May. 31st. 2021. 2bed 2bath Condo Market Discussion. Victoria BC. Canada. Opinion Only. Bradley Stokes-Bennett. MBA. RI. Real Estate Agent & Developer. Some Economic Assumptions around a segment of the Victoria Real Estate Condo Market. I look at specific stats to get an idea of what price points for newer construction might have the highest demand. What economic forces should be considered moving forward? Population growth, construction costs and government policy alongside Demand Behaviour changes brought on by Covid context? I try to take approximately 20 minutes that might help Buyers or Sellers when looking at this specific market.

Search Criteria: Single Family Home. List price 800,000 - 1,100,000 CAD. Sales vs Active Listings. East Saanich. I take a quick look at the market for single family homes on Jan 18th in East Saanich within a certain price range. Only 14 active listings fit that criteria! My thoughts on prices and hopes for the 2021 spring market. Brad Stokes-Bennett's opinions only. MBA. RI. Realtor. Developer.


I often get asked about why real estate prices are so high in Victoria relative to an average middle class income.  This is a very difficult question to answer in one conversation.  However, if we look at neighborhoods in Victoria that have high density demographics (ppl living closes together) we start to discover some key reasons in my opinion.  In future blogs, I will look at many reasons for this market effect; rent per sft, population growth, demographic bulge, construction costs etc...  However, for this short post, PART ONE, I have tried to key into what are likely the main reasons for the current lack of real estate supply in the Victoria downtown core market. 

Building UP (Condos, Apartments) required more construction financing than building OUT (sprawl, single family home subdivisions, townhouses).  A developer of a low density project can roll the construction financing from home to home.  Basically, you can build a home, sell it and then start the next one.  For a condo building you cannot sell the home until the entire structure is completed.  This limits your ability to stage out developments and increases your construction financing requirements and risks.  Therefore, the return on investment (ROI) will need to be higher or the capital will flee to safer investment opportunities. 

The market structure for multi-family residential downtown concrete development I would define as an Oligopoly.  (CFA Institute 2012, 160, 180)  The barriers to entry are high and the up-front costs alongside political risks & bureaucratic processes make this segment of the market out of economic reach for most developers.  There are few sellers and the main companies in the market are currently Cox Developments, Concert Properties, Chard Developments, Alpha Developments and Bosa.  The market area would be the downtown area of Victoria, Oak Bay, James Bay and Vic West.  An Oligopoly market structure may lead to pricing strategies such as the “Cournot assumption” where “each firm determines its profit-maximizing production level by assuming that the other firms’ output will not change”. (CFA Institute 2012, 181-182)  This makes intuitive sense given the time required to build new product and the supply/demand dynamics.  What occurs in the market is basically a development holding steady on it’s prices whenever financially possible as the end user will absorb any extra costs that are placed onto the supply curve.  So for example if the Step Code increases the cost of a condo unit by 30,000 CAD, a developer will wait to sell that product at the increase in price versus taking a loss. 

Over the past five years, there has been a notable increase in real estate demand (a shifting to the right of the demand curve) and a sustained shrinking of available new supply for the core.  We need to improve the efficiency of the permitting process to keep up with future growth and attract smaller firms to compete in the market.  Anti-development sentiment and red tape creep have increased risk to developments and make adding new supply difficult if not impossible for most market players.  Potential rent controls will also impact our industry and I would encourage Victoria and the BC Government to study the effects of rent control in other high-density communities such as San Francisco or Dublin. (Moranis 2017) (The Economist 2017)  (Murphy 2017)  But, the main reason for lack of housing supply rental or strata based, is likely due to the combination of a broken city council permitting process and the increased risks that high density developments take on in the form of construction financing exposure. 

On first glance the Victoria BC Real Estate Market looks incredibly hot over the past month of October 2020. However, I took a closer look at the 3 major economic products in the market; Single Family Homes, Condos and Townhouses. The stats of the past month can show us how the story for each type of home can differ. In my opinion, Single Family Homes in Victoria are currently experiencing a very high priced Sellers Market. If Buyers are looking for their purchasing power to go farther, both Condo's and Townhouses might be worth exploring in more detail at this current point in the economic cycle.

I take a brief look at the posted Victoria Real Estate Stats on October 1st. 2020 by VREB. Hopefully I can showcase how it is important to narrow your focus to find relevant market data specific to your home of interest. While single family homes for example are in high demand, we must question if other assets such as condos currently are as well.

My personal opinions around some of the Oct 1 Victoria Real Estate Stats.

SUPERUS nails the need for using user personas.

The company SUPERUS can teach us the importance of using USER PERSONAS in real estate development and other areas of business and investing. If you are buying or selling a home, always ask yourself (in my opinion) who would buy this house in the future and why.

What rate of return can a 1 bed condo (built between 2010-2020 with parking) in Victoria BC downtown core possibly provide for investors? I use stats and economic assumptions to try and provide viewers with some of my best estimates for the market.

What do 1bed condos in Victoria downtown rent for? What will they potentially be worth in 10 years? How much do buyers need to put down as a deposit in order to make a positive monthly yield? Some of my thoughts and guesses in the video that I hope are useful. Pls reach out if you have any questions in the comments section.

If you are in the market for a 2bed 2bath new condo in the downtown area of Victoria BC, this video will be helpful in providing market context. Before you buy make sure to look at relevant stats that might help you find the best price point for your new home.

This is one simple way I use stats to help me find a range of value for 2bed condos in Victoria BC downtown core market.

This video blog is part of an ongoing series aimed at helping real estate buyers, sellers, developers use stats to improve their decision making in the market. If you have an any questions please add comments to the post.

1 bed condos as of July 31, 2020

A quick video that might help real estate buyers, sellers, developers use stats to improve their decision making in the market.

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