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As you know, I don’t usually do my prediction until January, but the market has moved so quickly beyond my predictions for 2015 and 2016, both of which were on the mark. I realise that what is now going on in the Victoria real estate market is not only unique, but is going to shock everyone.
If you are looking to buy into the Victoria market—or elsewhere on Vancouver Island—the time to act is now. Although the prices on Vancouver Island have been strong for 2016, we have not even come close to a point where prices will level out.
Almost all of the projects and developments we currently see coming out of the ground are selling out well before the roofs are on; what we need to understand is what the timeline was for these projects to become available.
Everything you see coming out of the ground today is a result of land acquisitions of at least three years to five years ago, when land was much cheaper; then, the rezoning process took at least one to two years to get to the point of the developer getting a building permit.
Developers are now faced with land costs that no longer allow them to purchase potential sites, and rezoning processes that are too uncertain and too long to allow them to bring new projects to market in a timely fashion. These factors, along with rising construction costs, make any new land acquisitions for new projects in the core municipalities next to impossible.
The rate of growth in the Greater Victoria area has been totally underestimated by all levels of government. That is evident not only in roads and other infrastructure but even in a brand new high school on the WestShore that has just opened and had to add three portables to accommodate the students.
There will be a severe shortage of new construction of residential units in the core municipalities in 2017 and prices will rise by at least 10% from 2016, with a dismal selection of properties to choose from.
People with the foresight to buy a home which is under construction now—be it a condo, a townhome, or a house–or a lot will save the property purchase tax (up to $750,000) and will be buying inventory into a market that will experience a severe shortage of available homes in 2017, and a strong increase in price thereafter.