Property sales in the area represented by the Victoria Real Estate Board (VREB) have fallen to numbers not seen in decades. A total of 410 properties sold in the VREB area, which includes Greater Victoria as well as Salt Spring Island and the Malahat area. This figure represents a decrease of 46.1% compared to the same period last year and a decrease of 14.2% compared to August.
“Overall, September sales of 410 are the second lowest (for September) in 20 years, beaten only by 2010’s reading of 395 sales,” writes Leo Spalteholz, realtor on househuntvictoria.ca. The historic nature of the September numbers is also reflected in comments from VREB President Karen Dinnie-Smyth. “Sales have been falling month on month since May this year and we had a reluctant September with some of the lowest sales numbers for that month in decades,” she said in a statement.
As a reminder, September 2010 followed the Great Recession, whose origins date back to the fiasco of subprime mortgages in the United States. But while a real estate crisis caused the worst economic downturn since the Great Depression, real estate in the early 2020s is falling victim to external shocks, including inflation caused by the aftermath of the COVID-19 pandemic and the illegal invasion of Ukraine by Russia with all its effects, including rising energy prices and disruption of supply chains, further fuel inflation and reduce purchasing power. Western governments in Europe and North America, including Canada, responded to inflation by raising interest rates, thereby tightening credit and ultimately real estate sales.
Dinnie-Smyth points to rising interest rates as one of the factors behind the weak September numbers, which are even worse when looking at specific housing types. Condominium sales in September fell nearly 60% compared to the same period last year. Single-family home sales were down 33.2% from September 2021, with 221 sales.
According to the VREB, active listings exceeded 2,300 at the end of September, a 7.6% increase from the previous August and a 104.6% increase from 1,124 active listings at the end of September 2021.
“The good news is that we’ve seen more inventory hitting the market which, combined with slower selling activity, has resulted in more balanced market conditions,” Dinnie-Smyth said.
Prices, however, remained somewhat sticky. In September, the benchmark value of a single-family detached home in the Victoria Core region of the VREB was around $1.364 million, down 2% from August ($1.391 million), but up from compared to $1.201 million in September 2021.
Condominiums, meanwhile, fell 0.7% to $617,400 from August’s value of $621,900. For the Saanich Peninsula, the corresponding figures for single-family homes and condos were approximately $1.286 million and $635,600, for the West Shore they were $1.067 million and $557,100.
For Spalteholz, a lot of uncertainties are still ahead. Governments, he said, appear poised to raise interest rates in the future, despite calls from the United Nations (among others) to suspend future rate hikes to avoid a deep global recession. “The problem is that we have no evidence that central banks can bring inflation under control without a recession, so this is a warning that is unlikely to be heeded,” he said. “The waters are uncharted, but we’re full steam ahead anyway.”
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