Factors ranging from lack of inventory to historically low interest rates and an increase in people working from home have combined to turn the Victoria real estate market into a frenzied affair, where sellers are king and buyers have learned to pounce on things they like and pay more than the listed price.
“You have to act quickly and act decisively and be prepared for the situation,” says David Langlois, president of the Victoria Real Estate Board.
These days, it’s the norm for sellers to hold off offers for a few days, then receive multiple competing offers at once – most with no financing or inspection conditions attached.
Langlois said 65 to 70 per cent of single-family homes sold in the region are going for above the listed price.
“We are massively undersupplied and we have tremendous demand and pricing is very difficult in this market.”
As of the end of April, just 1,133 homes were listed for sale in the region, a sharp drop from the 2,300 listings at the end of April last year.
Sales have been brisk — 1,173 properties changed hands in March, a 92.9 per cent increase from the 608 in March 2020.
“The competition that results from any new listing that’s desirable coming onto the market is such that we are seeing prices that are frankly unexpected,” Langlois said.
For example, a home listed for sale at $990,000 in the Oaklands neighbourhood sold in February for $1.3 million. A home in Fairfield listed at $995,000 also sold for $1.3 million in January, while a home in Vic West listed at $799,900 sold for $1.02 million in mid-February. In April, a Broadmead home listed for $1.2 million sold for $1.65 million after just two days on the market.
That kind of activity isn’t just in the core.
In North Saanich, a home listed for $884,900 sold for $1.16 million in February, while in Central Saanich, a $2.995-million-listed home changed hands for $3.35 million late last year.
In Sooke, an Otter Point home listed for $999,900 sold for $1.275 million. In Langford, a home listed for $589,900 sold in March for $731,000, and in April, a French Beach home listed for two days at $2.1 million sold for $2.425 million.
Langlois said those waiting on the sidelines for things to cool off might be waiting a long time.
“Whatever a house sells for in a particular neighbourhood today sets the floor for the next one,” he said. “In a down market, you’re trying to catch a falling knife, but in this market, it’s like trying to catch a rocket being fired straight up.”
Pemberton Holmes agent Nicole Burgess, who has been tracking the number of homes selling over their asking price, also believes the current hot market might be around for a while, as long as buyers find Victoria an attractive place to live.
“The challenge is, it’s getting hotter each month — supply is simply not keeping up,” she said. “We had hoped the spring market would bring more supply and calm things, but demand is completely outpacing supply and we are now seeing competing offers on condos and townhomes, for sure.”
Burgess said there is a frantic element to the market that has been compounded by the pandemic, which has complicated the buying and selling process with new rules and restrictions.
She said buyers are taking bigger risks, buying with no conditions and without inspections.
“If buyers want to win a bid for a house, they are pretty much going to have to go unconditional,” she said. “That’s where we’re at.”
Langlois said short of an interest-rate shock or a world event, there’s not much that can be done when there’s little inventory and everyone wants to live here.
“This is not a new problem,” he said, noting there have been warnings for decades that Victoria was becoming unaffordable for working families.
Since the pandemic began, many people have realized they can work from home, which means they can live anywhere.
In that situation, the Island starts to look pretty appealing,” he said. “So, we get that pressure here.”
The one thing that could bring more balance to the market is developing new supply, and builders have been working flat out on just that.
Last year, homebuilders in the region started 3,209 new homes, 694 of which were single-family dwellings. In 2019, they started 3,499 new homes, of which 638 were single-family.
They would do more if they weren’t burdened with over-regulation, expensive process delays and councils that do not match their words with action, said Casey Edge, executive director of the Victoria Residential Builders Association.
“Officials can talk about the importance of housing and affordability and all the rest, but at the end of the day, it’s the numbers that matter,” said Edge, noting Langford is the one municipality in the region that streamlines the process for builders to get projects done.
Last year, 1,101 new homes were started in Langford, down from 1,289 in 2019. By comparison, Victoria started 330 new homes last year and 688 in 2019, while Saanich started 200 last year and 203 the year before.
Developer Mike Miller, who has 11 residential development projects in various stages of the approval process, said developers are keen to improve supply and densify parts of the region, but paperwork makes it difficult.
Miller said community plans, which often have not been updated in years and in some cases decades, have not kept up with the reality that the region faces — a housing and affordability crisis.
Many in the development community worry that too often, old community plans carry more weight than the reality that municipalities need more housing, he said.
Miller also noted that even if every developer’s application was approved, it might not solve the problem, as builders are so backed up, costs are bound to increase. “That can put a halt to it,” he said.
Langlois said building our way out of the current situation will take a long time, so it’s likely the red-hot market is here to stay for a while.
“We may have to settle in,” he said.