Metro Victoria
Real Estate Trends and Price Forecast
HIGHLIGHTS
Home values in Metro Victoria have been volatile in recent years, see-sawing up and down. However, the broader trend since 2022 has been downward.
While industry experts have declared market conditions are improving compared to 2023, purchase activity in 2024 is unlikely to match 2020.
A multi-factor analysis identifies Metro Victoria as a moderate-risk real estate market.
Budgets for home purchases are under strain due to the significant increase in mortgage rates since their historical lows.
This article covers:
What is the state of the Victoria property market?
Where are Victoria's prices headed?
Should investors sell?
Is this a good time to buy?
1. What is the state of the Victoria property market?
Home Price Overview
The pandemic turbocharged Metro Victoria’s housing market, driving up prices at a remarkable pace and causing aspiring homeowners to be pushed further away from their dreams. And just when they thought things couldn't get trickier, rising interest rates now force even more potential buyers to sit on the sidelines.
For those contemplating selling their homes, time is of the essence. Early Spring is the best time to sell because there is typically less supply.
Prospective homebuyers might consider waiting for a lighter mortgage burden. Mortgage rates are relatively high but are expected to fall in late 2024. Patience will be needed because forecasters keep revising their predictions, pushing out the date when they expect rates to drop.
The market fundamentals are riddled with risk and uncertainty as consumer sentiment has taken a substantial hit. But remember, consumer sentiment can be volatile and is an unreliable predictor of future price trends.
Metro Victoria Detached House Prices
Since the peak in Spring 2022, house prices in Victoria have fallen significantly. Government intervention successfully shielded the real estate market from the pandemic-induced recession, but now higher interest rates are weighing on the market.
We believe politicians are hoping to guide the market toward a typical annual real estate cycle with price growth in the range of 1 to 3% annually – in line with income growth.
Demand in Metro Victoria is low. Many people want to buy a home, but affordability is very low, which is reflected in the number of successful purchases. Significantly fewer people can realize their homeownership dream in these market conditions.
New homebuyers can’t afford to get onto the first rung of the homeownership ladder, and high rates trap existing owners. Families that want to upgrade to a larger home can’t qualify for a new mortgage at the current rates.
Meanwhile, the total active listings are trending upward. They are at their highest level in three years.
Metro Victoria New Construction Home Prices
Prices of new homes have been falling. With the drop, some homebuyers might find they will have paid much more than the most recent buyers in their development. Based on economic fundamentals, they will likely continue to drop.
Does this concern you? Read the Pros and Cons of Buying Pre-sale Homes
Market Risk
Based on Mortgage Sandbox Analysis, Victoria is at moderate risk of a significant market correction.
Our platform matches you with local, pre-screened, values-aligned Realtors.
Shared values make better working relationships.
Metro Victoria Condo Prices
After breaking records during the pandemic, Metro Victoria's benchmark apartment price has found some stability.
Similar to the house market, purchases are much lower than in most of the previous three years, and supply is growing quickly.
With more people working-from-home, we expect developers will begin marketing larger (i.e., 2 and 3 bedrooms) apartments to meet buyer preferences. As the supply of more generous floor plans comes to the market, it may depress the values for small floor plan condos.
At Mortgage Sandbox, we would like developers to build 4 and 5 bedroom condos because:
Not everyone can afford to buy a house for their family.
Canadians who now work from home need more room to segregate workspace from living space within their homes.
Many Canadians with longer working hours find it challenging to stay on top of necessary house upkeep (i.e., mowing lawns, clearing eaves, shovelling sidewalks).
Many people prefer to live in higher-density neighbourhoods with all the essential amenities within walking distance.
Metro Victoria Townhouse Prices
Still a challenge for first-time homebuyers
Metro Victoria's home prices are not very affordable. A homebuyer household earning $70,000 (the median Metro Victoria household before-tax income) can only get a $250,000 mortgage. For a homebuyer to purchase a benchmark priced condo, they would need to save hundreds of thousands for a down payment or receive a very generous gift from family. For most people, that is just not possible.
What about the rest of BC?
Read the Vancouver Home Price Forecast and Okanagan Home Price Forecast.
2. Where are Metro Victoria home prices headed?
There is a lot of uncertainty in the forecasts for 2024, 2025 and 2026. Many of the forecasters we've surveyed have different expectations for:
Will the federal government achieve its aggressive immigration targets?
There is no consensus among economists.
How do we arrive at our forecast range? Check out our full assessment of the five factors that drive these forecasts. These five forces help explain why several forecasters are anticipating price drops.
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At Mortgage Sandbox, we provide a price range rather than attempting a single prediction because many real estate risks can impact prices. Risks are events that may or may not happen. As a result, we review various forecasts from leading lenders and real estate firms. We then present the most optimistic estimates, the most pessimistic prediction, and the average forecast. Do you want to learn more about real estate risk? We've written a comprehensive report explaining the uncertainty level in the Canadian real estate market.
Our forecast inputs:
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3. Should Investors Sell?
From a seller’s perspective, more changes in the market influence prices downward so now may be a better time to sell than in two years, and the annual real estate cycle usually favours sellers in the first half of the year.
Sellers should consult a mortgage broker early to prioritise flexible loan conditions and reduce the risk of cancellation penalties. Find out more about the benefits of a mortgage broker.
Planning to Sell? Check out our Complete Home Seller’s Guide.
Fixed or Variable rate mortgage?
Find out where mortgage rates are headed before you start to negotiate.
4. Is this a good time to buy?
It’s hard to say. Prices have been falling, but interest rates (borrowing costs) are high, so prices could fall further. It's almost impossible to time the market. If you are buying your forever home and don't plan to sell for ten years, then the risks of buying now are lower.
Regardless, the annual real estate cycle usually favours buyers in late summer.
If you are considering buying, be sure to drive a hard bargain and pay as close to market value as possible. Also, don't bite off more than you can chew when it comes to financing.
Planning to Buy? Check out our Complete Home Buyer’s Guide so we can walk you through the end-to-end process and get you ready to buy your new home!
How much home can you afford?
Our mortgage calculator takes uses up-to-date mortgage rates and calculates the price of a home you could afford.
Here are some recent headlines you might be interested in:
Real estate sales fall amid more choices on market | Times Colonist
B.C. real estate sales to heat up by end of 2024: BCREA | City News
Bryan Yu: BC housing market showing signs of marginal improvement | BIV
Active real estate listings rise in Metro Vancouver | CTV News
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