Victoria Market Trends

With the city a-buzz with real estate chat while the market has been on an upward trend, the big question people are asking is: what does the future hold for Victoria's real estate prices?

There are many factors in determining market trends. While it is difficult to pin point exactly what the future holds, what we can do is look back at real estate history and data to understand the market as is and what this may mean for the future.

The sizzling hot spring and summer market of 2017 plateaued simultaneously with the falling of leaves, carving of the pumpkins and the barrage of rainy days. You may wonder if this slower speed is on par with a normal fall market, or if this is a sign of a downward trend. The following chart displays the number of sales each month for the past two years. You will notice that the fall and winter months bring fewer sales, and the coming of spring brings a boost. 


While we can use the chart above to speculate on the upcoming year, it is also important to consider other political and/or financial factors that may impact the market. For example, the upcoming "stress test" which will be brought forward by the Office of the Superintendent of Financial Institutions (OSFI) beginning January 1 of 2018 will require that Buyers with uninsured mortgages (making a down payment of more than 20%) will now have to qualify for the Bank of Canada's five year benchmark or their contract mortgage rate plus two percentage points.

 In a recent article in the Financial Post (link posted below), RBC and Bank of Nova Scotia both state that this new rule will affect approximately 5% of new mortgages, and that “Over 90 per cent of our mortgages are already underwritten at these higher rates so the vast majority of our originations are not going to be impacted,” [Neil McLaughlin, RBC’s head of personal and commercial banking] said. 

 It is possible that these changes may shift the trajectory of the real estate market; however, certain factors may bring an increase in prices and sales. One example is the relocation of the "Baby Boomers," who are now either retiring or planning retirement, and many aim to move to our beautiful city. According to the chart below, courtesy of the BMO Financial Group, 92% of British Colombians living in British Columbia plan to stay in their home province, while many retirees from other provinces plan to relocate to BC.


The theoretical "top of the market" has been discussed by many. Just last year it seemed to some that we were hovering on the top; yet 2017 has once again brought higher prices in all areas of the city. The following chart displays the median sale price in 2016 versus median sale price of sales (January 1 to November 27) in 2017.


With time we will see what the changes may bring. If you have any questions at all, please feel free to contact us anytime.