The B.C. Real Estate Association is predicting that prices of homes for sale in Greater Victoria will fall significantly next year, in part because of continued high interest rates.
In its fourth quarter forecast, the association predicts the average sale price will drop 4.3 per cent next year to $950,000. It forecasts the average sale price this year will land at about $992,300, a 9.5 per cent increase from 2021.
The association is also predicting that sales will fall by more than nine per cent next year, after a 32 per cent drop in the region this year from a red-hot market in 2021.
“The factors that drove unprecedented housing market activity over the past two years, including record low mortgage rates, buyer preference for extra space and the ability to work remotely, are now unwinding,” said Brendon Ogmundson, the association’s chief economist, in a statement. “As a result there has been a significant shift in the housing market, which we anticipate will continue through 2023.”
The president of the Victoria Real Estate Board said while there’s no question the dynamics of the market have changed, the underlying factors driving real estate investment and sales haven’t in this region.
Karen Dinnie-Smyth said despite rising interest rates, the market is still performing well and Victoria remains a destination of choice.
“Our market actually went up in sales last month for the first time since May,” she said. “So that is very optimistic. Traditionally, we slow down through November, December, January and then we start to pick up again in February and at this point, there is nothing to suggest that that pattern will change.”
Dinnie-Smyth said there are as many opinions about what 2023 will hold as there are people with time to offer one, and most hinge on what the central bank will do with interest rates.
“But having been through this two or three times, I’m going to ride with it being business as usual,” she said.
“The market will do just fine because, after all, this is Victoria. The demand is actually quite high. There’s a lot of people fence-sitting, certainly, but there is still a lot of active buyers out there.”
She said the difference now is that with slightly more inventory and fewer buyers – some lost to the higher interest rates — those who are still in the market have more time to make decisions, and a chance to put conditions on sales.
As for prices, she said Victoria prices may drop, but because inventory is still fairly low, with just under 2,200 active listings, the drop won’t be as pronounced as in other regions of the province.
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