Since the beginning of the COVID-19 pandemic, house prices in Victoria have been steadily rising. Take a look back to June 2020, when the MLS benchmark price for a house in the Victoria Core was $896,700. Fast forward to June 2021 however, and we can see the MLS benchmark price rise to $1,063,500, an 18.6% increase! As you can see, despite COVID-19’s effect on the economy here in Victoria, real estate has remained an excellent investment.
How does this relate to condos? Well, the MLS benchmark price for a condo in Victoria in June 2020 was $490,400 and as of June 2021, the benchmark price has risen slightly to $531,100. This increase is much smaller than the housing one, coming in at only 8.3% over the year.
Tom Davidoff, a finance professor at UBC’s school of business, says that a driving difference between these benchmark prices between single family homes and condos is the changing priorities due to the pandemic: “You don't need to be at the office for a lot of people during COVID. And you do need to be at home. So big space ... becomes more attractive relatively during the slow-down.”
Along with the change in priorities, demand for condos has likely increased slower for a few more reasons:
Taking this into consideration, the main groups who would be renting or buying condos such as students, new Canadians, and short-term workers have declined due to COVID-19, and as such, demand for condos has not risen as much as demand for single family homes. Additionally, since COVID-19 has opened up working from home, buyers are looking for places that have ample green space, and space in general since they’ll be spending more of their time there, giving houses a further advantage.
Now, since things have been reopening and students have been going back to campus, the demand for Victoria condos is astounding. Almost any rental listings posted in the University of Victoria groups receive at least fifty applications from renters!
Because of this increasing demand, and a very low supply - a 49% decrease between June 2020 and June 2021 according to VREB - condo prices should be brought up to their housing comparables as people move back into the cities.
Additionally, since condos are generally more affordable than detached houses, and they’re the first step on the traditional “real estate ladder”, the demand will continue to rise as more first-time home buyers enter the market.
Potential buyers could wait for a market correction or downturn, but there’s no guarantee that house or condo prices will decline by 2022.
Overall, because of the new increase in demand for condo buying and renting, mixed with an extremely low supply and better affordability than detached houses, condo prices should continue to rise to meet their house counterpart’s gains.