Condo Sales Plummet 18.5% in Victoria, Reflecting National Trends

Sales of condominiums in Victoria, a city on southern Vancouver Island, have experienced a significant decline, dropping by 18.5% compared to September 2024. According to the Victoria Real Estate Board, this downturn is part of a broader trend impacting the Canadian real estate market, particularly in major cities like Toronto and Vancouver. In Toronto, condo sales have hit a 20-year low, indicating a challenging environment for this segment of the housing market.

While Victoria’s situation is less severe, it has seen a surge in available inventory, reaching levels not seen since the fall of 2015. Local real estate expert Leo Spalteholz noted that while the overall housing market in Victoria is “sluggish,” condominiums face unique challenges. “For the longest time, basically nobody built any rental buildings in Victoria. Investors bought pre-sale condos and rented them out,” he explained. Over the past decade, the landscape has shifted, with increased rental developments leading to a surplus of available rental options. This oversupply has diminished the demand for condos, making it harder for sellers to find buyers.

Affordability remains a pressing issue as well. Following a series of interest rate hikes over the past three years, the pool of potential condo buyers has notably shrunk. Spalteholz highlighted that the reduction in buyers is “significant,” as many individuals struggle to meet the financial requirements of purchasing a condominium.

Despite these challenges, the overall property sales in Victoria have shown some resilience. The region recorded a total of 554 properties sold in September, a slight decrease of 3% from the previous year. While sales of single-family homes rose by 6.3%, condominium sales saw a marked decline, with only 154 units changing hands. Dirk VanderWal, chair of the Victoria Real Estate Board, commented on the current market dynamics, stating, “Single-family homes and townhome sales remained strong last month. The condo market proved slightly softer.”

For potential sellers, VanderWal emphasized the importance of presenting homes attractively and setting the right price. Buyers, on the other hand, have the advantage of more options in this balanced market, making it essential to prioritize their needs and wants.

The question of whether purchasing a condo remains a sound financial decision is complex. Spalteholz indicated that while prices peaked in spring 2022, interest rates have risen since then, leading to an approximate 10% to 15% drop in prices before stabilizing. For the current year, benchmark values reflect a slight increase of 1.2% for homes, while condos have seen a minor decrease of 1.1%.

Local realtor Katrina Brooks remains optimistic about the condo market. She describes condos as a valuable entry point for first-time homebuyers, providing an affordable way to begin building equity. “They’re a more affordable way to get your foot in the market,” she noted, suggesting that this equity can eventually facilitate a move to larger properties that better suit buyers’ lifestyles. Developers are also responding to market conditions by introducing programs and incentives to enhance the appeal of presale condos, including rate-holds and flexible deposit schedules.

Looking ahead, Spalteholz speculated that a shift in affordability would be necessary for condo sales to recover. “We basically need to have rates go lower, which they might… then I would expect sales to improve,” he said. If economic conditions remain static, he anticipates another year of similar trends.

Victoria benefits from characteristics that contribute to a relatively stable market. Spalteholz pointed out that historical data indicates Victoria experiences less extreme fluctuations than many other Canadian markets. Additionally, a significant portion of the population holds no mortgages, which can protect homeowners from the pressures of selling in a high-rate environment. VanderWal echoed this sentiment, stating, “Stability is a good thing. Our current market is fairly balanced, with less pressure on both the buyers’ and the sellers’ sides.”

As Victoria navigates these changes, the focus remains on adapting to evolving market conditions in a landscape marked by both challenges and opportunities.