September 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.
Before I jump into August’s statistics, I would like to take this opportunity to thank all of you for the warm welcome that our new executive assistant, James Robertson, received after joining the newly founded Carroll Group. James will be working diligently behind the scenes to ensure our clients continue to receive the highest possible level of service.
The conversation continues to circle around the COVID-19 pandemic and the explosion of activity we have experienced since mid-May. June marked the return of a ‘spring market’ with 808 sales after just 287 sales in April.
At that time, a tremendous influx of buyer activity meant upward pressure on prices when inventory was failing to keep up. 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 that month (June). That trend has continued for July and August with average sale prices of $1,035,257 and $1,020,845. The median sale price in this segment has also climbed from $824,000 in May to $886,988 in August.
More sales in the luxury market are influencing both of these numbers. The amount of sales above $2,000,000 this year (SFD – 102) has already eclipsed the number of sales for the entire year in 2018 and 2019 (89, 85).
Perhaps the most reliable pricing indicator is the VREB calculated benchmark value which categorizes sales by property type, area, etc. For August 2020 the benchmark value of a single family detached home in the core neighborhoods was $889,200. For August 2019 that same sub-category had a benchmark value of $849,500. Similar increases occurred on the Peninsula and in the Westshore.
The Bank of Canada has continued to promise low rates for the foreseeable future and remains committed to propping up our real estate values. They surpassed $8 Billion worth of Canada Mortgage Bonds (debt securities guaranteed by the Government) in July and in turn are creating liquidity for mortgage originators (who sell the government MBSs). Feel free to reach out to me with your questions on the derivative markets and how they relate to real estate. Another development I am monitoring are mortgage deferrals coming due in Q4.
Sales in the condo market have climbed slowly from when they bottomed out in April (76 Sales) to 262 in August. With that said, we now have the most active condo listings (1,089) we have had since 2013. The benchmark value of a condo in the core dipped to $513,900 this August vs. $518,000 in August 2019. My expectation is that we should experience some downward pressure on condo prices into the fall as more newly built condos will feed supply.
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.