To borrow a line from Charles Dickens, these are the best of times and the worst of times for the local real estate industry.
Here is the good news. The Greater Victoria region remains a seller’s markets. Year-to-date the average residential sales price has risen to $612,584 from $544,756, according to the Re/Max 2017 Spring Market Trends Report. It summarizes average prices, sales and trends for 26 regions in Canada, including Victoria, during the first quarter of this year compared to the same period in 2016.
Looking at specific housing types, the report identifies condos and luxury properties as the most sought-after housing types Victoria, as listings for both categories typically receive multiple offers. Looking at prices, first-time buyers typically spend anywhere between $400,000 and $500,000 for their initial purchase, likely a condo. As for luxury homes, they typically range between $1 million and $2.5 million.
The jump of 12 per cent in average prices reflects low inventory levels. And there lies the problem, says Ray Blender, general manager of Re/Max Camosun.
Low inventory levels mean less products for buyers and their realtors. According to Blender, the 1,300 realtors officially working in the Victoria Real Estate Board between Sooke and Sydney manage 1,600 listings — so just over 1.23 listings per realtor.
The lack of listings appears especially detrimental for aspiring realtors, said Blender.
Realtors entering the industry lack the network of contacts on which more seasoned realtors can draw as they are trying to establish themselves, while paying their bills along the way, he said.
Low inventory levels, naturally also frustrate buyers.
“They either go way over [in bidding for properties] or they drop out of the market,” said Blender. “If we had inventory, we wouldn’t have this kind of pressure on the buyers.”
In short, realtors face the promise of a nice payday, if they can find properties to sell, while buyers may find themselves making multiple bids before they can find something that fits their respective budgets, or they might simply abandon their search.
Not surprisingly, the 2017 Spring Market Trends Report identifies a 14 per cent drop in the number of units sold between January and March 2017 compared to the same period last year, from 2,432 in 2016 to 2,082 in 2017.
So what can be done to combat low inventory and high prices? The report predicts new condo projects nearing completion will help increase inventory levels. But Blender struck a more somber tone. Land is limited, he said, adding that the West Shore is the most likely place in the Greater Victoria region to accommodate more housing. However, the prospect of increasing housing supply on the West Shore would require significant upgrades to the local transportation infrastructure.
He also questions whether any of the three major political parties running in the upcoming provincial election will be able to address high housing costs through their respective policy proposals.
Larger uncertainties also loom these days, including geo-political instability in Asia and the protectionist economic agenda of the current U.S. administration under Republican Donald Trump, Blender said.
“All of these things affect people, especially if they are planning to make a large purchase like a house,” he said.