RE/MAX of Western Canada: First-Time Buyers Report (Victoria, B.C.)
First-time buyer activity was healthy out of the gate in 2011 and continues to build, despite market momentum that is more moderate overall. Close to 830 properties changed hands to the end of February, compared with 1,039 during the same period one year ago. Softer values and a good selection of available product helped buoy entry-level sales early in the year, but prices have since firmed up, now virtually on par with 2010 levels. The majority of first-time buyers are spurring demand under $325,000. Just over 220 sales have been recorded under that threshold so far this year, comprising 26 per cent of market activity—the same percentage as in 2010.
The bulk of those sales—73 per cent—were condominiums. Those looking to get their foot in the door to home-ownership will find an adequate supply of condominiums and town homes listed for sale, but inventory remains tight for single-family homes priced under $325,000—only 62 such properties had been listed at the end of February. Those that can be found usually require considerable renovation. For most entry-level purchasers in Victoria, the detached home remains out of reach, with typical starting prices now ranging between $450,000 to $500,000. As a result, affordability is the number one factor driving growth in the condominium sector, with units starting from $200,000 for a 400 to 500 sq. ft. apartment in the downtown core. Yet, the lion’s share of first-time buyers are anteing up $300,000 plus for larger suites, boasting 800 to 1,100 sq. ft.
While the vast majority of condominiums are situated in the downtown core, builders have sought to capitalize on the strengthening demand among first-time buyers for affordable product, offering new suburban condominiums starting from $230,000 for 600 sq. ft. This option provides a little more bang for the buck, but adds a 20-minute commute.
Downtown, however, continues to be most sought-after, particularly among young professionals. Alternatives have emerged in the detached segment, as well. Developers have successfully introduced small lot subdivisions in the suburb of Langford, where a 1,300 sq. ft. home on a 33 x 60 ft. lot starts from just $360,000. While there’s little yard to speak of, the neighbourhoods have been designed with plenty of green space, park trails, and recreational areas sought-after by young families. Those seeking out detached homes are laying down roots in areas such as Langford, Colwood, View Royal and Sooke. Despite the necessity of being budget conscious, location has become very important to first-time buyers, with most willing to pay a little more for the right locale. Consumer confidence remains solid and demand is expected to be steady as the spring market gets underway, with new financing restrictions forecast to have little impact overall. Prices should edge up slightly, but an improving economic and employment picture, combined with historically low interest rates, will continue to prop up demand in the entry-level segment.
Information from RE/MAX of Western Canada (www.remax-western.ca)