Victoria Area Housing Market Update Fall 2012
November 28, 2012
Home buyers that stayed on the sidelines this past year will find themselves in an excellent position today to take advantage of opportunities in the local real estate market. A buyers’ market currently exists with the sales to new listings ratio favouring buyers, but with interest rates at lower than normal levels, employment and migration levels in Victoria on the upswing, and time limited government cash incentives soon to expire, the question on many peoples’ mind is how much longer will these opportunities last?
Today at the Victoria Housing Market Outlook conference, Canadian Mortgage and Housing Corporation (CMHC) analysts said that continued low mortgage rates, an improving employment situation, and positive migration to Victoria will support a stable and improving housing market for the Victoria area including Sooke and the Westshore into 2013. The Westshore and Sooke communities will continue to see the lions share of growth as new developments offer new home benefits at an affordable price compared to more expensive properties closer to Victoria. Sooke in particular is attracting home buyers that are looking for a more small town neighbourly feel with it’s local stores and ocean proximity over the busier bustling Langford only 20 minutes away.
At Woodland Creek in Sooke, winner of the 2012 Gold Care Award winner for Best New Subdivision and Built Green Builder of the Year, we believe the value proposition for homebuyers is particularly strong. Last year’s release of new homes on Callumwood Lane combining energy efficiency with Built Green certification in a neighbourhood adjacent to schools, parks, and trails within walking distance of the town centre has received praise from buyers and industry peers alike.
Buyers can get into a new home today loaded with premium features starting a $369,900 net taxes included. All homes include an individual geothermal heating and air conditioning system valued at $20,000 that will save the homeowner over $1,000 per year in energy costs. Buyers that qualify for the BC First Time New Home Buyer Bonus will receive a $10,000 tax credit until the incentive expires on March 31st, 2013 and there is a further energy efficient rebate from CMHC for qualifying buyers. We think this offers buyers great value with a good selection of home styles and finishes currently available.
Some other interesting observations in the CMHC report that support an optimistic view of the market include:
Average Home Prices – While home prices have gone up and down since 2008, the average price for a single detached home in Victoria today has not changed significantly from 2008. Both average town home and apartment prices have seen recent decreases and larger fluctuations during the same period. Vancouver average single detached home prices increased almost 25% since 2008, primarily driven by international migration demand, and are now seeing more of a downward correction (the media has called this the Vancouver real estate bubble).
Purchase Power – Moderating home prices in 2012 combined with favourable mortgage interest rates has reduced average mortgage payment that is required to purchase the average priced home in Greater Victoria. In inflation- adjusted terms, the monthly payment associated with purchasing an average single-detached home in Victoria declined 11 per cent between the peak price in April 2008 and the September 2012 price.
Employment – In 2013, the gradual improvement of economic conditions, both locally and provincially will stimulate housing demand through job creation, income and population growth. Employment in Victoria is forecast to expand this year and next, returning to the previous peak level by the end of 2013.
Migration – People coming from other provinces and within British Columbia were key sources of population growth and housing demand. Net migration to Victoria between 4,500 and 5,300 is projected for 2012 and 2013.
Mortgage Rates – Although there is significant uncertainty, mortgage rates are not expected to change in 2012. Rates are expected to increase in later 2013, but rates will remain low by historical standards. Average 1 year posted rates in the 3-4% range and 5 year posted rates in the 5-5.75% range.
The Answer – So given this information, the question remains – how long will the current buyers’ market last? CMHC analysts believe that average housing prices in Victoria have now bottomed out and are expected to increase moderately through 2013 driven by positive employment and migration. Moderate growth in homes sales and housing starts is expected through 2013 so we think there will be a movement from a buyers’ market to a balanced market.
In the shorter term, over the next few months, past experience tends to lead us to the opinion that when we have periods of lower than normal activity such as has occurred this fall, we can expect a stronger rebound in activity in early 2013 to deal with pent up demand. This occurred both in the spring of 2009 and 2012 with an increase in spring sales and a corresponding reduction in new home inventory.
So in conclusion, we think that if you plan to enter the real estate market soon or are looking at trading up, and you have the financial ability to do so, now is the time to take advantage of a good selection of new homes at very attractive pricing and rebates that will put you in the position to benefit from the market recovery.
The entire CMHC Report can be found at this link.
About Totangi Properties Ltd. and Woodland Creek
Totangi Properties is a locally-owned and operated award winning property development and land management company established in 1968. Brothers Warren and Blair Robertson and their team work closely with the 2012 Built Green Builder of the Year, SC Smith Building Company, in the creation of Woodland Creek and are committed to creating affordable, high-quality residential properties with lasting homeowner value.
2012 Gold CARE Award winner for Best New Subdivision, Woodland Creek is a residential neighbourhood of new homes in the heart of Sooke, British Columbia – a waterfront community near Victoria BC. A planned residential community, Woodland Creek was designed with the objective of providing a wide range of new housing opportunities for the community; close to schools, parks and the Sooke shopping and service core with the fundamental commitments of quality construction, lasting value and the long term commitment of an established local developer.
For more information, visit www.totangi.ca.