Last year, Greater Victoria recorded most real estate sales since 2016

A sold sign at a home in Saanich is seen on Jan. 13, 2022. (CTV News)

The latest report from the British Columbia Real Estate Association (BCREA) shows that home sales in Greater Victoria in 2021 were just short of record breaking pre-pandemic numbers reached in 2016.

The report indicates that in December 2021 alone, there were 419 residential properties sold. The average price for a single-family home in the region rose 22.7 per cent to an all-time high of just over $1 million.

“In 2021, it was about 9,500 sales for Victoria and I think the record was 10,000 in 2016, so the second-best on record” said BCREA chief economist Brendon Ogmundson.

“A lot of that, though, is due to the severely low supply of listings, and I think if there had been a lot more choice out there, sales would have reached a record in Victoria.”

Ogmundson says the real estate market in B.C. and on Vancouver Island has been been very robust since the summer of 2020. He says despite the continuing pandemic and the most severe economic contractions in Canada since the Great Depression in the 1930s, the real estate market has seen a remarkable recovery.

“A lot of that is driven by record-low mortgage rates and a real desire for space,” said Ogmundson. “A lot of the demand we saw on the Island was people coming from the Lower Mainland trying to get more affordable, more available space.”

He says the demand for real estate in Victoria not only resulted in record-setting prices for single-family homes, but the price of condominiums has also rebounded.

“We started to see condos pick up after they lagged in the market through most of the pandemic,” said Ogmundson. “It’s all just a product of low supply in Victoria.”

Ogmundson says the Greater Victoria real estate market is likely the most severely constrained market in B.C. He says with a population of almost 400,000 people, there were only 400 available listings in Greater Victoria in December 2021.

“When you have a market with no supply and strong demand you’re going to get high prices,” said Ogmundson. “A market like Victoria was already under-supplied in 2019, then people withdrew their listings at the beginning of the pandemic, (and) we had this unexpected recovery and that drew down inventory even more.”

Ogmundson says another reason for the low number of listings is the migration of people moving to Greater Victoria from the Vancouver area. He says the influx of buyers from outside the region made an already low supply of homes even lower.

“Markets like the Island got more of the, ‘This was the plan in five years but we’re going to do it now instead,’ and I think the pandemic accelerated a lot of that movement (from the Lower Mainland),” said Ogmundson. “The Island is already challenged getting listings to the market because people usually go there to settle.”

Ogmundson says other reasons for the low inventory of available residential listings may be a reluctance by home owners to sell their homes during the ongoing pandemic or because the choices in a new home are limited.

“Even if you wanted to sell your home to take advantage of these high prices, there’s the issue of where you’re going to go,” said Ogmundson. “People are kind of stuck in place by just a lack of choice, which brings it back again to we need to expand the housing stock and provide more choice.”

Ogmundson says an increase in mortgage rates to pre-pandemic levels will help to dampen the demand, but he expects it may take another two to three years for the number of buyers and the number of available listings to even out.

“It helps supply because you have fewer sales and the total number of listings start to accumulate,” said Ogmundson. “We’re at all-time lows in supply and I think the listings in Victoria would have to quadruple to get back to a healthy level, so this is a long process to build those listings back up.”