The sale of real-estate in Greater Victoria continued its downward trend last month as buyers struggled to secure housing in an under-supplied market, according to the latest data released by the Victoria Real-Estate Board.

 

Real-estate purchases via the Multiple Listings Service saw a near 30% drop compared to 2017 that resulted in a slide from 929 transactions to 688 while median prices for single-family-dwellings and condominiums reached all-time highs of $801,500 and $420,000, respectively. Average prices dipped slightly from record highs in January to $903,052 and $476,568.

 

Although the reasons for a decline in activity can be attributed to several factors, the dominant driver affecting sales is pressure from an overly tight supply of inventory. Despite a 14% increase compared to March of last year, the region’s 1,776 active listings acted as an obstacle for purchasers faced with strong competition for desirable properties, elevated pricing across the board and a lack of choice.

 

“We’re currently faced with an interesting dynamic where sales have slowed down, median prices have reached record highs and active inventory remains very, very low compared to historical averages,” says Victoria REALTOR® Marko Juras. “It really feels as though owners of real-estate are hoarding their properties when we’re seeing less than half of the active listings we’re accustomed to seeing at this time of the year.”

 

The reality of the re-sale market is further exacerbated, Juras says, by sellers concerned about listing their homes and themselves ending up snagged in a "vicious inventory cycle." But the REALTOR® also believes another reality has crept into the local real-estate market that is greatly beneficial to one side of the housing spectrum, but which has inadvertently affected the other.

 

“With Victoria’s low rental vacancy rate we’re now seeing homeowners who are prepared to move up in the market maintain their previous home as a rental. With low interest rates and high rents, owners are able to move to a new home while securing enough monthly rent to cover the costs of their original mortgage. Without a doubt this is also affecting the buyer’s end of the market where that potential inventory is no longer accessible for purchase,” Juras said.

 

The much maligned mortgage stress test facing all buyers seeking a mortgage has forced some purchasers into a waiting game with an undefined end date. Others, however, have opted to forego the possibility of purchasing a single-family-home and have focused their sights on condominiums.

 

“Two-bedroom, two-bath condominiums are suddenly in vogue throughout the region,” Juras says. “Your typical two-bedroom layout is a decent compromise for a traditional house, and most developments will include at least one parking spot with the home. And we’re likely to see far more pressure on the condominium market in general as buyers look to less costlier options in light of the stress test.”

 

As if tight inventory, the low rental vacancy rate and the federal mortgage stress test weren’t enough, the provincial government has recently infused speculation taxes into the mix which Juras feels have muddied the waters further.

 

“Any time you introduce wildcards into the housing market you can never be certain of the ramifications. With the provincial government announcing a speculation tax program earlier in the year, then weeks later backtracking and altering that program, there hasn’t been enough market exposure to the changes and it’s too early to tell just what impact they’ll have on Greater Victoria.” C