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It’s Getting Worse

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  1. From the top 8:38 video:

    It’s getting worse in the Victoria BC Real Estate Market | July 2022 | Jul 24, 202

    The Victoria BC Real Estate Market has undergone a significant shift in 2022 that is unfolding as we speak. Low rates and low inventory fuelled a tremendous amount of pressure on prices in Victoria BC Housing that accelerated dramatically from the beginning of the covid-19 pandemic. That cheap money and credit that pulled massive demand forward seems to have come to an end and prices from the peak of this cycle could see declines as the market returns to more balance. A similar story is unfolding across most major Canadian Real Estate Markets but Victoria BC historically has seen less fluctuation over the last 15-20 years because of limited supply. Just shy of 2100 active listings and a strong rental market are helping to keep prices elevated but there a huge drop off in demand is putting downward pressure on house prices in Victoria BC, Canada.

    There are 3 main explanations to the market shift in my opinion:

    Intro: 00:00

    1) It’s the summer! Canadians are enjoying the weather and vacationing with their families. Real Estate is further down the priority list 01:23

    2) A historic change in the mortgage rates environment softening demand and buying power 02:02

    3) A complete 180 degree change in buyer sentiment from the early months of 2022 04:51

    Despite the fears that the Bank of Canada pushing interest rates higher too quickly could cause a recession, they seem to be stating a high level of conviction in doing what is required to reign in inflation and bring it back within their target rate of 2% by 2024. On June 1 we saw a 50bps interest rates increase pushing the policy rate to 1.5%. Prior to the pandemic rates had stabilized around 1.75% and following a massive 100 bps interest rate adjustment on July 13th the Bank of Canada’s policy rate now sits at 2.5%. Analysts believe this may reach 3.5% by the end of the year. On the positive side of the mortgage rates expectations discussion, 5 year fixed mortgage rates have stabilized just above 5% for most major Canadian Banks.

    Canadian Real Estate Investing is in a challenging position but overall my perspective as a BC Realtor and Victoria Realtor is that over a 5+ year time horizon our beautiful city will continue to appreciate. Vancouver Island Real Estate is some of the most desirable real estate in Canada. You are investing in a lifestyle as much as you are investing in an asset class. Nevertheless, Victoria BC isn’t so valuable that it is insulated from the effects of massive changes to interest rates and demand. Real estate is sensitive to interest rates and it will be interesting to follow events over the next 6 months. As previous month’s statistics have explained, we have entered a balanced market and could see statistics that resemble a buyer’s market in August and as we transition into the fall.

    1. Canadian Real Estate Investing
      I am wondering how much of an effect the Canadian RE crash will have on FL and Arizona. Having lived in S. Florida I distinctly remember areas in/near Hollywood FL that were almost totally Canadian in the winter. And having spent time in NE Florida I met a fair number of Canadians wintering there. I also had a former girlfriend who lived in Yuma AZ who said Canadians were very well represented in the winter there. Supposedly the SE FL homes were owned by the Canadians not sure about NE FL or AZ. So the question is: Will they have to unload these properties to keep their homes in Canada out of foreclosure?

      1. My dad lives in Hollywood and he recently got a French phrase book to carry with him. Lots of folks from Ontario down his way.

  3. The new construction part of the Austin video is interesting. I’m listening to it again right now.

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