Garden Suites, Carriage Houses or Laneway Houses in Victoria

“Build it and they will come. Well we have a reverse problem: they have come, but we haven’t built it.” - Victoria Mayor Lisa Helps, April 13.

If you live in Victoria and you want to build a garden suite, carriage house or laneway house, good news! Garden suites will be permitted in all of Victoria’s single-family residential areas, and you no longer need to undergo a rezoning. All the existing requirements for size, setbacks and height will remain in place, but in order to streamline the process, you do not have to notify your neighbours (though it might be a good idea for the sake of neighbourly relations), and no rezoning triggered public hearing.

What this decision by City Council will do is increase options for renters who currently face an extremely low vacancy rate currently below half a percent, and homeowners will appreciate the chance for rental income. It you’re planning on selling your home, creating a garden suite will maximize your home’s sale value, and make it more attractive for buyers who may need a mortgage helper.

Spring 2017 Newsletter

POPULATION GROWTH AND REAL ESTATE ACTIVITY

The 2016 census recorded a population of 367,770 in metropolitan Victoria, an increase of 6.7% over 2011.  Most of the population, 235,689 (64%), reside in the Core Communities, followed by the West Shore with 82,543 (22%) and the Peninsula with 39,735 (11%).  The West Shore led in population growth at nearly +13%, largely attributed to growth in Langford at +21%.  The Core Communities grew by +5.2%, led by Esquimalt at +9%.  The Peninsula grew by some +4%, led by Central Saanich at +5.5%. 2016 was a record-breaking year for the real estate market in Victoria. There were 10,098 residential sales through the Victoria Real Estate Board’s MLS® in 2016, nearly double 5,492 sales in 2011.  Similarly, the dollar value of sales more than doubled in the same period, from $2.73 billion in 2011 to $5.98 billion in 2016.  The average sale price increased by $95,370 over this five-year period, up some +19.2%. 

Residential sales in the Core Communities reached 5,773 in 2016, an increase of +72% from 3,351 in 2011.  Over the same period, the total value of residential sales increased +109% and the average sale price rose to $632,482, an increase +21% over 2011.  Clearly, many buyers are willing and able to pay for more expensive housing to enjoy the convenience and the amenities available in the core area of Greater Victoria.  The proportion of sales in the Core Communities fell by -3.0%, from 64% in 2011 to 61% in 2016. There were 1,124 residential sales on the Peninsula in 2016, up from 715 in 2011, an increase of +57%.  The value of residential sales increased +104% and the average sales price reached $686,970, an increase of +30% over 2011.  The average sale price reflects the impact of the number of waterfront and estate type properties on the Peninsula. The proportion of sales on the Peninsula fell -2.0%, from 13% in 2011 to 11% in 2016.  The West Shore has experienced the most rapid growth in real estate sales in the region.  Residential sales reached 3,201 in 2016, up +125% from 1,426 in 2011.  The total dollar value of residential sales rose +159% over the five-year period.  The average sales price reached $487,307, an increase of +15%, which is modest when compared to other areas.  The West Shore still offers the most affordable housing in the region and is the preferred choice of many first-time home buyers.  At the same time, the proportion of sales in the West Shore increased +6.0% from 26% in 2011 to 32% in 2016.

THE VICTORIA MARKET

Perhaps the predominant characteristic of Victoria’s real estate market in the 1st Qtr of 2017 is the shortage of supply and the accompanying upward pressure on prices.  Supply (i.e., the number of homes put up for sale) has not been this low in more than twenty-five years.  Demand (i.e., the number of sales) remains high, indeed many argue that sales would have been substantially higher had there been more properties available to purchase.  Sale prices continue to increase.  The differential between the sale price and the original list price has decreased. Indeed, most homes sold at or above their list price. Finally, properties are spending less time on the market.  The number of “residential properties” (i.e., all types of housing excluding lots/acreage and commercial properties) listed through the Victoria Real Estate Board’s MLS® in the 1st Qtr of 2017 was 2,453, down -26.0% from 3,316 in the 1st Qtr of 2016. Residential sales through the VREB’s MLS® totaled 1,955 in the 1st Qtr of 2017, down -14.6% from 2,289 in the 1st Qtr of 2016, but still up +26.5% from 1,546 sales in the 1st Qtr of 2015.  The sales-to-new-listings ratio was .80 (a remarkable figure for this time of year) even stronger than .69 last year.  Properties that sold in the 1st Qtr of 2017 were on the market for an average of 32 days compared to 49 days last year.  The average sale price of a residential property in Greater Victoria and other areas was $628,293 in the 1st Qtr of 2017, up +13.5% from $553,417 in the 1st Qtr of 2016.  The median sale price was $535,000 in the 1st Qtr of 2017, up +9.2% from $489,900 last year.  The figures for Victoria compare with average residential sale prices and year-to-date percentage changes of $950,185 (13.3%) in Vancouver, $624,704 (-8.4%) in the Fraser Valley, $834,628 (+25.6%) in Toronto and $459,337 (+2.6%) in Calgary for the first two months of 2017. THE MARKET INVENTORY As shown in Table 2, there were 981 properties active on the VREB’s MLS® database for the Greater Victoria area (i.e., excluding the Malahat, Up-Island and the Gulf Islands) on Apr 1, 2017, down -43% from 1,712 on Apr 1, 2016.  (This is the lowest the inventory has been on an April 1st in over two decades).

SINGLE FAMILY DWELLINGS (SFDS)

Sales of SFDs in Greater Victoria totaled 937 in the 1st Qtr of 2017, down -23.4% from 1,223 sales during the same period last year.  The average sale price of SFDs in the 1st Qtr of 2017 was $839,019, up +17.9% from $711,555 last year.  The median sale price was $734,000 in the 1st Qtr of 2017, up 17.9% from $622,500 last year.  SFDs that sold in the 1st Qtr of 2017 were on the market for an average of 29 days, down from 35 days a year ago.  The sales-to-new-listings ratio was .74 in the 1st Qtr of 2017, up from .50 last year.  As shown in Chart 4, both the average and median sale prices have been on a steep upward trend since the 4th Qtr of 2014.

CONDOMINIUMS

Condominium sales remained strong in the 1st Qtr of 2017 with total sales of 668, up +6.2% from 629 in the 1st Qtr of 2016.  The average sale price for a condominium was $393,852 in the 1st Qtr of 2017, up +17.8% from $334,235 last year.  The median sale price was $350,000, compared to $290,000 last year.  Condos that sold in the 1st Qtr were on the market for an average of 21 days, down significantly from 56 days last year.  The sales-to-new-listings ratio was .78 in the 1st Qtr of 2017, up from .76 last year.  As shown in Chart 5, the average and median sale prices of condominiums recently have shown a steady upward trend.

TOWNHOUSES

Townhouse sales totaled 180 in the 1st Qtr of 2017, down -27.4% from 248 last year.  The average selling price was $507,315 in the 1st Qtr of 2017, up +11.5% from $454,841 in the 1st Qtr of 2016.  The median sale price was $471,450, up +10.5% from $426,500 last year.  Townhouses that sold in the 1st Qtr of 2017 were on the market for an average of 26 days, down from 48 days last year.  The sales-to-new-listings ratio was .80, compared to .53 last year.  As shown in Chart 6, average and median sale prices have shown a steady upward trend over the past two years.

LOTS/ACREAGE

There were 57 sales in the 1st Qtr of 2017 compared to 66 sales in the 1st Qtr of 2016, 34 sales in the 1st Qtr of 2015 and 24 in the 1st Qtr of 2014.  The average and median sale prices of lots/acreage in the 1st Qtr of 2017 were $333,372 and $216,000 respectively.  (Note: the clear majority of these sales were in Sooke where land is comparatively less expensive). 

Summary of the CDN home sales activity across Canada till the end of March

Information provided by Sean Dhillon - Manager, Mortgage Specialist, Vancouver Island, TD Canada Trust

Overall as rates continue to decline, and they have dropped quite a bit in the past month, then the high home sales activity will continue in 2017.

Data Release: Canadian homebuyers brave the colder weather in March

· Neither higher mortgage rates nor colder-than-normal weather managed to slow the Canadian housing market in March. Canadian existing home sales rose 1.8% m/m in March or 6.6% from a year ago, and were at their highest level on record.

· Listings rose by more than sales (2.5% m/m), bringing the sales-to-listings ratio down a touch to 67.4%, from 68.3% in the prior month. However, the housing market remained well entrenched in seller's territory and upward pressure on home prices remained strong. The average sales price rose 8.2% year-over-year to reach $549,000, while home prices on a quality adjusted basis were up by 18.6% from last year – the fastest annual gain since the index was constructed in 2005. The speed of apartment prices (+16.3% y/y) is quickly catching up to that of single-family detached homes (+19.6%).

· The Greater Toronto Area (GTA) remained one of the hottest markets across the country, with home price growth topping 32% y/y on an average basis and 29% y/y on a quality adjusted basis. But, demand seems to be moving further out of the city center and into what were once more affordable markets. Sales were up just 0.4% in the GTA in March, but 2.6% across the rest of Ontario. Average home prices were up by over 30% in almost half of the markets in Ontario.

· Elsewhere, market activity was more subdued with the MLS composite home price index up moderately in Regina (+1.7%), Ottawa (+4.0%), Montreal (+3.3%) and Moncton (+4.7%), but still down in Calgary (- 1.2%) and Saskatoon (-1.5%) on a year-over-year basis. Meanwhile, home prices in Vancouver (+12.8% y/y) have retraced half of the loses experienced since August 2016 on a quality adjusted basis. However, the pick-up in prices in Vancouver is more of a reflection of tight market conditions, with listings tumbling to near-record low levels in recent months. Existing home sales were still down 37% from year ago levels in March. Key Implications · All eyes appear focused on the Ontario housing market as prices continue to race ahead of underlying economic fundamentals, such as population and household incomes. The speed at which home prices are rising have become a cause for concern with unsustainable home price growth at least in part attributed to speculative activity.

· The key question is however, "what will stop it?". As we look into the rest of 2017, the economic drivers are supportive of a continued acceleration in housing activity. The economy appears to be on a better footing, while interest rates have come down in the last month from their post-U.S. election peaks. The best available 5-year fixed mortgage rate is down 10 basis points from a month ago. Should the lower rates persist, home price growth could top 25% this year in Ontario, putting the onus on policy makers to take some action which could come as early as Ontario’s Budget Plan 2017, scheduled to be tabled on April 27th.

· As for the rest of the country, low interest rates will help offset the impact of relatively modest economic conditions and past changes to mortgage insurance qualification guidelines through most of 2017. Having said that, housing activity is likely to hold up given it’s more sustainable pace than that in Ontario as of late.

Sean Dhillon, Senior Manager, Mobile Mortgages TD Bank 250-818-1943

CMHC's Eric Bond Calling Victoria Market Overheated

CMHC Senior Market Analyst Eric Bond calls Victoria’s Real Estate market “Overheated”. In his opinion, the city of is facing a housing affordability crisis, with the average price of a home reaching $640,802 in March, up 11.3 per cent compared to March 2016. 

Put another way, the first quarter of 2017 saw the average price for a single-detached home increase by 19 per cent as compared to the same quarter last year.

The Victoria Real Estate Board reported the Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in March was $790,100 -  a 19.1 per cent increase from March 2016.

Despite the presence of strong market fundamentals like employment growth, increased population driven by younger demographics and low mortgage rates, CMHC doesn’t think the market’s price acceleration can be justified by these factors alone.

If you'd like to learn how CMHC makes their assessment, CLICK HERE