December Real Estate Update:
Hi everyone, I hope this message finds you and your families safe, healthy and in good spirits. I endeavor to bring you relevant market information, new listings, and the latest news which is shaping our local real estate market. Finally it seems that the pace is slowing, slightly. The story remains that available inventory can’t keep up with demand and there is an astonishing amount of pressure on prices that is leading to record-breaking sales numbers. When pent-up demand returned in full force in June, it resulted in 808 sales that month after just 287 sales in April. This highly active market has sustained since June and yet again November has marked yet another near-record month for sales with 795 Sales (37.8% more than last November’s 577). For the record, November of 1989 holds the record for most sales in November, with 892. The average sale price of a single family home in the Victoria Real Estate Board was over $1,000,000 for the first time ever in June and has just reached its all time high in November at $1,100,659. Once again this is just the average and this figure is skewed by higher-end property sales. The amount of sales above $2,000,000 so far this year (SFD – 188) has already obliterated the number of sales for the entire year in 2018 and 2019 (89, 85). I expect at year end we will see that this figure has been influenced by a greater number of buyers originating from off the island. November’s peak is coming off a slight dip to $1,047,380 in October, but it is all relative to our exceedingly low inventory levels that are fuelling multiple-offers and competition among buyers. We had limited inventory in October (2122 Active Listings), and the inventory levels have gotten even more critical at the end of November with only 1,813 active listings at the end of the month. Here’s a chart that helps paint the picture as sales to active listings have narrowed since April: As an example, I listed a property this month in Gordon Head (pictured above). At the time, it was the only single family home available between $1,000,000-$1,300,000 in the area. Over 3 days on the market there were 20 showings which produced 4 offers and a sale price $65,000 above the listed price. Demand is so substantial in single family homes that most properties priced below $1,200,000 are delaying the review of offers with prospects of receiving more than one. I exclaimed last month when the median sale price was the highest ever recorded but I spoke too soon. The median sale price on the Victoria Real Estate Board climbed from $824,000 in May to $924,000 in November (single family). November’s median sale price is now the highest our real estate board has ever recorded. According to the Buyer’s Origins Report published by our board from Q1-Q3 (ending Sept. 30), it appears that the number of buyers originating from the Lower Mainland, Ontario/Quebec, will all be up this year vs. 2019. So far this year greater Vancouver has contributed 8.96% of the buyers in our market, ON/QC – 4.05%, USA – 0.92%. As is the norm, around 3/4 of those purchasing real estate in Victoria are Victorians. One of the factors fuelling this activity are attractive rates. 2 days ago, it was the first time I had ever seen a posted mortgage rate at 0.99% for a variable mortgage. There are fixed mortgages available in the neighborhood of 1.35%. I’ve touched on this before but for those that are new, these low rates have been influenced by our central bank’s monetary policy although the Bank of Canada’s purchases of Canada Mortgage Bonds (debt securities guaranteed by the Government) did cease in October. They surpassed $8 Billion dollars worth of these bonds in July and in turn, had an effect on suppressing rates by creating more liquidity for mortgage originators (who sell the government MBSs). Another initiative that came to an end in October was deferring mortgage payments. At the end of August, 16% of all Canadian residential mortgages had deferred at least 1 payment (32% of which have since resumed payments). Closer to home, the number was 10.3% at the end of August in British Columbia (just for CMHC insured mortgages). It’s unlikely that mortgage delinquencies will have a huge effect on our market in Victoria but it will be interesting to monitor nonetheless. Sales in the condo market have climbed slowly from when they bottomed out in April (76 Sales) to their peak of 293 Sales in October. November marks another strong month in condo sales, with 270. Despite my own interpretation that the condo market was failing to keep up with new inventory, numbers of condo sales this fall suggest demand is still healthy in this segment. Of the 270 Sales, 108 were below $400,000 and 39 were over $600,000. With that said, we still have the most condo inventory we’ve had since 2013 and there are indications that more new developments will feed supply into early 2021. Factors supporting our condo market are affordability, low rates, and thin rental inventory (Greater Victoria’s vacancy rate is still just 1.2 percent). I will continue to monitor our inventory level to sales ratio as we head into the winter months. 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.