The Victoria market is seeing some buyers paying $100,000 or more above asking prices for single-family houses in desirable neighbourhoods.
Multiple offers. No conditions. Buyers cashing out in Vancouver to live here. Purchasers from China. These are all commonplace as the capital region’s already-hot housing market flares up and inventory tightens.
In February, the total number of sales reached 772, the highest for that month since 1992, when 780 properties changed hands, the Victoria Real Estate Board said Tuesday.
The benchmark price for a single-family house in Victoria’s core was $638,700 in February, up by 15 per cent from $557,000 last year. In Vancouver, the average price for a single-family home tops $1 million.
The new norm is for sellers to set a time and date to accept offers that pour in after a house in a popular area has been listed for only a few days, real estate agents say.
Victoria is experiencing a trickle-down effect from the Lower Mainland market. Wealthy buyers from China are snapping up Greater Vancouver homes, driving up prices. In turn, Vancouver buyers are cashing out by selling their homes and heading over to the Island to buy a home of equal quality for half the price.
“They are not afraid to fight. Multiple offers [in Vancouver] are expected on everything,” said Jason Binab, with the Engel and Völkers real estate firm in Victoria.
Those Lower Mainland buyers are “what’s really throwing things over the top,” said Binab, who specializes in homes in Victoria, Oak Bay and Saanich East. He said he hears from Vancouver residents every week wanting to purchase a house here, and they are prepared to quickly travel to vet a prospect.
Choice is more limited compared with a year ago. There were 2,562 listings last month in Greater Victoria, down from 3,480 in February last year, the Victoria board said.
“The combination of strong, steady job growth and highly favourable affordability are continuing to support healthy levels of housing activity in B.C.,” Landcor Data Corp. said in a report on the fourth quarter of 2015.
Binab sealed a deal Monday for a house at 177 Joseph St. in Fairfield. It was listed at $1.2 million. A local buyer beat out the competition with an unconditional offer at $152,000 above the asking price.
The successful bidder prevailed against buyers from California, Paris, Vancouver and another from Victoria, he said Tuesday.
Another listing at 1632 Kenmore Rd. in Saanich sold for $58,000 above its $600,000 asking price, Binab said. The accepted bid came from Victoria. Other offers were submitted by a local resident, and two from China.
Buyers from China are typically families who want to live and work here, Binab said. Setting a date and time to accept offers makes sense to sellers. “You are giving yourself a chance for full exposure to the market.”
Demand is surpassing supply and offers are crafted to be as simple as possible. “Right now, when the market is as hot as it is, nobody is writing offers subject to the sale of a home,” Binab said.
A Calgary buyer, who used to live in Victoria, was successful recently with an offer of $125,000 above the list price of $1.2 million for a house on Romney Road in Victoria. The three other offers were from Vancouver. Two inspections were carried out before offers were even being accepted. The deal was struck in fewer than 12 hours after the house went on the market, Binab said.
Frank Rudge, a real estate agent with Re/Max Camosun, said most properties would typically sell at between two to five per cent above their assessed value. But now, “I’ve been selling real estate for 40 years and I’ve never seen that much activity or that wide a range between the list price and the sale price.”
When he listed a house in the high Quadra area for $500,000, prospective buyers had 48 hours to check it out before making an offer. More than 100 showings took place and 21 offers were submitted. The house, which needs extensive upgrading, sold for $614,000.
A two-day deadline for offers is “very quick and that shows the fever pitch that we’ve got here in Victoria,” Rudge said.
This kind of system benefits the seller. The first offer for the Quadra house was $523,000, more than $90,000 lower than the accepted offer, Rudge said.
The challenge comes if a seller then tries to find something else in the same market.
Gregg Mah, a real estate agent with Pemberton Holmes, said the two- to three-day wait times before accepting an offer is “almost the norm” these days. He knows one agent who had 72 people through a house in a day and a half.
The market started gaining strength at the start of 2015, Mah said. “Towards the end of last year, we were putting in offers Christmas Day, Christmas Eve.”
When 2016 arrived, “the floodgates opened up and everyone is rushing,” he said.
It’s not just the capital region that’s hot. Vancouver Island north of the Malahat saw 407 single-family homes sold last month, up by 44 per cent from 282 in February 2015.
“We are seeing multiple offers in many transactions throughout the board area because there are more buyers than sellers,” Margo Hoffman, president of the Vancouver Island Real Estate Board, said.
“We are beginning to see some migration from Vancouver that isn’t retirement focused.
“An interesting development we’re watching is young professionals who are trading in their homes for a significantly nicer property on Vancouver Island and then commuting to their jobs on the Lower Mainland.”
It’s easier to commute these days than in the past, Hoffman said, citing float planes and helicopter service.