Real estate sales in the area represented by the Victoria Real Estate Board (VREB) dipped to figures not seen in decades. A total of 410 properties sold in VREB’s region, which includes Greater Victoria as well as Salt Spring Island and the Malahat region. This figure represents a drop of 46.1 per cent compared to the same period last year and a drop of 14.2 per cent compared to August.
“As a whole, the September sales of 410 are the second lowest (for September) in the last 20 years, beaten only by 2010’s reading of 395 sales,” writes Leo Spalteholz, a realtor on househuntvictoria.ca. The historic nature of the September figures also rings through in the comments of Karen Dinnie-Smyth, VREB’s president. “This year sales have dropped month over month since May and we saw a reluctant September with some of the lowest sales numbers for that month in decades,” she said in a release.
As a reminder, September 2010 was on the heels of the Great Recession, which origin dates back to the subprime housing mortgage fiasco in the United States. But if 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 Russia’s illegal invasion of Ukraine with all of its effects including higher energy prices and disrupted supply chains further stoking inflation and reducing purchasing power. Western governments in Europe and North America, including Canada, have 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 low numbers for September, which are even worse when looking at specific housing types. Sales of condominiums in September dropped by almost 60 per cent compared to the same period last year. Sales of single-family homes decreased 33.2 per cent from September 2021 with 221 sold.
According to VREB, active listings topped 2,300 at the end of September, an increase of 7.6 per cent compared to the previous month of August and a 104.6 per cent increase from the 1,124 active listings for sale at the end of September 2021.
“The good news is that we have seen more inventory come to market, which when combined with slower sales activity, has resulted in more balanced market conditions,” said Dinnie-Smyth.
Prices, however, have remained somewhat sticky. In September, the benchmark value for a single-family detached home in VREB’s Victoria Core region was about $1.364 million, down two per cent from August ($1.391 million) but up from $1.201 million in September 2021.
Condos, meanwhile, were down 0.7 per cent to $617,400 from the August value of $621,900. For the Saanich Peninsula, the corresponding figures for detached homes and condos were about $1.286 million and $635,600, for the West Shore, they were $1.067 million and $557,100.
For Spalteholz, much uncertainty remains ahead. Governments, he said, appear poised to raise interest rates in the future, despite calls from United Nations (among other voices) to pause future rate hikes to avoid a deep global recession. “The problem is that we have no evidence that central banks can tame inflation without a recession, so this is a warning unlikely to be heeded,” he said. “The waters are uncharted but we are full steam ahead anyway.”
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