MarketMonthlyIntelligence REBMETPESSNOITIDEEPTEMBEREDITION 2022 Terry DavidStockusParry 250.634.8356david.parry@theagencyre.com250.588.7933terry.stockus@theagencyre.com Presented by
Edition2022September-Parry&Stockus
The Fall Market Begins
September 2022
August in the Greater Victoria market ended with 478 property sales, down only slightly from the 510 sales posted in July of this year. Compared to August 2021, there was an almost 42% reduction in sales numbers down from 831. Historically, August is a slower month for real estate here in Victoria, being the last month of summer, kids home from school and people are travelling. This year holds no exception. While buyers have for the last two years experienced a market starved for inventory, these past few months have had those inventory levels gradually increase. At the end of August, there were 2,137 active listings for sale on our MLS system. While August saw a slight dip in active listings from July, down 1.2%, when compared to August last year, our inventory is up almost 91% from only 1,120 listings this time last year. Although this added inventory is a boon to buyers who have had to endure the region’s strongest seller’s market on record this past year, top-of-mind has been the Bank of Canada’s prime lending rate change. The 1% rate hike last month had an immediate impact, adding downward pressure to inventory pricing.
This is apparent in our benchmark prices. A single family home in the Victoria Core in August was $1,391,700, down 2.9 per cent from July’s value of $1,433,400. A condominium in the Victoria Core areas benchmark value down by 2.8 per cent from the July value of $639,900 to $621,900. Mortgage specialist Dan Miller tells us, “Today, the Bank of Can ada’s interest rate announcement, as predicted by most econo mists, brought another 0.75% increase to its Prime rate despite the recent slowdown.” What could this mean for you? Dan continues, “With this in crease, we will continue to educate the advantages of a variable rate mortgage product. Along with the upper hand of staying as ‘liquid’ and ‘flexible’ as possible, there remains a large spread between the variable result to where fixed mortgage rates are currently sitting. Further, while qualification remains at that of the contract rate +2%, the spread between fixed and variable rates can affect your buying power significantly. For example, the average qualifying rate for a fixed insured product currently is 7%, while an insured variable qualifying rate could be as low as 5.80%. Of course, these figures will vary for every client and their mortgage, respectively.”
The question that remains at the forefront is whether market prices have corrected for today’s latest interest rate hike. We are seeing housing activity stabilize as some buyers revisit the market at lower price points. This slower market is definitely not over yet, but liquidity conditions are improving after an initial interest rate shock. August continued to see the absorption rate climb in months of inventory (Figure 1). Illustrating that we are gradually approach ing a balanced market. This return to 2019 absorption rates is good news for prospective purchasers. More product, lower prices, and far more time to perform proper due diligence on a
Edition2022September-Parry&StockusFig. 1 5.1 5.7 5.3 4.7 4.1 4.0 3.9 4.0 4.3 4.2 4.0 3.7 4.2 4.6 4.3 4.7 5.6 5.2 3.5 2.8 2.4 2.2 2.0 1.6 1.9 1.8 1.5 1.4 1.3 1.3 1.3 1.3 1.4 1.3 1.2 1.1 1.4 1.6 1.6 1.7 2.2 2.8 3.4 4.0 0 1 2 3 4 5 6 2019 2020 2021 2022 Absorption Rate InventoryofMonths Single Family Detached - Greater Victoria
Price range also accounts for significant differences in property demand. Property in the Greater Victoria Area has roughly 2 months of inventory under 1.2 million. However, as the price range increases, we see how our high end market typically will take much longer to sell. This is because of a significant amount of supply and diminished demand (Figure 3).
potential purchase are critically important to a smooth, trouble free transaction. A balanced market allows for this and better pricing accuracy through improved comparable sales activity.
Fig. 3
Last year remains such a historical year for real estate in the capital that it offers us a unique, yet unrealistic framework for comparison to the typical market. Because 2021 was so “in ventory poor”, the industry is starved for data making pricing a home challenging. Sellers in this current climate need to be reactive to showing, pricing and property condition feedback from buyers and their Agents in the first crucial days after their property has been listed. This is key to successfully selling a home in a transitional market.
Finally, the media uses broad brush strokes when real estate is their subject. With today’s interest rate hike, we will certainly see a significant amount of negative, bearish journalism about the housing market. Some of it will be accurate, much of it will be alarmist. We always encourage people to remember that real estate has many microclimates within it. Despite what the media might say, there is significant historical data that illus trates the exceptional growth of value real estate has taken year
Absorption Rate Single Family Detached - Greater Victoria - By Price Range 2.05 2.11 3.15 6.12 7.05 14.33 0 00 2 00 4 00 6 00 8 00 10 00 12 00 14 00 16 00 Under $800K$800K to $1.2M$1.2M to $1.5M$1.5M to $2M $2M to $3M Over $3M InventoryofMonths Edition2022September-Parry&StockusFig. 2 Absorption Rate Single Family Detached - Greater Victoria - By Area 2.15 6.46 1.44 4.20 4.50 3.82 4.57 1.71 3.77 3.35 2.38 3.70 4.05 0 00 1 00 2 00 3 00 4 00 5 00 6 00 7 00 InventoryofMonths
When we examine absorption rates broken down by area, we see our various neighbourhoods each command different levels of demand. Oak Bay, for example, with its higher dollar val ue property, is slower than most other neighbourhoods. Single-Family homes in Esquimalt, Victoria, the Lake District and Sidney, however, remain in high demand (Figure 2).
If you would like to further the conversation on the current mar ket, discuss buying/selling strategies or gain an understanding of the market value of your home, we would be delighted to hear from you. Being a part of our boutique brokerage means benefiting from the strength of the whole. It means coming together with fellow real estate professionals who are constantly rethinking industry norms and pushing themselves further through technology, design and service.
Edition2022September-Parry&Stockus
It’s real estate without boundaries.
after year. Be cognisant of that, and long term, the market rarely drops as much as it rises.
It’s real estate that moves you.
Terry Stockus
© Parry Terry Stockus,
&
Mortgages The Mortgage Group
Dan Miller Miller
theagencyre.comterry.stockus@theagencyre.com250.588.7933 Parry
The Monthly Market Intelligence is written exclusively by David Parry and Terry Stockus with valued input from other market experts. While the information contained herein is believed to be accurate, the authors assume no responsibility for any errors or omissions. Not intended to solicit business from individuals cur rently under contract. An independently owned and operated licensee of UMRO Realty Corp.
David
Guest Contributor
2022
David
theagencyre.comdavid.parry@theagencyre.com250.634.8356
millermortgages.comdan@millermortgages.com250.858.8489
