A Greater Victoria BC Real Estate market update and overview as to what is and what is not happening in your area.
Currently across all of our VREB service area, we have about 650 more active listings (4,407 this year) compared to last year, and we have for the month of May reported 383 fewer sales compared to last year (496 this year).
These are very big differences during what we consider the busiest periods of the year. We may see a bit of a spike in reported sales over the next few days as many contracts tend to become unconditional near the end of a month, but there is no doubt that our board will be reporting a dramatically lower sales results in their next press release.
Obviously they will try to give it a positive spin, but the number of sales don't lie. Prices will be affected if the number of sales remains at these levels for some time, as there will always be a good number of sellers that have to sell, regardless of price, and they will just continue to drop their prices until somebody buys it.
One month worth of information never tells the entire story however, it is clear that with the current inventory in the market and current sluggish sales level, buyers really are in control of the condo market at this time.
It is entirely possible that the market will remain as is for some time as we get to the introduction of the HST, as well as the expected increase of lending rates across the board.
If the Feds do increase the mortgage rates we will likely see a further cooling by the buyers in the market.
Media reports that are either negative, with mixed messages, or contradicting one another are not helping either.
According to a fair bit of media coverage and the feds, we are in a recovery, and more people are being hired, supposedly BC has the fastest growing population, and is the place to be.
While at the same time, the province is laying off people, HST is being feared, higher lending costs are looming, the stock market is making everybody nervous, and things just don't feel right on the street talking to people.
So what is the truth and what will be happening in and around the Greater Victoria Real Estate Market, who knows for sure!
It would appear that at best every segment of the real estate market will continue to tread water, and adjust to find buyers and sellers that are ready willing and able to move. an example would be people wanting to move and realizing that their property will sell for a little less, but being able to make it work because their purchase will also be at a lower price than initially expected. I do not see any model where there are substantial property value increases over the next few years to be honest until 2012 possibly 2014.
At worst, and although I do not seriously expect a real doom and gloom, but with the still rather fragile state of a number of the larger developments holding huge amounts of condo inventory (not on the MLS system) it is entirely possible that we could see some of those developers go in to bankruptcy which may force a number of these developments in to fire sales (at prices well below current levels) in order to satisfy the creditors. If this occurs, (and we know that at least 3 developers are on the edge now) we could see this creating a ripple effect thru-out the entire lower Island and affects at least the condo market for many years to come, and possibly the rest of the market as well.
Currently the biggest issue is the lack of confidence and momentum in the market (fear for the unknown) and generally people retreat and do nothing under those circumstances. In reality nothing really bad has happened locally (yet) other than government lay offs. I also think that many people are fearing the HST more than they should, but this is no different to when the feds introduced the GST in 1991 and the economy (including real estate) slowed down for about 6 to 9 months, before people realized that life goes on.
I personally also think that society as a whole is slowly starting to realize the huge impact on society when the boomers start to retire. This is a very complex and difficult issue that nobody seems to have a good handle on. But there is no doubt that when the pendulum swings over the next 3 to 15 years from a society of working people to a society of retired people that everything will be affected at every level.
On the bright side; this will in fact also offer amazing opportunity and areas of huge growth for those that provide the services and assistance needed. We in the Greater Victoria Area will continue to see a substantial growth in population with needs to service all those existing and new residents (both the newly wed and the nearly dead).
Market Value of any property is always a moving target, both when selling or buying, so dependent on what HAT (buyer, seller or both) you are wearing, I think that today is as good as the previous or the next to be part of the real estate market.
For Sellers "pricing" will be key, and to be ahead of the trend (which right now seems to be flat to down). Buyers, for lower end homes should be buying now versus later. If you are planning on downsizing from a big house to something smaller, this will be a good time to do so, just be realistic with your sale price of your current property as you will likely be able to make up some (financial) ground on your purchase.
Buyers for Condos are likely better off to play the wait and see approach, unless the right property shows up at the very best locations, (but only if you don't need to sell first to buy, then selling now is best). Buyers for townhomes and 1/2 duplexes will find that there will be more options and choice and may find a few single family homes as alternative options.
Handy or creative buyers and investors for lower end properties with potential or for revenue purposes, now would be the time to pay attention and get your money ready to get into the market for some of the opportunities with condos townhomes and or 1/2 duplexes that need a make over. The market is heading your way. To a lesser degree the same applies for single family homes in need of upgrading, fixing and optimizing, mainly because everybody is so focused on these type of properties, they are still in higher than average demand.
Multi family and or revenue based property is always hard to justify in greater Victoria, because of the low Capitalization ratios, however with the recent increases in vacancy rates there may be some opportunities that may work for some type of investors that can add value to a property and by doing so make the numbers work even in Victoria.
As indicated above, we will be flooded with retired people over the next decades (including ourselves), if you can create appropriate and adjusted housing for that population group, We feel strongly that there will be many opportunities for better than average returns. If you own property that can accommodate residents with an eye to extra services or requirements, keep it and convert the property to optimize your returns.
If you are in the market to buy long term revenue property, make sure it can be converted to assist those with age related needs, as your property will then be able to generate much higher than average returns.
If you are considering downsizing or aging in place, how about converting your current residence and make sure it is suitable for you as you prepare for a more age appropriate use. Fewer if any stairs, railing, ramps and elevators, creating a extra suite for in house assistance or revenue (or both).
In short and for the next months, competition for the fewer buyers will be fierce in order to sell property, which will cause a number of sellers to continue to lower prices in order to sell. Conversely opportunities to buy will become more and more appealing for those that are ready to do so.
I hope I have not overwhelmed you this morning, and crystal ball gazing or fortune telling in real estate is not as simple as looking at the stock market where cause and affect are often resulting in changes within hours, in real estate these things tend to show up months later, so the current slow period may in fact just be as simple as the result of the entire province sitting in front of the TV during the Olympics in February.