While September was another stable month for local real estate, according to the Victoria Real Estate Board, condo sales saw an 18.5 per cent drop from September 2024.
It's a trend spreading across Canada. Vancouver and Toronto in particular are seeing "pretty severe" downturns, the latter of which has seen condo sales hit 20-year lows, says local real estate expert Leo Spalteholz.
While Victoria hasn't been hit nearly as hard, it has more inventory available than it has had since the fall of 2015, Spalteholz said.
Victoria's overall housing market is "sluggish", but condos are struggling for specific reasons, he noted.
“For the longest time, basically nobody built any rental buildings in Victoria. Investors bought pre-sale condos and rented them out." That changed in the past decade, with rentals driving real estate development. "Now, there’s no longer this big demand [for condos] because tenants have tons of choice."
Another factor: affordability. Rates were raised three years ago, shrinking the pool of buyers who can afford condos "significantly," he said.
While demand in Victoria has softened compared to previous years, the city isn’t seeing the same oversupply as places like Toronto. Toronto’s sharper downturn stems from a surge of condo construction that continued even as demand faded.
The Victoria Real Estate Board region saw a total of 554 properties sold this September, three per cent fewer than in September 2024. Sales of single-family homes increased by 6.3 per cent. Sales of condominiums, on the other hand, decreased by 18.5 per cent from September 2024, with 154 units sold.
“Single-family homes and townhome sales remained strong last month. The condo market proved slightly softer,” said Victoria Real Estate Board chair Dirk VanderWal. “In these balanced market conditions, if you’re selling, it’s important your home is well-presented and correctly priced. If you are purchasing, it’s important you prioritize your needs and wants, as there are more options to choose from."
Spalteholz said it's "hard to say" whether or not it's still a good financial decision to buy a condo. The peak for all real estate in Victoria was in spring 2022. Since then, interest rates went up and prices came down about 10 to 15 per cent before stabilizing.
That held true for this year, with prices remaining relatively unchanged; benchmark values for homes increased by 1.2 per cent, and for condos, decreased by 1.1 per cent.
Local realtor Katrina Brooks said, despite market conditions, condos are still a "great stepping stone" for first-time homebuyers.
"They’re a more affordable way to get your foot in the market, start building equity, and down the road, you can use that equity to move into a bigger property that fits your lifestyle a bit better if you choose to."
She added that developers are also introducing programs and incentives to address buyer concerns and make presales more attractive. that includes rate-holds and more flexible deposit schedules.
In order for condo sales to trend upward, Spalteholz hypothesized that affordability conditions would have to change.
"We basically need to have rates go lower, which they might ... Then I would expect sales to improve," he said. "If we just cruise along as we have been, rates roughly where they are, the economy not in great shape, everybody's in a holding pattern, then I wouldn't be surprised if we see another year of basically what we have seen."
Luckily, Victoria has traits that contribute to a relatively stable market. "I looked at 40 years of market data once, and Victoria has less extreme moves than almost any other market in Canada," Spalteholz said.
There is also a higher percentage of people with no mortgages, which protects people from having to sell when rates are high.
“Stability is a good thing,” VanderWal said. "Our current market is fairly balanced, with less pressure on both the buyers’ and the sellers’ sides. This means each party in the transaction has time to do their due diligence and make decisions.”
