September 2023 Market Update

total of 493 properties sold in the Victoria Real Estate Board region this September, 20.2 per cent more than the 410 properties sold in September 2022 and a 9.4 per cent decrease from August 2023. Sales of condominiums were up 23 per cent from September 2022 with 155 units sold. Sales of single family homes increased 3.2 per cent from September 2022 with 228 sold.

This is impressive volume showing the resiliency of our market, despite a general hesitancy by buyers as the market finds its new equilibrium. In general, we are seeing homes sit on the market longer and re-listing at lower prices as higher interest rates mean that buyers, dependent on mortgages, are seeing substantial cost increases, over 30% year over year (Toronto Star)

The Bank of Canada will announce the next key overnight interest rate on October 25th. It currently stands at 5.00%.

Sales Volume and Inventory

Sales improved 20.2% compared to 2021, but this number is low compared to the past decade. 
New listings hit the highest on record over the past few years, and could continue to trend upwards. 

Total active inventory sits around 2,699, which is an improvement but still substantially down from 2011 – 2014 where we had nearly 5,000 active listings. 

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Single Family Detached

Quite surprising, the median single family home peaked in September, to a level not seen since May of 2022’s $1,240,000. This is not typical based on the seasonality trend of real estate, where prices tend to peak in the spring. The median figure was impacted in September by an increase in sales in neighbourhoods (Victoria, Oak Bay, Saanich) that are less dependent on mortgages, and 5 sales over $4,000,000. 

The Westshore (Langford, Colloid, View Royal, Sooke) saw a decrease in sales, where purchasers are more dependent on mortgages.

We do not believe the high September median to be an indicator that prices are rising. Rather prices are flat, and have the potential to trend down should inventory and interest rates continue to rise.

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Condominiums

Prices have remainded flat throughout the year. In September we saw some new construction projects complete, most notably the latest phase of Dockside Green by BOSA. Located at 363 Tyee and 369 Tyee Road.This raised the median price slightly, as new construction is more expensive than re-sale units.

We have seen a rapid increase in listings for units that are designated for AirBnB or short-term rental use. There are approximately 50 listings for condos that are in buildings that are zoned and permit short-term transient use. In previous years we would see less than 10 active listings. 

We believe this to be out of fear for the yet to be announced legislation. Housing minister Ravi Kahlon has recently mentioned plans to take action in the coming months on platforms like AirBnb, citing concerns about housing availability and affordability. Stricter enforcement was mentioned earlier in the year by the provincial governments Homes for People Action Plan. 

Municipalities have also taken action to discourage short term rentals. City of Victoria raised annual licensing fees for non-principal residences from $1,000 to $2,500. The City of Vancouver followed suit raising its licensing fees from $109 to $1,000, in an effort to decrease future property tax rate hikes. 

New York City made headlines in September by announcing drastic legislation to AirBnB hosts. New policy dictates that reservations less than 30 days require the host to be physically present for the duration of stay, a maximum of 2 guests, and apply to the city for a $145 license. You can no longer rent entire apartments or homes for less than 30 days, unless you maintain a common household and share space with the guests.

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What’s Next

We anticipate a slow down of sales volume for the remainder of the year. Interest rates are likely to rise another 0.25% (Dominion Lending Centres) on either the October 25th or December 6th announcement. Inflation has remained sticky coming in at 4.00% in August. 

If active listings creep upwards to 3,000+ listings, we are likely to see downward pressure on prices in Greater Victoria. 

Winter is just around the corner, and if you’re a buyer, you’re in for some exciting opportunities. In the coming months, specific segments of sellers will be motivated to transact due to various factors like life events (death, divorce, relocation), fluctuating mortgage rates, and mortgage renewals. With reduced competition during this season, you’ll have a great chance to secure a favorable property deal. To make the most of these prospects, we strongly advise enlisting the help of a dedicated professional who can assist you in seizing the perfect opportunity when it presents itself. Happy house hunting!