A Decade to Remember for Greater Victoria Real Estate

Over the past decade Victoria home prices increased by 128 per cent. Not only have they outperformed equity markets, but also almost any other type of investment one could have made at the end of 2001. Real estate returns in this area represented a sizzling 8.5 per cent average annual compounded rate of return.
 

If, after a decade of living in his home, an owner sells today, hoping to bank some cash, he’ll have to move to a lower-cost area, downsize his home, or both.

Many of us can attribute our increasing net worth largely to this unrealized, historical increase in the value of our home. But, will this trend continue for the next decade? Not very likely.

Whenever assets, be they gold, equity markets, or real estate, increase dramatically in value, the risk of a significant correction in value also increases. Real estate prices in Greater Victoria specifically now epitomize such risk.
 

In Canada today, it is estimated that some 43 per cent of total household income is needed by an average family solely to finance their mortgage, property taxes, and utilities. In British Columbia this figure exceeds 70 per cent. In Vancouver, it’s a horrendous 92 per cent. For Greater Victoria, a specific number is not available, but since our home prices are second only to Vancouver’s, we know that our costs are much higher than the Canadian average. Such costs are clearly not sustainable.

Either wages must rise dramatically – a highly unlikely event – or house prices must soften, if not drop drastically – especially in B.C. In Greater Victoria three years ago, about 20 per cent of active listings sold in any one month. Today that number is close to 10 per cent. With interest rates at rock-bottom levels propping up house values, we know rates can only move upward, eventually further dampening market activity and home values. Because of the premium location we enjoy in Canada, we are more likely to endure moderate pricing squalls over the next decade, rather than the devastating monsoon that has occurred in the U.S., but I would keep an umbrella close by.
 

A retired corporate executive, enjoying post-retirement as a financial consultant, Peter Dolezal is the author of three books. His most recent, the Smart Canadian Wealth-Builder, is available at Tanner’s Books.

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You have decided to buy a home. You've analyzed your budget, talked to a REALTOR® and figured out what kind of house you want. But, the most important step may have been left until last: picking the right neighbourhood.

Choosing not only the proper community, but also the right neighbourhood, can have a tremendous impact on your family's happiness and the value of your investment.

The first thing many people do when considering a move is drive around various communities gaining a sense of which areas they like. Buyers find out how close the major highways are and if the neighbours keep their yards tidy. Most will make sure they know the location of the closest mall. But what about public transit, colleges, schools, libraries, parks, recreation centres and fire or ambulance stations? Is the local police station close to your prospective neighbourhood? All of these factors can make or break a decision to buy a certain property.

Your REALTOR® can provide you with a wealth of general information on different neighbourhoods. For detailed information, it's a good idea to contact the appropriate agency directly. Here are a few suggestions to consider:

Contact the municipality

Municipalities have a wealth of information on hand. Some distribute brochures and booklets containing the locations of colleges, libraries, ambulance stations, hospitals, parks and transit stops. It's also a good idea to check the location of recreation centres, swimming pools, ice rinks and the like, along with the programs they offer.

Call the local police and fire departments

Ask them how many stations service the community and their locations. Also ask about response time to emergencies.

Contact local School Boards

The Greater Victoria, Saanich, Sooke and Gulf Islands School Districts will be able to give you information on the locations of elementary and secondary schools within their jurisdictions. It's a good idea to mark the routes your children would take and then walk them yourself.

Your REALTOR® and MLS®

Your REALTOR® will be able to offer you general advice and information on many of the above topics. Remember, your REALTOR® has access to the Multiple Listing Service® (MLS®) and can provide you with a customized list of properties available for sale in the neighbourhood of your choice that meet your needs, wants and budget.

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MLS® property information is provided under copyright© by the Vancouver Island Real Estate Board and Victoria Real Estate Board. The information is from sources deemed reliable, but should not be relied upon without independent verification.