Victoria Real Estate Market in the Times of Covid-19
June 1, 2020 — The number of home sales in Victoria for May 2020 compared to May 2019 was down 46.1%. Since mid-March, when the COVID-19 state of emergency was called, we’ve seen monthly home sales volumes drop substantially. Even though the number of homes sold in Greater Victoria has dropped, prices are remaining steady and we are even seeing small increases. The benchmark home price index showed a 2.6 % increase for single family homes and 3.5% for condominiums, when you compare May 2019 to May 2020 prices. However, because of the significant drop in sales volume and active listings, the benchmark home price index for April and May is likely skewed.
|# of Sales
2019 vs 2020
|# of New Listings
2019 vs 2020
|# of Active Listings
2019 vs 2020
|April||696 vs 287 (-58.8%)||1369 vs 625 (-54.3%)||2,751 vs 2,305 (-16.2%)|
|May||848 vs 457 (-46.1%)||1613 vs 1095 (-32.1%)||3019 vs 2544 (-15.7%)|
Not surprisingly, given the uncertainty of COVID-19, there are wildly varying forecasts as to the future of the Canadian housing market.
Probably one of the most pessimistic forecasts was provided on May 19 by CMHC CEO Evan Siddall in his report to the Parliamentary Standing Committee on Finance. In referencing the six month deferral on mortgage payments offered by Canadian banks, Siddall noted that CMHC estimated that “12% of mortgage holders have elected to defer payments so far and that figure could reach nearly 20% by September.” He referred to increasing household debt and unemployment and indicated that “CMHC is now forecasting a decline in average house prices of 9 to 18% in the coming 12 months.” It’s worth noting that Siddall suggested that CMHC may be looking to increase the amount of down payment required on homes from 5% to 10% to offer “more of a cushion against possible losses.” Some may see CHMC’s forecast as overly pessimistic in order to bolster their call for higher down payments.
In a conference call on May 27th sponsored by the British Columbia Real Estate Association, BCREA Chief Economist Brendan Ogmundson and other panellist were more optimistic than CMHC.
Although Ogmundson and the other panellists agreed that there will likely be a decline in prices in the range of 5 to 10%, it was generally felt that, assuming that the economic shut down precipitated by COVID-19 is not prolonged, we will see prices and sales track something like the Nike swoosh in which sales and prices decline quickly and then recover over a longer period. The panelists agreed that the recovery will be gradual and won’t likely be complete until next year.
As physical distancing restrictions are starting to be loosened in British Columbia, we are beginning to see more listings being brought to the market. The number of new listings in May 2020 were up 10.4 percent compared to April 2020.
In the last three recessions we’ve experienced, prices in Greater Victoria did decline, but each time they recovered completely. So, while we may see some reduction in home prices over the short term, we feel strongly that, in the medium and long term, our market will recover and continue to thrive.
Although it may not be a good time for a quick flip, if you are thinking of buying and holding for a longer term, there may be less competition from other buyers until more confidence returns to the market. Well priced homes in some market segments are still selling quickly, but it will be important to be strategic in the pricing and marketing of your property to ensure maximum dollar.
We continue to believe that the Greater Victoria Real Estate market will fare as well, or better than any other area in the Canada.
You can find the full Victoria Real Estate Board report as well recent reports from the BC Real Estate Association and the Canadian Mortgage and Housing Corporation by clicking on the links to the right.
As always if you have questions, we’re here to help.
Hal Decter, LLB & Audra Poole