Volume 31 | December 2024

Your Monthly News & Updates

I'd rather regret the things I've done than regret the things I haven't done.” 

-Lucille Ball

2024 Victoria real estate market year in review and into the future 2025

The 2024 real estate market outperformed 2023 in sales, despite restrictions imposed by the provincial government. Increased activity was spurred by declining interest rates, which began easing in September, bolstering buyer confidence.


While 2024 featured more months with over 3,000 listings than in previous years, inventory levels remained below long-term averages. Elevated sales absorbed much of the available supply, keeping the market tight. If inventory stays constrained while demand rises, upward pressure on prices could reemerge. To address this, the Board plans to continue advocating for gentle density development in 2025.


The rate-cutting cycle, paired with a resilient economy, stabilized the housing market with modest gains in sales and prices. However, affordability challenges remain significant. While some borrowers benefited from lower rates, many—particularly those renewing mortgages—continued to face higher borrowing costs.


Despite the easing, key inflationary pressures persist. Stubbornly high energy prices, rising rental costs, and elevated mortgage payments have contributed to ongoing price pressures. Analysts warn that these factors, coupled with persistent economic slack, an elevated unemployment rate, and uncertainty regarding potential U.S. tariffs under the incoming Trump administration, will keep affordability under strain and that includes new developments.


Outlook for 2025


Looking ahead, the outlook for 2025 remains cautiously optimistic. Following five rate cuts in 2024, totaling 175 basis points, the Bank of Canada is expected to slow the pace of reductions. By mid-2025, the overnight rate may decline further from 3.25% to a range of 2.00%–3.00%, depending on inflation and economic conditions.

Bond yields, which directly impact fixed mortgage rates, are projected to hold steady at around 3.00%. For borrowers, this suggests continued gradual relief for variable-rate loans and greater predictability for fixed-rate mortgages as the year progresses.

With the stabilization of interest rates and efforts to address inventory shortages, 2025 holds potential for a more balanced housing market. However, persistent economic challenges and affordability concerns will remain key themes in the year ahead.

Information in the charts above using the VREB and VIREB statistics calculator provided to determine month-to-month reports on residential units in the Greater Victoria and Nanaimo regions. I use the overall average statistics to determine the monthly price of sales.

WHAT IS NEW

BC Home Flipping Tax Now in Effect

As of January 1, 2025, the BC Home Flipping Tax is now in effect.


This new tax is distinct from the existing federal property flipping tax and specifically targets short-term property sales within British Columbia. 


Here’s how it works: 

  • The tax applies to income from sales of residential properties, presale contracts, or assignments owned for less than 730 days (two years). This includes properties bought before January 1, 2025, if they are sold on or after that date and owned for less than two years.  
  • The rate is  20 per cent for sales within the first 365 days of ownership, gradually decreasing until it is eliminated at 730 days.  
  • This tax applies to any person or entity (individual, corporation, partnership, or trust) selling property within BC, regardless of residency.  
  • Exemptions include certain primary residences, though exemptions are subject to specific conditions and filing requirements. 

Coffee Break News - Opinion

Mayor Alto wants developers to build 33 square meters units for housing in downtown Victoria

Just how small is 33 square meters? At roughly 350 square feet, it’s comparable to a studio apartment in The Janion—units originally designed for short-term rental use in Victoria, not long-term living.


Despite this, a City of Victoria staff report recommends council consider allowing developers to build micro-units in new projects, citing minimum standards. Mayor Marianne Alto supports the idea, stating it’s an effort to increase housing supply in a tight market.


“There is enough demand for these types of micro-units to entice developers to build them,” Alto asserts. She adds that shifting demographics, including individuals wanting smaller living spaces, justify catering to this segment of the market.


However, this optimism seems detached from current market realities.


A Troubling Trend


Units of this size are already struggling in Victoria’s housing market. Condos in The Janion, some as small as 250 square feet, have faced severe challenges attracting buyers. Many remain unsold, and those that do sell often fetch prices significantly below their assessed value.


The City of Victoria’s decision to reduce parking stall requirements for downtown developments has compounded the issue. Without parking, these micro-units lose further appeal, especially to buyers seeking convenience and accessibility. The assumption that residents will rely on bike lanes or walking hasn’t aligned with buyer preferences.


The Impact of Policy Changes


Mayor Alto’s previous move to abolish non-conforming short-term rental rights exacerbated the situation. Once marketed as premium investments, units in The Janion have seen steep declines in value. BC Assessment recently devalued many by over $100,000 compared to last year—a harsh blow to buyers who paid a premium, only to watch their investments erode.


Unanswered Questions


This raises critical concerns:

  • If micro-units are already struggling to sell, how will new developments fare?
  • Who will invest in properties that lack buyer demand and are subject to policy shifts that diminish their value?
  • Are these units truly meeting housing needs, or will they add to the surplus of unsold properties?


The city should tread carefully before approving a plan that might worsen existing issues. Without addressing the flaws in previous strategies, encouraging more developments of this type risks further destabilizing an already fragile market.


This version underscores the disconnect between Mayor Alto’s proposal and the current challenges facing small-unit housing in Victoria.


Here's a riddle to ponder:


I speak without a mouth and hear without ears. I have no body, but I come alive with the wind. What am I?

Take a guess! 😊

You have the answer! Email me


Win a Tim Horton's coffee and a donut on me!

How did you like this email?
Positive        Neutral        Negative
site-photo-1364059064102.jpg
Facebook  Linkedin  Instagram



Consider incorporating my services if you, your family, or your friends are exploring real estate transactions in the current market. I'm here to assist you or them in discovering the ideal home or confidently selling your property.

Fair-Realty-black.png

Contact: (250)888-7042

Email: dastyk@shaw.ca