictions and regulations all reduce the pace and the number of homes coming to market.
So even though interest rates have increased (impacting only buyer demand), there is still a supply and demand imbalance in the housing market. Long term, lack of supply will continue to be an issue for the affordability of homes in Victoria and surrounding neighbourhoods.
Sellers may also be reluctant to sell their homes if they’re locked in at a low-interest rate since they would then purchase a new home with a significantly higher interest rate. This could also impact the number of new listings added to the MLS®, and we may start to see an even lower supply.
Without a strategic long-term plan for more housing supply in Victoria, we will continue to have too few homes available for the number of people who are looking to purchase a home.
Allowing secondary suites, zoning changes, and quicker approval of development permits are necessary to continue to have enough housing supply in the Greater Victoria area.
Net unconditional sales: 320
New Listings: 361
Active listings: 1,688
Net unconditional sales: 438
New listings: 399
Active listings: 652
The total residential sales over the total active residential listings ratio is a measurement of supply and demand and is expressed as a percentage at months-end. This measurement is the percentage of available listings that have sold in a specific month.
The ratio can provide buyers, sellers, and their real estate agents an understanding of whether we are in a buyers’ market, sellers’ market, or a balanced market.
When the percentage of sales to active listings is in the 15-20% range, there is little pressure on home prices either way, and it is typically considered a balanced market.
However, when the sales to active listings percentage falls below 10%, there is downward pressure on prices, which is considered a buyers’ market.
Alternatively, when the sales to active listings percentage increases above 25%, there is upward pressure on prices, which is considered a sellers’ market.
For December 2022, the sales to active listings ratio slightly increased to 25%, indicating a 3% increase from the 22% sales to active listings ratio in November 2022. It’s a very sharp decrease compared to December 2021, when the sales-to-active listings ratio was at approximately 100%. The lower percentage indicates more properties are available for homebuyers, and buyers have more negotiating power than last year.
The Victoria, BC, real estate market is very dynamic, and many factors can influence market conditions. If you have any questions about the Victoria real estate market or if you’d like to know what your home is worth in today’s market, I can prepare a free, comparative market analysis for you. Easily send me a message on my contact page or email email@example.com. I look forward to hearing from you!
*Disclaimer: The topics of discussion, content and resources on this website are general information that may not be the right solution or advice for you specifically. Not intended to solicit buyers or sellers currently under contract with a brokerage.
*Stock images from Social Squares
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