2015 Real Estate Outlook
Most Victoria real estate analysts are predicting a similar year to what we just experienced in 2014, which ended with an 11% increase in sales from the previous year combined with an approximate 10% drop in listing inventory, and a 1.8% increase in overall single family home prices. The result was a firming up of the market, leading to a small tilt in favour of sellers. During 2014 and up until today, homes still must be priced correctly or they will not sell, and if they are priced well, the buyer demand is high, with some areas seeing a rise in multiple offer situations. This trend has continued into 2015 already, and should continue for the bulk of this year, pending any major global melt downs, or significant crisis due to oil price drops. Interest rates held firm in 2014, but have already been on the downward trend in 2015 due to the 25 point decrease by the Bank of Canada in January of this year. We are now at historic low interest rates with some lenders offering 2.69% for a 5 year mortgage! The global inflationary pressures that were building a year ago seem to have evaporated with the massive drop in oil prices over the last 6 months. However, if the oil prices rebound, which they have done so in recent weeks, then the low interest rates may not last that long. However, the prediction is still for low rates until at least the middle of 2016. We will see…
When will house prices start to go up again? This is a good question. Most analysts have predicted a small overall increase in prices for 2015, but nothing dramatic. However, if the listing inventory continues to drop, and sales continue to rise, and the multiple offer situations increase, we may see prices start to increase sooner in Victoria, and the end result might be a larger overall increase by the end of this year.
The historic patterns of market cycles are what usually predict these prolonged slow and busy periods in our economy. The typical up market or down market real estate cycles usually last about 7-8 years, or 14-16 years for a full down cycle and then an upswing. The last upswing which started in 2001 ended in the fall of 2008. The current downswing, apart from a brief rebound in 2009-2010 due to the government stimulus packages, is now in its 7th year. That would mean that the bottom should hit sometime in 2015, or into early 2016, which means prices would then start rising at that time. Again, we’ll see….
The main statistical tracking indicators (listing inventory, sales, and interest rates) are pointing to continued improvements for 2015. The Victoria listing inventory has continued to drop for 2 years in a row now, which bodes well for sellers. Interest rates are back to record lows, which is great for buyers. Prices appear to be stable, and sales are poised to continue to increase. These are all good signs for the market. We might not have the peak prices we had a few years ago, but values will most likely be back to those levels in a few short years, barring any unforeseen global interference. As a result, the lower priced property buying window of opportunity in Victoria may be slowly evaporating, as we appear to be getting closer to the next upswing.
The dark horse for 2015 will be the effect that the low oil prices have on the overall economy. I don’t feel that Victoria or BC will be affected to the degree that the larger oil producing provinces will be, so we should remain on solid footing over the course of 2015. Victoria is still a desirable relocation city, and we should see increased in-migration to Victoria as the overall global economy improves, and as supply of jobs in the oil industry outside of BC continues to decrease due to the lower global oil prices.
To conclude, the market should remain balanced and stable throughout 2015. I do not foresee a bubble bursting or a significant increase in prices either. I think interest rates will remain low for the balance of the year, but the good deals in some areas may dry up as the inventory levels continue to decrease, resulting in fewer choices for the competing buyers of these popular properties. The activity and level of interest for the well-priced listings should continue to be strong for the rest of this year, and multiple offer situations will continue to drive the price up in some areas. That is good news for the overall market. Let’s hope it continues throughout the year, and that everyone will have a successful 2015!
In the meantime, here are a few links to various real estate sources that may be of interest to you:
1. Click on this link and hit “Like” to obtain current postings from my real estate Facebook page: VictoriaBCProperties
2. Click this link for details of my Late Winter Newsletter: Newsletter
3. For the latest historical statistics from the Victoria Real Estate Board, click here: VREBStatistics
4. Search for listing at my Victoria BC Properties website: DaleSheppard.com
All the best to you and your family this year!
Dale.
