In the movie City Slickers, Jack Palance, (Curly) utters a now-famous line about how the secret to everything comes down to “one thing.” He holds up a finger, smiles knowingly, but never discloses what the “one thing” might be, leaving Billy Crystal (Mitch) completely befuddled and unsatisfied.
Mike Nugent, president of the Victoria Real Estate Board (VREB), maintains homebuyers or sellers looking for a single explanation of everything in Victoria’s current real estate boom are just as unlikely to find a simple factor for the market conditions.
Nugent said it’s obvious Victoria is riding a strong housing sales market right now and there is no end in sight.
A total of 1,286 properties sold in the VREB region this April, a 53 per cent increase from the same month last year. But Nugent stressed a host of factors have combined to cause the boom in the market and trying to decipher the causes to gain an advantage is not likely to be successful.
“I’ve heard people say that it’s foreign buyers, or buyers from the mainland cashing in and moving to Victoria who are pushing up demand, but it’s not the main factor…again, there is no one thing,” said Nugent.
Popular wisdom attributing the hot market to foreign buyers is not borne out by statistics complied by the VREB which indicate that buyers from the U.S. have increased by only 0.2 per cent and buyers from Asia showed a similarly modest increase of 0.1 per cent.
Nugent acknowledged some truth in the belief that Lower Mainland buyers are cashing in on a bullish real estate market in Vancouver and surrounding areas and moving to Victoria, an action leading to increased demand here. VREB statistics show, in 2015, 8.2 percent of buyers originate on the mainland.
“If you look at the statistics, Victoria generally has a movement of about 25,000 people. Generally that number evens out, with about half moving off the Island and half moving here to stay. Last year we had a net positive movement of about 6,000 and that increase in numbers is significant given our relatively small population,” said Nugent. “It’s bound to put pressure on the market.”
But he was quick to add a plethora of other causes are feeding the boom.
“Real estate is always cyclical, and we are coming out of what was a steadily declining market after the 2008 financial crisis. We had almost five years where the market was very flat and the herd mentality being what it is, people just didn’t want to commit to a home purchase because they were concerned about the economy and saw others holding off…so they did as well,” said Nugent.
He said the same group think has now fueled a belief that it’s a time to get into the market for a new home.
Another factor adding to the increase in housing sales lies in demographics, said Nugent. Aging baby boomers are downsizing, selling the family home to get into smaller accommodations, while the millenial generation is entering a point in their lives where a family home is wanted by many.
Finally, Nugent said Victoria’s geography means the amount of land for new construction is very limited.
“We have some densification with the construction of condos in the downtown area of Victoria, but the main possibilities for new housing (in the region) are out on the West Shore. That increases the demand for housing in the downtown area and when homes do become available near downtown they can generate multiple offers.”
Regardless of the causes for the current real estate boom, the best advice when buying or selling a home is still to use a reputable realtor, said Nugent.
“Work with a realtor…they know the market and they know what they’re doing.”