Sales of condominiums, here under construction in Saanich, have propped up a weak real estate market. (Saanich News file photo)

Condominiums prop up weakening real estate market across Greater Victoria

August home sales drop compared to last month, last year

New figures and comments from the leadership of Victoria Real Estate Board (VREB) suggests Victoria is slowly but steadily shedding the status of a seller’s market.

According VREB, local realtors sold 594 properties in the region — almost 20 per cent less than the 736 properties sold in August of last year and almost nine per cent than in July 2018. Condominium sales dropped 5.3 per cent from last year in August with 195 units sold, while sales of single family homes dropped 22.1 per cent from 2017 with 304 sold this August.

“Prices in our market are quite flat right now, with a slow, long-term trend toward a more balanced market,” said Victoria Real Estate Board president Kyle Kerr, who linked this development to various regulatory measures passed in the last few months.

“Many demand-side measures were introduced this year – including a stress test on mortgages – which altered many buyers’ purchasing power,” he said. “These new policies are having the desired effect of slowing the market, though it is likely that over time the market will normalize these changed conditions.”

This said, he suggests numbers might pick up again in the fall.

“Our strong local economy and high employment rates may bolster demand into the fall as people return to work after their summer vacations,” he said. “Fall numbers will be an interesting indicator of our year to come as we continue to track low home inventory in a changing marketplace.”

Leo Spalteholz, a local realtor, who runs House Hunt Victoria, a blog about the local real estate market, argues that the August numbers point to the existence of two markets: one for single-family homes, and one for condominiums.

Single family sales continued to slow down as expected in August, while condo sales actually increased a bit from July and are at almost the same level as last year, he said. “This is relatively unusual, having only happened once in the last 10 years (in 2014).”

While single family sales are “languishing,” condo sales in August remain strong. “The same picture is in play when looking at months of inventory, where single family properties are at double that of condos,” he said. “The bump in condo sales meant an interruption in the cooling trend in the overall market on a seasonally adjusted basis.”

Condominium sales, in short, are propping up what would otherwise be a weak market.

Spalteholz’s reading of the condominium market also offers insights into the effects of recent regulatory changes. Strong condominium sales in August reflect a “scarcity” of condo listings. “I would have thought that the looming [speculation tax] and AirBnB regulations would have brought a lot of investment condos out of the woodwork, but so far that is not the case at all. Historically speaking, we still have very few properties on the market.”

In short, Spalteholz challenges the VREB’s argument that home speculation tax has contributed to the current slowdown.


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