by Mary P. Brooke    |         January 4, 2010

In the breathtaking scope of one year, the real estate market in Sooke (and Greater Victoria) made a dramatic recovery from the doldrums seen only a year ago. The economic recession that arrived with full force at the end of 2008 (due to forces generated in the US economy and impacting Canada and the world) ushered in an uncertain and price-lowering phase of real estate sales in January-March 2009.  But property sales continued and confidence grew with the support of an overall stable Canadian economy. Now, as we emerge into 2010 and a new modern decade, housing prices in Sooke are back to the prices of fall 2008, in fact have set a new record of $651,316 for Greater Victoria at year end 2009. Has the storm blown over? Not quite.

While the real estate recovery appears strong there is -- below the surface -- the shaky reality that most homes are now clearly unaffordable by average working families and that mortgages again (since last summer) require a minimum 5% downpayment and likely also a stronger borrower financial profile. There is even talk (musings from the federal government) that minimum downpayment requirements might be increased in 2010 and that the current maximum of 35 years amortization might be downsized.

This changes the mortgage-lending landscape to one where prospective homebuyers (first-time and otherwise) must have a pile of cash in the bank (or available from supportive family members) and where their employment and/or financial profile of the past two years must be stronger than might be possible for many. The advent of the 12% HST tax (which will be payable on Realtor fees, legal fees, moving fees and other closing costs starting July 1, 2010) puts some heat under the entire scenario.

"Some are speculating that the feds are hoping that by just talking about it (the prospect of downpayment increases and amortization shrinkage) that the talk will have the desired effect," says Stuart Price, a Realtor with Sutton West Coast Realty, Victoria. The hoped-for effect being, of course, that banks will require stricter commitments from buyers in most circumstances.

"I think the housing market will be active earlier in the year than usual, because people will want to get moved and established in their new homes (with new appliances, etc) before the HST kicks in at the beginning of July," says Helen Jones, owner of Jones Co Real Estate in Victoria.  Usually the Greater Victoria real estate sales momentum picks up in March each year, maintains strength through May or June, then subsides during the summer months. This year might see strong sales right from the start of the year.

"Given the significant worldwide economic downturn we were very pleased (in 2009) to see the real estate market recovering so quickly," said Randi Masters, president of the Victoria Real Estate Board in that organization's January 4, 2010 news release. "With interest rates expected to remain low in the coming months, we are anticipating a strong and balanced market in the coming year."  The MLS statistics show that while there was a price slump during late 2008 and early 2009, prices overall did not change much from high levels seen in 2007and early 2008, and ended up at a record high at 2009 year end.

An average house sold for $450,068 in Sooke last month (Dec.2009) which is up by a large jump from $416,548 in the previous month (Nov.09). Townhomes averaged at $345,000 in December, down from $369,680 in November. Condos sold on average at $263,333 in November (no condo sales in Dec.).  As newer housing product emerges into the Sooke market, MLS average prices will increase. How long will Sooke maintain its reputation for affordable property ownership?  At least for a while, comparatively speaking. An average home in central Victoria now costs over half a million dollars ($550,221 in Dec.09); in Saanich East, which tends to be a bell-weather area for the direction that prices are heading in Greater Victoria, the average house sold for $640,903 last month (Dec.09). The overall average house price for Greater Victoria (but not including the Gulf Islands) was $651,316 in the last month of 2009, with a 6-month rolling average of $601,237 (i.e. July to Dec. 2009). 

While 2009 saw a sales volume (number of properties sold) increase of 24% over 2008 in Greater Victoria, there was a substantial decline in the number of properties for sale in Greater Victoria last year. By the end of December there were 2,557 properties available for sale, down 33% from a year earlier.  MM

See current market statistics for the Greater Victoria MLS.

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