VICTORIA -- The latest report from the Canada Mortgage and Housing Corporation (CMHC) shows that despite the pandemic, the Victoria real estate market remains hot.
The report for the third quarter of 2020 indicates that sales in the region have been trending upwards since the height of the COVID-19 lockdown in March and April. Reported sales of single-family detached homes from July to September surpassed sales in the same period in 2019 and 2018.
“The third quarter not only surpassed the same level last year but it is gearing towards the peak year in 2016,” said CMHC senior analyst Pershing Sun. “We see this ‘heat’ in the market partially because of a low and stable mortgage environment.”
Sun says during the reporting period conditions were right for people who were considering the purchase of a home due to the availability of “cheap money.” She says the costs of borrowing remaining low translates into lower carrying costs for homebuyers.
“This might have motivated a lot of home buyers to enter the market,” said Sun. “Mortgage rates are one of the fundamental indicators that supported a higher home price on average.”
Sun says although unemployment is high due to the pandemic in some of Greater Victoria‘s hardest hit industries, such as tourism, it is hard to say if people in those industries are taking advantage of low interest rates to purchase a home.
“Its quite likely that home buyers in Victoria have not experienced this job loss or any significant financial burden,” said Sun.
The report notes another factor that is fuelling the region’s hot market is supply and demand. The third quarter of 2020 saw a reduced number of active listings compared to the number of potential home buyers in the hunt for a home.
“Homes that were listed on the market got absorbed relatively quick,” said Sun. “The speed of supply or the amount of listings that were coming on the market hasn’t really been able to catch up with demand.”
According to the report, more than one quarter of all sales of single-family detached homes in the third quarter of 2020 were in Saanich East, Langford and Victoria. This led to a year-over-year increase in the price of single-family homes in Victoria by three to five per cent during the three-month period.
The price of a single-family detached home in West Shore communities, such as Langford and Sooke, increased by more than seven per cent during the same reporting period.
“The West Shore area is the major driver of the new supply of housing stock in Victoria,” said Sun. “New housing supply in Victoria is a good thing, it helps to balance out the amount of demand in the region and hopefully it will keep the supply and demand in a healthy threshold to keep the price growth at an affordable pace.”
Sun says based on sales data and other economic indicators for the third quarter of 2020, the overall condition of the Greater Victoria real estate market presents moderate vulnerability.
“So that is the middle of low to high vulnerability so it warrants further monitoring,” said Sun. “So far I would say it is quite stable and hasn’t shown that much evidence for us to be concerned.”
