Is the Victoria Real Estate Market heading towards a Sellers Market? – Victoria Real Estate Market Update – Fall 2014
Victoria Area Housing Market Update Fall 2014 – With a Sooke Footnote
November 26, 2014
It is no secret that the real estate market in the Victoria area has been much more active this year. Homes sales are exceeding last year numbers, and listing inventories have shrunk. These conditions have put us squarely in a Balanced Market territory with sales to active listings ratio in the range of 15 to 20 percent. In a Balanced Market, home prices remain relatively stable and there is a reasonably good supply of homes in the market for buyers to choose from (at least 5 months worth of supply). That being said, with economic, job and immigration forecasts improving for 2015 through 2016, it is reasonable to question whether the Balanced Market may move to a Seller’s Market in the near future.
At a recent Victoria housing conference, Canadian Mortgage and Housing Corporation (CMHC) analysts predicted that current economic forces will support a stable and improving housing market for Victoria, including Sooke and the Westshore. The BC economy is forecast to expand by approximately 3% in each of 2015 & 2016. US economic growth coupled with a lower value Canadian dollar will grow BC exports. Locally Victoria’s economy will also benefit from increased tourism driven by a lower Canadian dollar, higher consumer spending, and regional infrastructure projects. Moderate growth in homes sales, housing prices, and housing starts are expected through 2015 & 2016.
So are we entering a Seller’s Market? Seller’s Markets are categorized by limited inventory and upward pressure on home prices often experienced when sales to active listing ratio exceeds 20%. Increased MLS sales and reduced inventory this fall have had the Victoria market peaking into Seller’s Market conditions, and the expectation from this writer is that this trend may continue somewhat into the spring market of 2015. This will be driven primarily by increased housing demand without an equal increase in housing supply in the short term.
With positive economic factors in sight, what might put the housing market in check? The answer, as always, is affordability and ultimately mortgage rates. Each year we have been told by experts to expect mortgage rates to remain stable but be prepared for increases and this year’s message was no different. Mortgage rates are currently at historic lows, but the average of private sector forecasts predict that rates are expected to increase in the second half of 2015. This rate increase will have a dampening impact on housing demand and affordability. So while we may move into and remain in a Seller’s Market in the short term, mortgage rate increases will likely moderate prices and sales in the longer term leading us back to a Balanced Market.
The Sooke Experience Footnote
Like the rest of Victoria, Sooke has experienced the busiest fall for real estate sales since 2010. At Woodland Creek, we have sold out of our new home inventory and have been working with buyers on pre-sales for delivery in 2015. Sooke continues to attract buyers that appreciate the lower home prices, but are also attracted by the small town feel on the west coast close to the amenities and shopping of Langford and Victoria.
Our recent experience is that savvy and more experienced buyers in the housing market are recognizing the advantage of ‘pre-purchasing’ a new home that they can move into in about 6 – 9 months. These buyers have taken the risk out of entering a 2015 Seller’s Market and instead of having to choose from what happens to be available in the market, they have locked into the certainty of a fixed price pre-sale. They have ordered exactly what they want in their home from the floor plan, lot location, interior and exterior finishing, and any special extras. In a sense, these buyers have greater control over their housing purchase and achieve a custom home experience without a custom home price.
We are also seeing an up tick in more mature buyers cashing out of condo’s or townhouses in town and moving into single family homes with ‘master on the main’ or one level accessible living. Many of these buyers started their lives in smaller towns and again are attracted to Sooke as a nice friendly place to retire.
Blair Robertson – co-owner Totangi Properties and Realtor® DFH Real Estate www.VictoriaNewHomes.com
About Totangi Properties Ltd. and Woodland Creek
Celebrating their 45th year in business, Totangi Properties is a locally-owned and operated award-winning property development and land management company established in 1968. In 2014, Totangi was ranked #1 in Canada for Customer Satisfaction by Avid Ratings. 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 .