Victoria’s Real Estate Market – Show Me The Beef!

I attended the Annual Victoria Real Estate Board election meeting this week where Cameron Muir, Chief Economist of BC Real Association spoke. He had some strong, positive news to report and feels the media and news are exaggerating some of the declines these past few months and feels as we head into 2013 we will see about 2% increase in prices within Victoria, after only a  3.5% drop so far this year on average prices (keep in mind higher-end properties and townhouses/condominiums have seen some larger declines).

Cameron quoted three strong economic factors that are at play which in his opinion, won’t lead us into a recession or real estate bubble within Canada and the Province:

 1.            Strong full-time job reports within BC and especially that  12,000 full-time jobs were created even though 5,000 part-time jobs lost, but it’s been the highest number of full-time positions created during the past decade! This is good, solid underpinning heading into the housing market next year if buyers have jobs, feel secure and can qualify for credit.

2.            Population growth is continuing on par over the past few years and not declining as it did in the 90’s. We have 4.5M people in the Province with the boomer population coming in a big wave soon and Victoria and the Island still targeted as their preferred retirement communities to relocate to.

3.            Interest Rates are continuing to be at historic lows, with only small incremental increases coming but not in the immediate future. The news these days and last weekend’s National Post quoted a story about Canadian household debt climbing but Cameron cautions the statistics don’t paint the entire picture and that if the averages they are using over the past 25 years should be factoring in the average 5 year mortgage rate which is 10%: right now we are no where near that level of interest rate. He is not concerned and especially that 2011 had some dismal employment stats but 2012 and heading into 2013 can only improve these numbers and confidence in the market. He also said stats show after credit tightening there is a pattern of decline and then an upward trend and we saw that in 2006 and if the same is true present day, we have seen most of the fall out of this past spring’s Federal government policy changes.

 Although there are still some major headwinds the Canadian economy is facing with global and US problems, it would take a major macro economic shock (i.e. recession, sharp increase in unemployment and household financial credit stress over a vast number of homes) for us to see some major declines in pricing within the Canadian housing market and within BC. Our Canadian economy is still “2 steps forward, 1 step back” and will finish the year like that.  Cameron showed an interesting slide in his presentation with the statistic for sales-to-active listings throughout the Province and Victoria ranked second at 12% which is a very strong showing.  

Another positive indicator is BC’s exports are so diversified especially in comparison to Alberta and Ontario who rely to heavily on the US and this has already helped stabilize the Province. In his opinion, he forecasts a continuation of flat, moderate pricing over the next 1-3 years, with no dramatic increases or drops. Cameron said “show him the beef” from the critics who are quoting the “sky is falling in” and “prices are going to drop 20, 30 to 50%” and the housing market is going “hell in a handbasket” – his economic factors and principals just don’t support these theories or comments.

At the end of the meeting, the Victoria Real Estate Board of Directors for 2012-13 was announced and I am proud to be part of such a professional, committed and forward-thinking Association of Realtors!