After almost two years of disruption, what will the coming year bring to the frenetic business of real estate? Local realtors share their predictions, while acknowledging the crystal ball can be hazy.
BY SHANNON MONEO
Lisa Williams has been selling homes in Greater Victoria for 30 years and has traversed the market’s peaks and valleys while generating one of the region’s mightiest totals in transactions as a solo agent. When it comes to a prognosis on the area’s robust real estate market, Williams says, “That’s the question everyone is asking.”
When the pandemic took hold, people in her business thought the market would crash and prices would fall.
“The reverse happened,” says Williams, a vice-president of sales with Sotheby’s International Realty. For next year, however, she has a forecast. “It’s strong — and it’s going to stay that way.”
The president of the Victoria Real Estate Board (VREB), David Langlois, also incorrectly guessed that real estate would take a hit.
“We’re terrible at predicting the future,” Langlois says.
Still, that doesn’t prevent him for theorizing. Because people are adapting to the changing nature of pandemic restrictions, he says buying a new home may drop from their to-do list.
“[People] are not so obsessed with the four walls around them,” he says, noting, “we know markets turn on a dime.”
Current predictions estimate prices will not slump over the coming year, because of the continuing shortfall of ready housing. The VREB’s June 2021 report noted that the median price for single-family homes in Greater Victoria rose 21 per cent from June 2020, condo prices jumped by 14 per cent and row/townhouses saw a 24 per cent increase. Even manufactured homes registered a 4 per cent hike.
“It’s all good news for those selling,” says Tony Joe, the broker/owner of RE/MAX Island Properties.
With three decades of selling properties in Victoria under his belt, Joe says this region is a safe bet when it comes to real estate. He’s seen people willing to pay top dollar, because they know their investment is sound, unlike other parts of Canada. He recalls in 2009 when prices did drop locally but rebounded within a few months.
Even if interest rates rise slowly, as all three realtors expect, it won’t dampen buyers’ enthusiasm, because buyers view their purchase as a long-term investment. Rates have been low for so long, it’s inevitable that they will rise, Williams says.
So, who is making those million-dollar purchases for a regular detached home?
Langlois, an agent with Macdonald Realty, has seen “a relentless march out to the West Coast.” The story, during the pandemic, is that people want more space and, since they can work at home, why not have a home in a place without six months of winter, with clean air and with diverse recreational choices?
“It makes sense,” Langlois says. “But is it real?”
Joe believes the theory is partly accurate.
“The pandemic has caused people to revisit their lifestyle. They can work remotely. They can work anywhere,” he says. “People come here by choice.”
He’s had experience with native Victorians who have moved elsewhere and returned. A lot of Ontarians and Lower Mainlanders are migrating to the Island.
“You can sell your semi-detached home in Toronto and buy a detached house in Victoria,” says Joe.
Williams has sold to Canadians living in the U.S., as well as international clients. “A lot of tech money is coming in to Victoria. There are younger buyers, younger families,” she says.
Driven By Demand
Experts agree it continues to be a sellers’ market — aided by low inventory.
“It’s one-third of what it should be,” Joe says, noting that in June, there were 1,400 active listings. Historically, there are around 4,500. “For meaningful change, we need 2,000 homes tomorrow.”
Yet, Joe says, it’s not likely to happen. He points to municipalities like Saanich and Oak Bay, where it can take one year to get a permit for a building extension. In Langford, there’s a seven-day turnaround.
Langlois says more projects are coming online, but developments face hurdles.
“I hope that municipalities stop talking about improving development timelines and actually develop them,” he says.
Williams adds that there’s frustration in various corners due to building costs that continue to climb. Delays in approvals only add time and costs.
One unexpected pandemic “buy” product has been the number of people who are now purchasing homes without having set foot in them — even pre-construction sales, where buyers haven’t seen the property.
“It’s remarkable to me,” says Joe, who’s gone so far as to make a video from a Sooke home, through town and along the highway.
Buyers are making big-money decisions based on these 3D video tours. Langlois notes those tools aren’t new, but more realtors are being forced to use them to meet consumer demand.
“But there’s no substitute for being in a property,” he says.
As for open houses, Joe hasn’t held one for over a year and a half, and Langlois wonders if they’ll ever return.
“I’d prefer not to sit in a box for two hours on a weekend,” he says.
Whatever happens in the coming year, Williams believes the stakes are clear.
“The inventory is so low and there’s such demand,” she says. “We don’t see things changing.”
INSIDER’S QUICK HITS:
Prices will remain elevated. There will be a levelling off as demand slows, leading to a less dramatic rise in prices. The market will be more balanced for both sellers and buyers.
The housing shortage will continue. Single-family homes will continue to be in high demand. Buyers’ focus will shift to condos and townhouses.
Low rates have been around since 2009 and the creep up will begin. Regulators will aim for measured increases.
Videos and 3D tours will continue to be significant selling tools. Open houses may become defunct.