Victoria’s real estate market activity has slowed due to a supply shortage
Last year pent-up demand was the dominant theme in the Canadian real estate market. This year, the offer appears to be everything realtors, market analysts and consumers are talking about across the country, from the British Columbia housing market to Atlantic Canada. The Victoria real estate market is one of Canada’s sizzling real estate markets desperately short of supply, with inventory levels close to historic lows. But, in an environment where demand is immense and borrowing costs low, is there a short or even medium term solution?
A local real estate association manager thinks he has found an answer to the city’s supply problem: less ânot in my garden “ and more “yes in my garden! While this is a new concept in many municipalities nationwide, it could be a simple solution to one of the most common problems facing Canada today. Until policymakers take action, let’s explore the numbers and housing conditions on the ground last summer.
Supply shortages Cascades of activity in Victoria’s real estate market
According to the Victoria Real Estate Board (VREB), residential property sales fell 15.1% year-on-year in August and are down 0.5% from the previous month.
Victoria’s real estate market has seen a boom in condominium transactions, while single-family homes have collapsed. In August, condominium sales advanced at an annualized rate of 21.5%, while single-family home sales declined 9.8%.
Despite the slowdown in demand, prices continued to rise. The benchmark Home Price Index (HPI) price for a single-family home in Victoria jumped 22.4% year-over-year in August to reach $ 1.089 million, also representing a 0.7% jump from the previous month. Condominium prices topped $ 540,000 in August after rising 11.8% year over year.
Like other segments of the Canadian real estate market, the housing industry in Victoria is experiencing a supply problem. According to figures from the VREB, active registrations fell 56.7% to 1,120 at the end of August.
But could relief for tight stocks be on the way? New data from the Canada Mortgage and Housing Corporation (CMHC) shows housing starts soared to 572 in August from 224 the year before. In the first eight months of 2021, starts in the Victoria housing market have exceeded 3,000, compared to 2,150 in the same period a year ago.
âYear over year numbers may indicate a slowdown in our market, but there are two important factors to consider,â Victoria Real Estate Board chairman David Langlois said in a statement.
“The first is that our market is hungry for inventory. So it should come as no surprise that with half of the inventory available last August, we sold fewer homes in August. Without the significant shortage of inventory that we know, sales would most certainly have been comparable, if not higher, than last August. The second factor is that the 10-year moving average of August sales is 675 properties, so with 831 properties changing hands in August, it’s clear that our market remains very robust, and this lack of supply is the biggest issue affecting accessibility for our community.
Would a larger supply ease Victoria’s tight real estate market?
While real estate in Victoria is experiencing very low inventory levels, some real estate experts are presenting their own proposals to reverse this trend, especially in the post-pandemic economy.
The VREB believes that city ââofficials should speed up approval processes by reducing red tape and delaysincluding allowing multi-family dwellings such as duplexes and triplexes in neighborhoods that are historically single-family areas neatly tucked away in upper, downtown or downtown residential neighborhoods.
This, says Langlois, could lead to more housing, more density, and maybe even new real estate concepts.
âIn terms of the way they look at the way the land is laid out and treated, it takes on the idea that the single family home reserve that occupies the vast majority of our land needs to be changed. That we must allow a mix of types of housing in neighborhoods traditionally [for] single family homes, âhe said in an interview with The Times Colonist.
“This is the future and the sooner we choose to embrace the future, the happier we will be,” added Langlois. âWe need less NIMBY [not in my back yard] and more YIMBY [yes in my back yard]. “
At a time when the entire Canadian real estate market needs fresh supply to meet current and future demand levels, every little bit would help ease the pressure on tight stocks in the Victoria real estate market, and beyond. of the !