n September 2024,VREB announced a 15.9% rise in housing transactions compared to the period in 2023. This increase indicates a revival of buyer enthusiasm possibly driven by Seller's adjusting asking prices and interest rate cuts.
The standard price for a detached house in Victoria's downtown area was $1,279,800 in September showing a -2.9% drop, from the year prior. Even though it might indicate a weak market environment, at first glance it's crucial to recognize that there is still a scarcity of inventory, with competitively priced properties attracting numerous offers consistently.
Median price was $1,238,100 in September 2024, which -2.9% below August and -8.4% below Sept. 2023.
Sales volume was 261 homes, which is up +7.0% compared to August and 20.3% compared to Sept. 2023.
Median price was $596,209 in September 2024, which -0.2% below August and -8.6% below Sept. 2023.
Sales volume was 189 condos, which is up +4.4% compared to August and 21.9% compared to Sept. 2023.
For a comprehensive review of condo stats visit the 8X Condo Stat Dashboard.
The Bank of Canada has cut its keys policy rate at each of the last 3 meetings by 0.25% for a total reduction of 0.75%. The key policy rate is now at 4.25% with future rate cuts anticipated at the October 23rd and December 11th meetings.
The interplay between interest rates and inflation remains a critical factor shaping market conditions. The 0.5% interest rate cut by the U.S. Federal Reserve in September has had significant implications for both the Canadian and global economies.
The Conference Board of Canada has reported inflation decelerated to 1.6% in September, even lower than the 2.0% in August 2024. Dropping below the Bank of Canada's 2.0% target.
CIBC's forecast projects a 2% reduction in the Bank of Canada's key interest rate by mid-2025, with the rate expected to stabilize between 2.25% and 3.25%. This gradual easing of monetary policy should help sustain buyer confidence, particularly in the housing sector, where affordability has been a key concern in recent years.
A significant change, in the Victoria housing market involves the decision to rescind presales at the Tresah development near Mayfair Mall. Initially planned as a 179 unit building made of mass timber, the developer Mike Geric Construction decided to switch to steel and concrete due to lower construction expenses. Unfortunately the increased costs posed challenges that were not sustainable resulting in the the developer switching the project to a 100% purpose built rental.
This choice emphasizes the difficulties that developers encounter in keeping costs as material and labor expenses rise steadily. Tresah buyers who had reserved units, 2 years ago in a much more attractive interest rate environment, find themselves in a disheartening situation as their agreements were rescinded—a turn of events, for those looking forward to owning a piece of this project. Realtors who worked hard advising their clients end up with no commissions.
Another example is with Chard Developments, a respected and proven builder, who applied for an additional 2-storeys to allow for 31 more hotel rooms at its 6-storey heritage revitalization project at Broad and Johnson Street. Chard Developments cites a 51% construction budget increase, and is looking for ways to make the project economically feasible.
The vacancy rate in Victoria remains at historical lows in the October 2023 CMHC national housing report at 1.6%.
Research by 8X on local classified websites shows:
• Studio units starting at $1, 600 per month
• One bedroom units priced around $ 2100
• Two bedroom options available at $2800.
This mirrors the trend in Victoria where the increasing need for properties is pushing rental rates higher notably in prime locations.
Industry expert Bob Rennie recently shared insights suggesting that now may be an ideal time to purchase properties under construction, with completions scheduled for the next 18 months. He anticipates stronger demand by spring 2025, driven by a combination of pent-up buyer activity and the anticipated easing of mortgage rates.
On the policy front, recent adjustments to federal mortgage regulations are expected to expand homeownership opportunities. Key changes include:
These changes are expected to offer some relief to buyers navigating today’s challenging affordability landscape, but still adding on more debt to the consumer to float the market.
As we look ahead, the combination of falling interest rates, favourable policy changes, and shifting market dynamics points toward a more active and competitive market in 2025. For those considering a purchase, especially in the pre-sale market, this may be the right time to take advantage of current opportunities before demand accelerates next year.
On a lighter note, we’re pleased to share that Victoria has once again been named the best small city in the world by Conde Nast Traveller’s Readers’ Choice Awards, a title that reflects the exceptional quality of life our beautiful city offers.
If you’re considering buying or selling, or simply have questions about current market conditions, don’t hesitate to reach out. We’re here to provide the expertise and guidance you need.
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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