Home buyers moving from Vancouver’s overheated housing market have upped the number of million dollar home sales in Victoria.
Re/Max Realty’s 2016 Spotlight on Luxury report, which reports on trends in the luxury market, reported an unprecedented increase in the sale of homes priced at over $1 million, and the trend appears to be continuing. Million-dollar-plus home sales have increased by 82 per cent, year over year, while condominium properties in the same price bracket increased by 71 per cent.
Ray Blender, general manager of Re/Max Camosun, attributed the increase in luxury property sales to activity in the Vancouver market.
“People in Vancouver suddenly found their homes valued in the several million dollar neighbourhood and they’ve cashed in. They arrive in the Victoria market looking to buy a home here, and they’re coming with a lot of money,” he said. The phenomenon is one of the reasons for the increase in home prices in Victoria, which have jumped 24.1 per cent in the past year. The October 2016 benchmark price for a home in Victoria was pegged at $755,000, up from $608,200 for the same time last year.
Another cause for the rise in prices can be found in the low availability of homes for sale in the Victoria region.
“We continue to see low inventory hindering sales in the local market,” said Mike Nugent, president of the Victoria Real Estate Board. “Our numbers are down from the record-setting pace set this summer, [but] the market is still moving quickly and is still very competitive for certain properties.”
The increase in prices in Vancouver had been, in part, attributed to the purchase of homes by foreign buyers who were speculating on the hot housing market. The provincial government stepped in during the summer and, in an effort to put a damper on run away home prices, slapped an extra 15 per cent property tax for properties on foreign buyers. But the same surcharge has not been applied to Victoria.
Scott Piercy, a real estate agent with Engel and Volkers Vancouver Island, said on the West Shore, Bear Mountain offers the best illustration of how briskly homes in the $1 million range are selling.
“It’s high in demand,” he said. “The big thing about it for the Greater Victoria area is it’s one of the only newer subdivisions where you can get new product all the time.”
In terms of numbers, homes selling for $1 million or more have gone up by almost four times over 2015, he said, noting that 23 such properties have cracked that price point in 2016, compared to just six last year. “For buyers from Vancouver, Calgary and Toronto, it’s still a good value.”
Blender adds that it’s not just $1 million property sales increasing in Victoria.
“We’re seeing an overall rise in price at the most costly homes,” he said.
“We had nine condos and 72 freehold properties sell over the $2 million mark this year and 15 freehold properties sell at over the $3 million mark.”
The soaring home prices in Victoria may be impacted by new rules introduced by the federal government regarding minimum down payments for homes as buyers requiring mortgage insurance may qualify for significantly smaller mortgages. Blender points out the new rules have no effect on home buyers from Vancouver with enough equity to make a cash purchase.
– with files by Don Descoteau
GREATER VICTORIA MARKET UPDATE » MONTH TO DATE Dec. 5/16 COURTESY VICTORIA REAL ESTATE BOARD
» 78 / 465 -- NET UNCONDITIONAL SALES / TOTAL, December 2015
» 85 / 451 -- NEW LISTINGS / TOTAL, December 2015
» 1,757 / 2,517 -- ACTIVE RESIDENTIAL LISTINGS / TOTAL, December 2015