Matter of perspective: Victoria's June real-estate data depicts either market jolt or soft landing
Mike Kozakowski, Citified.ca
Published July 4, 2022
The residential real-estate market on southern Vancouver Island delivered several surprises in June as rising interest rates and a growing inventory of listings impacted home sales.
Victoria Real-Estate Board (VREB) figures tallied 612 Multiple Listings Service transactions for the month, effectively the least productive June since 2000 when 511 sales were recorded. June’s market activity came close, however, to figures from 2010 (625 sales) and 2011 (618 sales).
A total of 302 single-family-dwellings sold in June, a drop from 440 one year prior and 367 in May of this year. The average sale price just shy of $1.35 million was the lowest since December of last year ($1.33 million) and a fall from the all-time peak of $1.42 million set in April, although significantly above the 2021 annual average of $1.206 million. The median in June, or the exact mid-point of all sales, totalled $1.178 million compared to March’s peak of $1.31 million.
Victoria realtor Marko Juras says that while market inputs have changed, like five-year interest rates rising to 4.5% from approximately 3% at the start of the year, the outlook for Greater Victoria remains up-beat and buyers continue to shop listed properties.
“We are seeing some parallels to softer markets like that of 2008-2014, but the main difference is the inventory of available homes remains significantly below that period, and interest rates, all things considered, are still quite low,” Juras said, referring to today’s re-sale inventory environment of some 2,000-units compared to 5,000-units a decade ago.
“Is there panic in the market? No, far from it. But some would-be buyers are on the sidelines, absolutely, waiting to see if there are further price concessions among sellers who may be pressured to sell in a short period of time, and assessing for themselves what is the reality down on the ground compared to anecdotes, media coverage and conversations with colleagues,” Juras added.
The condominium re-sale market, meanwhile, saw 202 sales averaging $640,498 with a $565,000 median, according to the VREB. The figures were down from peaks in January and February, respectively, which saw a $683,759 average apex and a $620,800 all-time median high. June activity was at its slowest for the month since June of 2014. It did, though, land in-step with 2020’s 209 sales and 2019’s 216.
Where prices appreciated, at least month-over-month, was in the townhome segment where only 66 purchases were completed, albeit at a premium.
VREB data showed prices jumped to a near-record high in June to $930,226 on average with an $845,000 median, whereas the segment had a downturn in May (the average fell to just over $850,000).
June's average was second only to April’s $946,319 and the median at its third highest point behind January’s $861,250 and April’s $890,000. The limited supply of this housing form despite strong demand – due to high prices of single-family-homes – means significant price pressure is placed on townhomes among single-family buyers turning to the next best thing. That being said, Juras feels due to the low volume of sales in this segment, month-to-month data can be impacted by statistical noise such as the sudden price drop in May and subsequent rise in June.
Heading into the summer, Juras believes the level of re-sale inventory may be the figure to watch as a clue to where things are headed.
“A decade ago there were 2.5 times as many homes for sale as there are now, which if you put that into perspective, it made for a significantly different, far more competitive market for sellers than what we are seeing today,” Juras said.
“And what appears to spur activity on a stale listing in this market is a price adjustment, as we are seeing a desire for value emerge as a strong caveat among today’s buyers who know the market is taking a breather, while interest rates are trending higher. In other words, ten years ago it was difficult to find a buyer, period, but today, the right balance of value for the money is the dominant driver,” Juras continued. C
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