February 2021 Real Estate Update – Victoria

Hi everyone, I hope this message finds you and your families safe, healthy and in good spirits. I endeavour to bring you relevant market information, new listings, and the latest news which is shaping our local real estate market.

The end of 2020 (December) was a slower month compared to the Summer and Fall but the first month of the new year has marked yet another rampant month in our real estate market and a continued frenzy on more affordable single family homes. January 2021 was one of the most active Januarys on record with 646 sales and a slight uptick in new listing inventory above December’s 25 year low (1279) to 1321.

The pandemic continues to reframe the narrative for what living at home should mean, and low rates are inspiring moves and purchases alike. The interesting part of January’s statistics is that demand seems to have flooded back into the condominium market. Sales of condominiums were up 83.1% from January 2020 with 216 units sold.

I’ve also noticed that larger 2+ bedrooms have seen a resurgence. January accounted for the highest month of sales of units with 2 or more bedrooms/dens in the core in the last 2 years (53). My personal opinion is that the tremendous pressure on single family is forcing some to reconsider more affordable options in the condo market.

Here are a few more insights from last month’s stats:

Recall that there were 234 sales above $2,000,000 on the Victoria Real Estate Board in 2020. In January of 2020 there were 4 homes sold above $2,000,000. This January there were 25. 

October’s median sale price of $893,000 is the highest our real estate board has ever recorded until January’s figure of $975,000.

The average sale price of a single family home on the Victoria Real Estate board for 2020 was $1,010,219. January was a record shattering month with a new all-time high reached at $1,220,626. 

The average sale price of a condominium on the Victoria Real Estate board for 2020 was $484,317. January’s average was slightly above the 2020’s total at $490,511

I’ve been getting lots of questions about why the luxury market has been so hot. My sense is that we simply have had more move-up buyers and eyes on Victoria as a long term destination from other parts of Canada, and the rest of the world, in 2020. The recently published Buyer’s Origins Report for 2020 shows that the number of buyers originating from the Lower Mainland, Ontario/Quebec, and other parts of the world were all up vs. 2019. The lower mainland brought 775 buyers in 2020 (9.42%) vs. 554 in 2019. ON/QC contributed 312 buyers in 2020 vs. 256 in 2019, and the United States brought 74 buyers from 63 in 2019. The impact of international buyers has been skewed in the past and these statistics verify that. Only 1.2% of all sales on our board in 2020 originated from buyers residing outside of Canada. Nevertheless, wealthy Canadians see Victoria as a long-term destination and 2020 reflected that.

The demand for single-family homes in attractive neighbourhoods is palpable. We had a laughable 388 single-family detached homes listed on our entire board at the end of January. Couple that with 286 home sales and you have a perfect storm for pressure on prices which drove the average house prices up to new record highs north of $1.2M. For some more context, in the summer there were more than 500 sales in the months of July and September. 286 single-family home sales is the most in January in the last decade. 

There is even less inventory in the core neighbourhoods. There were 168 single-family detached homes for sale in these areas (Victoria, Esquimalt, Vic West, View Royal, Oak Bay, Saanich East/West) at the end of January (the lowest there has been in the last decade). Once again there is still far too much demand to outweigh the amount that is available and there were 120 sales in this same segment.

Last year’s best month in condo sales was 293 Sales in October. Historically the peak of condo sales occurs in the late spring/summer so this October peak is more consistent with the pandemic shutdown. January came roaring back to produce 216 sales which is atypical for this time of year. Of the 216 Sales, 73 were below $400,000 and 39 were over $600,000 (2020’s all-time high was 53).

The difference when comparing those months in the Summer and Fall is a story of inventory. June, July and August shared the peak of just over 800 active listings last year and because of a lift in inventory to match demand, prices remained quite stable with a nominal increase.

However, at the end of January, there were just 442 active condo listings. A significant portion of the dip in inventory is just a consequence of some sellers taking a break, but it has had an effect on driving competition in the first month of the year.

Other factors supporting our condo market are affordability, low rates, and thin rental inventory (Greater Victoria’s vacancy rate is still just 1.2 percent). Recently completed buildings at the Wade, Jukebox, Yates on Yates, and Hudson Place One will continue to fuel inventory levels. I will continue to monitor our inventory level to sales ratio as we head towards the Spring.

Outlook

The thin inventory at the start of the year is a huge concern for those that are trying to get into the market and my expectation is that we will reach all-time highs in value heading towards the spring if inventory doesn’t come onto the market to support demand at a more reasonable level.

Our real estate market is showing more signs of strength than ever before, and our central banking policy is supporting the function of Canadian real estate markets. The downside of all this, single-family homes in our more desirable neighbourhoods are getting out of reach for some. The question may ultimately become how far can prices push relative to incomes in our city.

For those that are currently participating in the market, our industry has adopted new business practices and is emphasizing the use of technology in order to showcase properties as safe as possible.  Listings can include video property tours and 3D tours and we are using health disclosures, social distancing, and disinfecting/sanitary procedures to help limit the risks associated with property visits.

Feel free to reach out to us with any of your market-related questions or if you would like some of our insight into your potential move in 2021!