Knowledge is power. There is a lot of noise out there. We are passionate about getting you the information you need to feel confident in today’s market.
We answer 10 frequently asked questions from buyers, sellers, and investors in Victoria, BC:
What is the state of the market? Or, is the market going to crash?
Several factors contribute to the resilience of Victoria’s housing market, including low supply of housing and the inherent desirability of the geographical location. It is highly unlikely the market is going to crash.
2021 Market Notes:
– Record low interest rates;
– Record low inventory;
– Intense market for buyers;
– Unusual amount of unconditional offers submitted in order to compete;
– Steep, and unsustainable, price increases.
2022 Market Notes:
– Aggressive hike in interest rates (policy rate moved from 0.25% to 4.5% between March of 2022 and January of 2023);
– Buyer fatigue;
– Mid-way through 2022, prices began to decrease, dropping about 11%.
2023 Market Notes:
– After the January 2023 announcement, the Bank of Canada held the policy rate at 4.5% for several months. This gave buyers time to adjust to the new rates in general, as well as time to examine and consider the long-term implications of buying at a higher rate, but within a less competitive market;
– Market activity increase;
– Steady price increases, likely to be impacted by the June and July interest rate increases;
– Suspect prices to stabilize, perhaps plateau for a while.
Will real estate in Victoria ever become more affordable?
Affordability in Victoria, BC is a big topic, and for good reason. BC has one of the highest ratios of income to home prices at 5.4, and Victoria specifically sits at a ratio of just over 6. If you look across Canada, and remove areas like Victoria, Vancouver, and Toronto, the income to home price ratio drops to just over 2.
The reality is that demand is consistent in Victoria and home prices aren’t just going to come down; however, there are two possible approaches we are seeing in this area:
🛠️ Changing how we build here—building higher density to increase the number of homes available, AKA the “missing middle” initiative. Victoria has supported this action by removing the rezoning process that was previously required to build high density on single family zoned lots.
💵 Lowering the upfront costs of purchasing for buyers—mainly through down payment support. It’s no secret that BC’s First Time Home Buyers Program falls short for buyers in Victoria looking to save on the property transfer tax for their first home, as only homes up to $525,000 or less qualify for a partial exemption.
However, we are seeing new initiatives come out, including:
🌇 Langford’s Attainable Home Ownership Program
🗝️ The Lake at Kettle Creek’s Deposit-to-Own Program
💲 BC Housing’s Affordable Home Ownership Program (matching up to 10% of the down payment required for qualifying pre-sales, such as the Haven by Chard Development)
I need to sell before I buy, when should I get my house on the market?
It’s quite common that homeowners who are looking to make a move need to sell their current home in order to comfortably afford their new home; however, there is also the concern of finding a place to buy before selling your current home—especially following a period of low listings and high buyer competition.
With options like bridge financing available, the question then becomes: should I buy before I sell, or sell before I buy?
Your personal circumstances, local markets, and properties in question will all play a role in this answer.
There are two subject clauses, or ‘conditions’, that we can utilize in these scenarios: a seller’s subject that the deal will not be completed until you have secured a place to buy, or a buyer’s subject that the deal will not be completed until you have sold your current home.
It’s important to consider that either subject will have some effect on your negotiating power.
If a seller accepts your offer to buy their home subject to the sale of your home, there is generally a time clause included. In the case of a seller’s time clause, if another buyer presents a satisfactory offer to purchase the home, the seller can enact this clause which then gives you a finite period of time to close on the deal whether your current home is sold or not, otherwise the contract is terminated in order for the second buyer to come in.
We can discuss all these factors in detail as they relate to your situation. Generally speaking, if you are planning on making an offer to purchase subject to the sale of your home, our advice is to have your property listed, or ready to be listed as soon as possible at the time of the offer, to increase the likelihood of your offer being accepted, and decrease the potential pressure while waiting for your home to be sold in order to complete on your desired new home.
How are real estate agent fees paid?
Real estate agent fees come out of the purchase price for the home, meaning that sellers are paying the real estate agent fees.
The fees paid by the seller are split between the seller’s agent and the buyer’s agent.
There are, however, other additional costs involved with purchasing a home that buyers should be aware of, such as property transfer tax, home inspections, and title transfer.
When you have a seller or buyer consultation with us, we bring a net sheet to outline the typical costs involved so you know what to expect from day one. ☑️
What programs are available for first time home buyers in BC?
BC’s First Time Home Buyers’ Program
💵 Allows you to save up to $35,000 as an individual, tax-free for the downpayment on your new home (withdrawn from your RRSP account, money must be in the account for 90 days**).
💵 Property transfer tax exemptions on properties up to $525,000 (max eligible for a partial exemption).
First Time Home Savers Account
💵 Allows you to save up to $40,000 as an individual, tax-free for the downpayment on your new home (can be used in conjunction with RRSP savings, but can only contribute $8K per year).
Other programs (limited eligibility):
🌇 Langford’s Attainable Home Ownership Program
🗝️ The Lake at Kettle Creek’s Deposit-to-Own Program
💲 BC Housing’s Affordable Home Ownership Program (matching up to 10% of the down payment required for qualifying pre-sales, such as the Haven by Chard Development)
Hopefully, we will continue to see more programs that support residents looking to purchase their first home in Victoria, BC.
Are foreign buyers driving up home prices in Victoria, BC?
The short answer is, no, foreign buyers are not driving up home prices in Victoria, BC.
While the federal government passed a foreign buyers ban in 2022, it is noteworthy that foreign buyers only made up ~1.56% of annual sales in Victoria at that time.
There is, however, a growing number of people moving to Victoria from other cities. In 2022, about 75% of annual sales were made up of Vancouver Island residents, with many buyers coming from the Lower Mainland, Toronto, and Ottawa regions.
It’s no surprise that Victoria is a sought-after place to live. While this lessens the likelihood of drastic market changes, it also contributes to Victoria’s home prices tracking relatively high.
Do I need to pay property transfer tax when buying a home in Victoria, BC? Are there any exemptions on property transfer tax?
🗝️ Property transfer tax:
– Is separate from your annual property taxes;
– Cannot be worked into your mortgage;
– Is due when title transfers to your name;
– Paid by the buyer.
💸 Amount of property transfer tax you will owe:
– 1% of the purchase price up to and including $200K;
– 2% of the purchase price greater than $200K, up to and including $2M;
– 3% of the purchase price greater than $2M.
– Further 2% on residential property over $3M.
📋 Exemptions:
– First Time Home Buyers’ Program exemption is only on properties $500,000 or less (partial exemption for properties up to $525,000;
– New build exemption on new builds $750,000 or less (partial exemption for properties up to $800,000);
– Some exemptions for property transfer between families in cases involving loss of life or divorce.
Most people purchasing property in BC will be paying property transfer tax. It’s on our buyers’ net sheet for you to allocate to your budget. ☑️
Do I need to get a home inspection? Is a home inspection worth it?
Home inspections are an important and valuable step in the home buying process! 🔍
No home is perfect, and getting a home inspection does not suggest the seller is hiding something.
It’s critical we have a thorough understanding, from an expert’s perspective, regarding any maintenance or repairs that may be necessary in the near future.
It’s not uncommon for a home inspection to uncover issues the seller was not aware of, often these are easy-to-fix and unlikely to impact the sale, sometimes they are significant and result in negotiation or a decision not to complete on the deal.
The takeaway: a home inspection provides valuable insight so we can make well-informed decisions regarding the decision to purchase.
How do I prepare my house before selling? Tips for sellers:
When it comes to preparing your home to sell, exceptional marketing materials is a nonnegotiable from us. We take our presentation of your home incredibly seriously, investing in high-quality images, video, 3D virtual tours, print materials, and target marketing to get your property in front of as many prospective buyers as possible.
When you are considering changes to make before listing your home, there are many factors that play into how best to prepare your home to sell: meaning the return on value is worth your investment.
Generally, if you are keen to make updates to your home in preparation for selling, we recommend less-intensive changes that focus on a positive first impression that appeals to the widest range of buyers, such as:
– A fresh coat of paint, leaning towards neutral color choices.
– ‘Curb appeal’: adding fresh flowers, trimming up any shrubbery or lawn edges, cleaning up the windows and gutters, etc.
– Removing clutter and personal items to showcase the features of your home and help potential buyers envision the space as their future home.
We are happy to discuss how best to prepare your home to sell in more detail during your seller consultation with us.
Check out these blog posts for more tips for sellers and homeowners:
– High Value Home Renovations: What’s Trending in 2023
– Selling Your Home in Victoria: How to Get the Best Price in Today’s Market
– Selling a Home in Victoria, BC
How long will it take to sell my home in Victoria, BC?
A good question with no one-size-fits-all answer! We prioritize pricing your home effectively for a successful and timely sale.
Your unique home, neighbourhood, and market factors will all contribute to the length of time it takes to sell your home; however, we can discuss average days on market stats relative to your property during your seller consultation.
You can count on us for your next move.
We hope you found this Q&A helpful! Please never hesitate to reach out with your market questions, we appreciate the opportunity to connect with you.
No matter what stage you’re at, we’re here to help,
Alex and Ricki-Lee
Additional resources:
Book a free home valuation with us.
Sign-up for our monthly e-newsletter and download our FREE Buyer’s and Seller’s Guides.
Contact us to book a buyer or seller consultation.
Email us at [email protected], call or text 250-634-2141.
Thank you for being here,
Alex Hughes* and Ricki-Lee Jewell, Victoria, BC Real Estate Agents
*Personal Real Estate Corporation
