Victoria Market Overview - So far in December new listings are hitting the market at a noticeably higher rate than they were at end of last year. Meanwhile, sales are slower in the same comparison. Going back a bit further and looking at November, sales slowed significantly as did new listings and inventory in general. None of this is shocking as we move closer and closer to Christmas and the traditionally slowest of Real Estate seasons. Over and above the seasonal normalities, interest rates are having a huge impact on how consumers are viewing the future. The future, it seems, too many buyers isn’t one that they can imagine themselves taking on the financial burden of a home. And to sellers, the future isn’t yet one where they will need to sell due to financial hardship. It is the views and beliefs about the future of these groups that will ultimately decide what happens in the Real Estate market. Of course, those beliefs are often influenced by external factors and boy is the government throwing out “external factors” left and right (discussed more below).
Getting into the Numbers - Digging into it, the Victoria region saw a decrease in the number of properties sold in November, with 384 properties sold in total. This is a drop of 41.2% compared to the 653 properties sold in November 2021, and a decline of 20% from October 2022. Condominiums saw a decrease of 42.4% from November 2021, with only 136 units sold, while single-family homes decreased 34.1% from November 2021, with 182 sold.
Active listings, of which there were 2,111 on the MLS at the end of November, dipped 3.7% from October. This is still a far cry (and a 138% increase) from the 887 listings we had at the end of November 2021. While inventory is much higher than it was last year, we are still below historical averages and well below levels we would traditionally call a “buyers' market”.
Considering Price - The Home Price Index benchmark price of a single-family dwelling in the Victoria Core in November 2021 was $1,249,400. The worth of the same house in November 2022 rose by 4.6% to $1,307,100 but was lower than October's value of $1,341,400 by 2.6%. The HPI benchmark price of a condominium in the Victoria Core in November 2021 was $536,200, while the same condominium in November 2022 increased by 9.6 % to $587,800, a decrease of 2.5% from the October price of $602,700.
Measuring Benchmark prices instead from the peak in June, we are down 10.7% from that high of $1,464,400 for a single-family in the core. This brings us back to roughly where we were in February 2022 before the peak.
Considering that inventory is still relatively low it is worth asking why the steep price drops. Up to this point, it has been the drastic decrease in sales which have caused one of our key indicators, the sales to new listing ratio, to fall to levels very indicative of a buyer's market. What this means is that the market is very sensitive to how many buyers choose to participate or abstain from the market.
Looking Forward - As anticipated, the Bank of Canada increased rates last week, reaching the highest amount of rate increases in a year since the 1930s. The Bank of Canada increased the overnight rate to 4.25% with an additional 50-basis point rise. While these elevated mortgage rates will continue to restrict buying and selling, the Bank of Canada seems to be changing its language about future rate increases and many economists are forecasting rates to start heading down in the fourth quarter of 2023. Of course that all depends on how the inflation situation plays out.
One of the government factors (previously references to watch out for) includes bill 44 (dubbed Wild Bill) which introduced changes to the strata property act to remove age restrictions under 55 years as well as remove rental restrictions. This was all done in an attempt to add additional rental stock to the market which is already drawing some controversy as many of those units are already occupied, by owners. Removing rental restrictions will likely drive prices up in previously restricted buildings as they become more appealing to investors.
Another future consideration the government has thrown at us is the ban on foreign buyers which comes into effect on January 1st and will last 2 years. With no supporting documents released and a fast-approaching deadline, we will have to watch closely for the execution of that policy.
For the hat trick, we have the new Home Buyers Rescission Period coming into effect on January 3rd which will give buyers the right to withdraw from an unconditional offer within three business days for a fee.
With all these changes coming down the pipe we highly highly recommend speaking to a realtor if you are thinking of navigating these waters. We are always available for a chat.
Neal Estate Group Highlights - Last but not least, we at the Neal Estate Group are deeply passionate about the Christmas season of giving and are grateful for the chances we have had to give back recently. This week, we were delighted to serve hundreds of turkey dinners to guests and visitors at Our Place. Additionally, we donated 100 turkeys to the Mustard Seed Food Bank, and together with RE/MAX Generation and our brokerage, we contributed $10,000 to CFAX Santa's Anonymous to make Christmas a bit nicer for hundreds of families. We thank everyone who has supported us and given us the opportunity to help those in need. Wishing you all a Merry Christmas and a Happy New Year!
P.S. In the spirit of showing our appreciation for your tremendous support, we invite you to please join us for The Neal Estate Group Family Fun Holiday Skate at Pearkes Arena from 12:30-1:30 on Friday, December 23rd. The arena and ice will be decorated for Christmas, Santa's Elves will be on hand, enjoy FREE hot chocolate, FREE skate rentals (while they last) and fun photo opportunities. Click HERE for event details
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