Victoria, BC Market Update: *NEW* Benefit for First Time Buyers (Save $8K on Tax!) & More Changes! 🏡

We’re certainly feeling an increase in market activity, which is beginning to show in the February stats.

New listings and steady prices are good news for Victoria’s real estate market.

Victoria Real Estate Board’s February 2024 Market Statistics

Missing Middle Housing and Upcoming Short-Term Rental Restrictions

Townhome sales increased this past month, which is noteworthy as townhomes are part of the missing middle housing that the City of Victoria has been referencing in new regulations. Which allows for house plexes, corner townhouses, and heritage conserving infill in traditional residential areas. 

The City of Victoria is a relatively small part of the Capital Region District as a whole, but we can hope that municipal governments will continue to recognize the need for missing middle housing to improve affordability for people living in Greater Victoria, and will work to streamline the approval process for such housing to be built. 

Something I talked more about in our market update last month, was the province’s upcoming restrictions on short term rentals in an effort to bring more condo units to the market either as long term rentals or for buyers to purchase. However, this initiative is unlikely to make a significant difference in terms of the need for more missing middle housing, as many of the more affordable units being used as short term rentals were microunits or smaller condos that would be better suited for individuals or two-person households. 

Speaking to that–we did see a slight decrease to the benchmark condo price in February’s stats when compared to January, but an increase when compared to the stats for February last year, however, the news on short term restrictions did not come out until October of last year.

Bank of Canada Interest Rate Announcement Schedule for 2024

Lots of talk about rates dropping this year but we’re likely to see a slow and gradual decrease.

The recent holds have contributed to an increase in confidence navigating the market, complimentary to more inventory and relatively stable prices.

January 24: Hold at Policy Rate of 5%

March 6: Hold at Policy Rate of 5%

April 10: TBA

June 5: TBA

July 24: TBA

September 4: TBA

October 23: TBA

December 11: TBA

The BC Budget for 2024 included upcoming changes to the property transfer tax exemptions for first time buyers and new builds, as well as the BC Home Flipping Tax.

Changes to Property Transfer Tax Exemptions for First Time Buyers

Previously properties up to $500,000 were eligible for a property transfer tax (PTT) exemption, with partial exemptions up to $525,000.

Starting April 1, 2024, properties up to $835,000 will be eligible for PTT exemptions on the first $500,000 (that’s $8,000 in savings for qualifying first time buyers).

PPT can’t be worked into the mortgage so this helps with lowering the amount of funds needed to enter the market. 

We do have an updated blog post on the First Time Home Buyers’ Program.

BC Home Flipping Tax

Also introduced in the budget was new legislation regarding the BC Home Flipping Tax. Previously, any profits made from the sale of a residential home within one year of buying it were subject to the tax.

If this new legislation is passed, starting January 1, 2025, any profits made from the sale of a residential home within two years of buying it are subject to the 20% tax. (Some exemptions do apply).

You could say this is more of a symbolic gesture by the government, especially in today’s market, property flipping is not super common, however, the cost of housing in BC is an ongoing topic and this announcement, while unlikely to have a significant effect for people looking to enter the market, is clearly intended to appear as an action that is addressing the issue of affordability.

Next Steps?

Homeowners: Contact us for a free, no-obligation home equity check to gain a deeper understanding of your position in the market. 

Buyers: We’re here to help, no matter what stage you’re at, to determine the most effective pathway towards achieving your real estate goals. 

Contact us: 250-634-2141 (call or text) or [email protected]

Schedule a call with us.

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With gratitude,

Alex Hughes* and Ricki-Lee Jewell, Victoria, BC Real Estate Agents

*Personal Real Estate Corporation