Canada's Housing Bubble

Jul 30, 2010 HouseHuntVictoria

Victoria, BC -- Sales volumes are way down. Price changes are creeping through the PCS/Matrix systems of the VREB REALTORS®. Sellers are likely getting frustrated with the lack of attention to their "perfect Victoria properties." Will they de-list and reduce inventory or drop their asking prices in an effort to beat the falling market?

The difference between a seller's market, a balanced market and a buyer's market in Victoria seems to be about 1000 available units - under 3500 units (seller's with rising prices), 3500 to 4000 (balanced, with flat to slight rise) and 4000+ (buyer's with negative price pressure mounting over time) - in the peak selling months of April, May and June. The market will bleed listings for the rest of the year, most likely at the same rate as it loses buyers. The sales to active listings ratio will likely remain below 20% keeping us safely in buyer's market territory even as total listings volumes drop.

There are approximately 152,482 occupied private dwellings in the Greater Victoria area. Current active listings number 4435 or 3% of total. Approximately 3% to 4% of Victoria housing stock is bought and sold each year. I did a quick comparison to another real estate obsessed city, Vancouver, to find that our market turnover numbers are extremely close (within 1%).

Do we have a small market - meaning a small number of units changing hands setting the market each year? If so, does this skew the true market value? I'm willing to bet that if these two questions are answered affirmatively, the same forces that skew on the upside will skew on the downside, likely to a very similar degree. Get ready for falling average prices, they are almost guaranteed for the rest of 2010, because the spring selling period is over, and it wasn't a good one.