On January 29, 2025, the Bank of Canada announced a 25 basis point reduction in its benchmark interest rate, bringing it down to 3%. This move, marking the sixth consecutive rate cut since June 2024, comes amid escalating concerns over potential U.S. tariffs on Canadian imports—a development that could significantly impact our national economy.

In tandem with this monetary policy adjustment, the Canadian government has introduced several mortgage reforms aimed at enhancing housing affordability and accessibility. These changes are particularly relevant for homebuyers and owners in the Greater Victoria area, where property values have seen substantial appreciation in recent years.

Understanding the Rate Cut

The Bank of Canada's decision to lower the interest rate is primarily a preemptive measure to cushion the economy against the anticipated adverse effects of proposed U.S. tariffs. President Trump's administration has signaled intentions to impose a 25% tariff on Canadian imports starting February 1, a move that could disrupt trade and economic stability.

By reducing the policy rate to 3%, the Bank aims to stimulate economic activity by making borrowing more affordable for consumers and businesses. However, it's important to recognize that while lower interest rates can lead to reduced mortgage rates, the broader economic uncertainties tied to international trade tensions may temper the housing market's response to this rate cut.

Key Mortgage Reforms

In response to ongoing housing affordability challenges, the federal government has enacted several significant mortgage rule changes:

1. Increased Insured Mortgage Cap: Effective December 15, 2024, the maximum price cap for insured mortgages has been raised from $1 million to $1.5 million. This adjustment allows buyers in high-cost markets, such as Victoria, to qualify for mortgages with a down payment of less than 20%.

2. Extended Amortization Periods: The government has expanded 30-year amortization options to all first-time homebuyers and purchasers of newly built homes. This change, effective December 15, 2024, aims to lower monthly mortgage payments.

Navigating the Path Forward

In these times of economic change, it's essential to approach home buying and ownership with a blend of optimism and caution. The recent policy shifts are designed to support Canadians in achieving their homeownership goals, but individual circumstances vary widely.

Engaging with a knowledgeable REALTOR® can provide personalized insights tailored to the Greater Victoria market. Additionally, consulting with financial advisors can help in understanding the long-term implications of mortgage choices and ensuring that decisions align with both current needs and future aspirations. Should you find yourself with real estate questions to your specific situation, please reach out - we’d be happy to hear from you.

As 2024 comes to a close, the Victoria real estate market appears to have maintained a sense of calm and predictability throughout the year. December saw 421 properties sold—an increase of approximately 28% compared to December 2023 but a decrease of 23.6% from November 2024.

A Gradual Rise in Sales

Over the course of 2024, approximately 6,893 properties were sold—an 11% rise compared to 2023. December’s sales, in particular, reflect notable year-over-year increases in several property categories:

• Single-family homes: About 191 units sold, reflecting a 20.9% increase year-over-year from December 2023.

• Condominiums: Approximately 135 units sold, a 25% uptick year-over-year from December 2023.

• Townhomes: Around 52 units sold, showing an impressive 33.3% rise​ year-over-year from December 2023.

These trends suggest a market that may be leaning toward balance, offering both buyers and sellers opportunities to make confident decisions. That said, December’s active listings were down to 2,290—a decrease of 19.3% compared to November.

Trends in Home Prices

Home prices have remained relatively consistent, offering buyers and sellers a degree of predictability. In December 2024:

• The benchmark price for single-family homes in the Victoria Core was approximately $1,306,400, a modest 2.7% increase from December 2023​.

• Condos, on the other hand, experienced a slight dip, with the benchmark value around $547,800, a 1.6% year-over-year decrease but a small increase from November 2024​.

While these figures suggest stability in pricing, local factors such as demand and inventory levels could shift the landscape moving into 2025.

Looking Ahead: What Might Influence 2025?

The future of the real estate market is influenced by many variables, and while we cannot predict outcomes, a few ongoing trends may shape what’s to come:

• Recent changes to amortization periods and property transfer tax thresholds may provide additional opportunities for first-time buyers.

• Interest rate stability could help more people feel confident in making their next move​.

However, with inventory levels remaining relatively low, any significant uptick in demand could put upward pressure on prices. Efforts to encourage gentle density development could also play a role in easing supply constraints and creating more housing options.

The information provided in this update is general in nature and intended to offer a broad overview of market activity. It is not a substitute for personalized advice. Every real estate journey is unique, and we encourage you to consult with us for information tailored to your specific circumstances.

Let’s Plan for Success Together

Whether you’re considering buying, selling, or simply exploring your options, having a strategy tailored to your goals is key. Let’s connect to discuss how we can help you navigate the market in 2025 with confidence and clarity.