Island real estate market cooling off, but prices might be plateauing

The red hot real estate market in the Capital Region has cooled off since its peak this past March. Interest rate hikes have softened demand, causing some to be more reluctant to take on a mortgage, and turning the tide from a seller's market to a buyer's.

Marko Juras is a realtor with Fair Realty in Victoria. He’s seen firsthand the transformation.

“A year ago, it was a severe seller's market,” he said. “[Last year], upwards of 75 per cent of properties went over asking price with multiple offers. Now, we're seeing multiple offers on less than 10 per cent of properties.”

Inventory has doubled in Greater Victoria compared to last year and median prices have declined each month for the past seven months.

The median price of a single family detached home in Greater Victoria in October was a little more than $1 million, down $250,000 from this past March and down $150,000 from last year.

In the mid- and north island, inventory is also up – triple, in fact, from a year ago – and interest rate hikes have also affected the market.

“We’ve shifted from a seller's market at its height in about February of this year into a buyer's market,” said Erica Kavanaugh, the head of the Vancouver Island Real Estate Board.

Still, in Parksville, interest rates haven’t had as big an impact and the benchmark price for a single family home was up seven per cent to $913,000.

“In Parksville [and] Qualicum, we tend to have a lot of retirees, and interst rates don't affect them because they tend to be a lot of cash buyers,” said Kavanaugh Wednesday.

As for what the future holds, that will depend on what interest rates do going forward, experts say.

“Prices might be pretty close to a plateau, assuming interest rates don’t go too much higher from here,” said Juras.

Interest rates are expected to go up at least once more, likely in December.