As we move into the final three quarters of 2023, the Victoria real estate market is showing signs of change, but what does it mean for investors? The average home price in Victoria has decreased by approximately 10% between 2022 and 2023, which may cause some investors and potential buyers to worry. However, the Victoria housing market is one of Canada’s most desirable real estate investment markets, and the projections for the remainder of 2023 look promising.
Victoria is one of Canada’s most desirable real estate markets due to its diverse economy, thriving tourism industry, and attractive lifestyle. The city is home to various industries, including technology, tourism, and government services, which have helped to support the housing market. With the military base, parliament, international airport, and university all located in this region of Vancouver Island, it’s clear that a need for housing will always be present, which explains the rapid development and growth of the area.
Furthermore, Victoria’s thriving tourism industry brings in over 4 million visitors annually. This industry has created a strong demand for short-term rental properties, particularly in the downtown core. The city’s world-class amenities have also helped to attract an influx of international investors and buyers.
The Victoria real estate market continues to stabilize after the pandemic and increased interest rates. The number of properties sold is down 29.2% from last year, with 590 properties sold this year compared to 833 properties sold in 2022. However, this isn’t necessarily a negative sign, indicating a return to pre-pandemic levels.
As we move into the spring, demand is increasing in the markets, and more listings are coming on the market, with 1,970 active Victoria real estate listings at the end of March 2023. This supply increase will impact pricing as we move away from a competitive seller market.
February saw an uptick in demand that pushed prices close to what we saw in August 2022. As more listings come on the market in March, however, it is expected that an increase in supply will create a settling in the price and a shift away from a competitive seller market.
Despite the impact of the pandemic, Victoria’s real estate market is expected to continue to grow in 2023. Prices in the Victoria area are expected to increase by approximately 4% in 2023, with an average home price of around $950,000.The Canadian Real Estate Association’s forecast predicts that home prices in Victoria will increase by approximately 5% in 2023 and an additional 1.6% increase in 2024.
The demand for housing in Victoria is expected to remain high, particularly for single-family homes and townhouses. This is partly due to the low supply of new homes, with the Victoria Real Estate Board reporting that the number of active listings in March 2023 was down 16.3% from the previous year.
While the central city core of Victoria itself is a highly desirable real estate market, many other municipalities in the surrounding area offer great investment opportunities. The municipality of Langford has seen significant growth in recent years, thanks in part to its affordable housing and proximity to Victoria. Other municipalities, such as Sidney and Saanich, offer attractive investment opportunities for those looking to enter the Victoria real estate market.
Victoria’s real estate market spans 13 municipalities with unique characteristics, municipal building restrictions, and property tax rates. In fact, nine municipalities in the Greater Victoria area made the list of the highest and lowest property tax rates in British Columbia in 2021.
Some of the highest property taxes can be found in Oak Bay and Victoria. While higher property tax rates may be a concern for some buyers, it’s important to note that other factors, such as access to amenities, proximity to downtown, and the desirability of the location, balance these property tax rates. These factors are significant in Victoria, where buyers are willing to pay a premium for properties that offer a high quality of life or make them more desirable for tenants.
Victoria’s real estate market is forecasted to stabilize and maintain steady growth in the coming years and is expected to remain one of the most stable in Canada, with home prices increasing by approximately 5% per year.
While the Victoria real estate market may not be ideal for those looking to buy a physical property at this time, there are other ways to invest in the market. One such method is through mortgage pools managed by mortgage investment corporations (MIC), which provide investors with an alternative investment option to capitalize on desirable real estate regions or increased interest rates. Mortgage pools offer several advantages over traditional real estate investments, including lower upfront costs, reduced risk, and higher returns. Additionally, with interest rates still relatively high, now is a great time to invest in mortgage pools to capitalize on Victoria’s desirable real estate market and be on the receiving end of the interest.
The Victoria real estate market has seen some fluctuations in recent years, but it remains a healthy and desirable market for real estate investors. With a growing tech industry, a thriving tourism sector, and a strong demand for housing, Victoria offers many opportunities for investors and developers. By investing in mortgage pools and other creative investment vehicles, investors can capitalize on the city’s strong market fundamentals and potentially earn high returns while minimizing risk.
If you’re curious to learn more, get in touch with Jordan on our team today.