Victoria real-estate saw $9 billion change hands in 2021 amid modern era's fastest rising market
MIKE KOZAKOWSKI, CITIFIED.CA
Published January 4, 2022
Victoria real-estate prices saw their biggest year-over-year appreciation in decades, according to annualized 2021 sales data released by the Victoria Real-Estate Board (VREB), and record-high prices across all market segments.
Single-family-homes, the most desirable and priciest form of housing in the Capital, saw valuations jump by a staggering 21.63% above the average in 2020 to a record-high perch of $1,206,878 (compared to $992,247 one year prior). In dollar terms, the uplift was $214,631 over 12 months.
The median price of all detached home sales for the year, calculated as the price of a single-family-home in the exact mid-point of the year’s 4,708 purchases made through the Multiple Listings Service, was $1,050,000 compared to 2020’s $855,760 over 4,244 sales. And 2021's transactions represented the busiest year since 2016’s 5,256 single-family-home sales, which remain in second place behind 1991’s 5,496 deals.
“We’ve not seen an annual increase in the value of houses throughout Greater Victoria at such a high rate since at least the late 1980s,” says Marko Juras, a Victoria-based real-estate agent. “Runner-ups include 2004-2005, with a 20.04% rise to a $463,399 average, and 18.70% between 1989 and 1990 when the annual average increased to $186,249.”
December of 2021 set a record of its own for single-family-homes from Sooke to Sidney, averaging $1,330,847 to eclipse the former record of $1,330,251 set the previous month. The median settled just below that of November’s, reaching $1,215,000 compared to $1,235,000.
652 active listings encompassing all market segments were available at the end of December, including commercial listings, compared to several thousand that Greater Victoria normally sees at this time of year. Such a drastic lack of inventory and high demand, Juras said, played a key role in putting intense upwards pressure on prices.
“The listings environment has never been drier, and the inevitable seller’s market is created where demand far, far outstrips supply, and this is a story we’ve talked about throughout 2021, and one that has a national angle to it as across Canada we saw multiple markets unable to accommodate rising demand for desirable properties in urban and rural areas."
Cumulatively, 10,052 properties both commercial and residential sold in 2021 at a record total value of $8.98 billion. 2020 had 8,497 total sales at a value of $6.5 billion. At just over 10,000 deals, real-estate changed hands at the highest rate in 2021 compared to prior years, save for 2016 when 10,622 properties sold.
Condominium sales ended the year with a record-breaking December average of $663,079, while the annual average shot up by 16.06% over 2020 to an all-time annual high of $562,254. Last year’s annual average totalled $484,434, which was a record-setting year at the time. 2002-2003, 2003-2004, 2004-2005 and 2016-2017 had higher annual appreciations for the sector at 21.83%, 18.03%, 16.40% and 18.58%, respectively, although in sheer dollars the 2021 increase was the highest at $77,820 in just one year.
The number of transactions reached a record with 3,449 to unseat 2016’s then-record of 2,911 sold units. And the median among condominiums in 2021 was $495,000 placing it well out of reach of 2020’s median of $429,000.
December’s sales saw the monthly average rise to its highest ever of $663,079 to unseat the former record set in November at $648,867. The median for December was $566,898, the second highest after November’s $585,000.
Townhomes saw average values appreciate by 19.88% to $736,482, the second-highest annual increase dating back to at least 1988, according to VREB data. The median for the year was $708,999. Only 2003-2004 saw a higher annual average price appreciation of 21.17% at a time when the average was $298,872.
Throughout December the average price paid for a townhome was $822,876, short of October's record average of $855,894. The median was $770,000 in December.
Who were Victoria real-estate buyers in 2021?
Just over two-thirds of real-estate purchases across southern Vancouver Island were made by south Island residents, according to buyer origin data for January through September. Data for October through December is expected by mid-winter.
This means that over 30% of homebuyers were not expected to sell local real-estate inventory back into the market in the form of re-sale listings, but were competing for limited listings with local buyers.
“It is a fair assumption to make that when over 30% of purchasers of Victoria real-estate are not local to the area, that their purchase did not come with a re-sale for another local buyer, and this demand without any supply is on top of first-time buyers from Greater Victoria buying inventory with no inventory of their own to sell, and demand from local investors,” Juras said.
“If we split out the numbers, over 11% of buyers were from the Vancouver area, and a further 10% or so were from other parts of BC. In total, 68% of sales were by local residents, and 89% of sales were by British Columbians,” Juras continued.
10% of purchasers over the first three quarters were from other parts of Canada, VREB data shows, while only 1% of purchasers were foreign buyers.
“Vancouver continues to be a relatively dominant source of purchasers of Victoria real-estate, largely because homeowners are able to sell a home for an average near $2 million in Metro Vancouver, and buy into the Victoria market for a lot less money. And the rate of buyers from the Metro area is increasing compared to previous years due to this disparity and Victoria's status as the province's second-largest city that happens to be within easy reach of Vancouver,” Juras said.
What’s in-store for 2022?
Juras believes home sales are poised for further under-supply forces as key drivers into 2022 that will maintain a trajectory started in 2020 that fuelled 2021, although price-wise the local market could be nearing its carrying cost ceiling. That ceiling, currently at $1.3 million, will depend on who the purchasers are, and how far they can financially reach.
“Based on market metrics right now, given the demand and the lack of inventory, we are set up for another year of increases, and at this point unless we see significant government intervention and/or macro-economic events, the conditions are right for prices to keep going up, but how much higher they can go will likely be limited by external forces like interest rates and the demographics of purchasers,” says Juras, adding that “this spring the province will unveil new rules to require cooling off periods designed to limit the impact of unconditional offers that have been so common over the last two years. Cooling off periods have traditionally only been applied to pre-sale property sales and not the re-sale market, and as such, how this impacts the market remains to be seen.”
The agent sums up the scenario facing Victoria's 2022 real-estate market like so:
“As long as there remains so little to buy, the market will lean in favour of the seller. When we have a near one-to-one ratio of sales to available homes, there is virtually no room for negotiation with the seller, only the price-raising effects created by competing interests of buyers." C
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