elcome to our monthly real estate update for October 2023! In this post, we'll discuss the latest trends and developments in the real estate market, providing insights into what's happening in Victoria, British Columbia. We'll also touch on macroeconomic factors and important policy changes that are affecting the market. So grab a coffee and let's dive into the details!
October has traditionally been a month marked by low sales and declining volumes in the real estate market. This year we saw this trend come in strong. Many of our key real estate market indicators are pointing toward either a balanced market or, in certain cases, a buyer's market, especially in the downtown condo scene. During October, only 407 properties were sold, a significant 15.2% drop from the 480 sold in October 2022 and a 17.4% decrease from September.
It's a really tough market right now. This is the slowest October we've had in over a decade! During the peak of COVID we had 990 sales in the month of October 2020. Only 14% of Sellers were able to sell in October. If you need to sell before year end, you must price your property sharp to have any chance of success. While some of this slowdown can be attributed to seasonal factors, such as the approach of winter, there are other underlying factors are at play. Let's get into them.
One significant influence on market sentiment has been the prevailing interest rate environment. Many prospective buyers are closely watching the Bank of Canada's key policy rate announcements. In the recent October 25th update, the Bank of Canada maintained the policy interest rate at 5% for the second consecutive time, after an increase to 5% in July. The next update is expected on December 6th, 2023.
This decision provides some short-term stability in terms of inflation, which has been fluctuating. In September, the total Consumer Price Index (CPI) stood at 3.8%, following 4.0% in August, 3.3% in July, and a low of 2.8% in June. The Bank of Canada projects that inflation will average around 3.5% into 2024, gradually easing toward its 2.0% target in 2025. This indicates that the current mortgage rate environments is likely to persist until the end of 2024, with gradual declines expected in 2025.
In mid-October, Bill 35, the Short-Term Accommodation Act, was announced and received royal assent on October 27th, with little to no amendments. What does this entail for the real estate market in Victoria?
The new legislation introduces a principal residency requirement. This means that renting out entire condos or homes for short-term accommodation like Airbnb is now restricted to not more than one secondary suite or an accessory dwelling, provided it's in the same location as your primary residence. However, some unusual dwellings, like boats, tree houses, RVs, and yurts, will still be eligible for short-term rentals.
Notably, the act removes the legal non-conforming status enjoyed by many buildings in Victoria, causing some outrage among Airbnb operators and managers. Approximately 22 buildings relied on this legal recognition (grandfathering) since the City of Victoria introduced a bylaw prohibiting Airbnb rentals in 2018. These changes will come into effect starting May 1st, 2024, through amendments to the Municipal Charter.
The impact of the legislation is far-reaching, affecting areas with populations over 10,000. Resort regions, such as Fernie, Golden, Invermere, Kimberley, Radium Hot Springs, Revelstoke, Sun Peaks, Tofino, Ucluelet, and Whistler, are the only exceptions. The legislation also introduces a new registry, enhanced enforcement, and data sharing, signaling a significant shift for Airbnb operators.
Due to these changes, many owners who relied on short-term rentals are now considering entering the long-term rental market or selling their properties. Currently, there are 65 units for sale, a substantial increase compared to the typical five AirBnB units we'd typically see in any given month. Long-term rental rates do not provide the revenue these owners are accustomed to, causing an influx of listings downtown. This, combined with the existing sluggish condo market, is likely to lead to a strong buyer's market in the coming months.
Shifting our focus to the broader condo market, median prices decreased by 3.4% compared to September, with the median price now at $540,000 and the average condo selling for approximately $616,500. Sales volume saw a 9% decline compared to September, totaling 141 units for the month. This is also a 7.2% drop compared to October 2022. The months of inventory stand at 4.8, indicating an official buyer's market—a trend not seen since January.
For single family homes, median prices saw a sharper decrease of 7% compared to September, with a median price of $1,125,000. The average single family home price remains relatively stable at $1,259,000, similar to last year. Sales volume for single family homes fell by 15.4% compared to September, with 193 units sold in October.
In terms of the overall market, active listings have increased by 25.7% compared to October last year, totaling 2,756 active listings. We anticipate that this number will soon surpass 3,000, which will be a record after several years of record-low inventory. The months of inventory are at 6.4, signaling a balanced market. New listings for the month numbered 1,100, slightly higher than the 998 new listings in October 2022. The sales to new listing ratio (SNLR) indicates a buyer's market at 37%, while the sales to active listing ratio (SALR), which is a more lagging indicator, points to a buyer's market at 14.8%.
With these indicators, it's clear that we've shifted away from a seller's market, moving towards a more balanced or buyer's market, depending on the type of inventory and location. Well-priced, attractive homes in good locations, particularly those priced under a million, are still generating significant interest.
Whether you're considering buying or selling in the coming months, we strongly recommend consulting with your realtor to determine an appropriate pricing strategy. Making a well-informed decision is crucial, as the market is evolving rapidly.
Thank you for joining us for this month's real estate update. I'm Dustin Miller, the managing broker of 8X Real Estate, and I invite you to visit our office in downtown Chinatown at 535 Pandora. We'd love to discuss your real estate needs over a cup of coffee. Stay tuned for more updates on the ever-changing real estate landscape in Victoria.
Dustin Miller is the managing broker of 8X Real Estate. When he's not on the road, he is on his computer looking at real estate. You can often find Dustin at his office enjoying a bowl of won-ton soup.
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