Victoria Real Estate Market Report November 2021
More of the Same Plus How Migration Affects Our Victoria Housing Market
Simple Supply and Demand
There were 1,036 active listings of homes for sale on the Victoria Real Estate Board at the end of October 2021, which was 51.2% fewer properties than the 2,122 available at the end of October 2020.
Sales in October of all properties in the Victoria Real Estate Board were down 24.7% as compared to October of last year. Sales of single-family homes were down 30.4% from October 2020 and condominium sales were down 18.1% from October 2020.
Not surprisingly, low inventory drove-up the benchmark value for a single-family home in the Victoria Core by 25.3% compared to October 2020. The benchmark value for a condo rose 14.4% over the same period.
Migrations Effect on Victoria Real Estate
People often ask us about the volume of people moving to Greater Victoria from other provinces and countries and what effect they have on our market. As we’ve reported previously, last year, about 73% of buyers of Greater Victoria properties came from Greater Victoria itself. Buyers from other parts of BC made up another 17% of our buyers. About 9% came from other parts of Canada and only about 1% came from other countries, with US buyers making up about 90% of that 1% of foreign buyers.
Interestingly, BC has seen a fair amount of migration from other provinces, while Ontario has seen more people leave that province than people who came to the province. According to Statistics Canada, Ontario residents have been leaving in unusually large numbers over the past year. British Columbia (BC) is the number one destination for Ontarians relocating within Canada. In Q2 2021, about 26% of the total people who left Ontario came to BC.
Although people moving from other provinces and countries make up only about 10% of the buyers in Greater Victoria, their effect on our market is higher than the numbers would suggest. When someone from Oak Bay sells their home and buys a condo in Victoria, they are just switching homes. But, when someone from outside Greater Victoria buys a home, that home is removed from the market and nothing is added, so the supply of homes goes down. When supply goes down, prices go up. So, an out-of-town buyer has more effect on prices in the market than a local buyer.
As BMO’s Chief Economist Doug Porter put it, “while many downplay this factor (‘it’s only X% of the buyers!’), Economics 101 will tell you that the marginal buyer sets the price.” Additionally, out of province buyers tend to buy higher priced properties, which are mainly homes. The supply of homes is harder to replenish because Victoria has a limited amount of land.
The Future of Victoria Real Estate
Looking forward, British Columbia Real Estate Association Chief Economist Brendon Ogmundson notes, ”The strength of the first half of this year has sales on track to easily break the previous record for annual sales. While we do not anticipate a repeat of the record-setting market of 2021, we do expect housing market activity to remain vigorous in 2022. Given strong demand and very low active listings, particularly in smaller markets around BC, the average home price in BC is projected to rise 17% in 2021. Prices are forecast to rise about 3% in 2022 as the composition of home sales changes due to normalizing demand for single-family homes and a recovery in active listings helps the market balance out.
Ogmundson’s forecast, however, did not take into account the BC Financial Services Authority (BCFSA), recent announcement regarding new policies they are intending to introduce in 2022 that will affect both home buyers and sellers including a cooling off period which would allow home buyers of existing residential properties to exercise a right to rescind their offer. Also under consideration are policies such as restricting blind bidding, unconditional offers, mandatory home inspections, waiving conditions and other practices that may be identified as consumer protection risks. If, and when, these new policies will be implemented remains to be seen.
You can find the full Victoria Real Estate Board report as well as recent reports from the BC Real Estate Association and the Canada Mortgage and Housing Corporation by clicking on the links to the right.
If you have questions about buying or selling a home in Victoria. We’re here to help.
Hal Decter, LLB & Audra Poole