What does the current Victoria real estate market look like?
As part of our monthly Market Insight Series, I am excited to continue to bring you regular insights into the Victoria and Vancouver Island market trends, so you can make better buying and selling decisions. Below I will jump into the most important market numbers to look into, I will provide glossary term definitions, and will conclude with resources if you want to further research current trends and stats. If you want to see what the Market Insight for the previous month was, click here.
Today is the start of a turning point. That may be an understatement. If yesterday was a crossroads, today saw the beginning of US trade tariffs on Canada and retaliatory tariffs in response from Canada back at the US. Although there may still be an opportunity to reach a negotiation that avoids significant economic damage to both economies, the train is quickly leaving the station, and time may be running out. In the current market report, I want to take some time to touch on the potential impacts of a sustained trade war between Canada and the US, the possible fallout, and some possible off-ramps that may help us avoid this economic calamity. We'll start with the current real estate market numbers first and then analyze the current trade tensions and economic outlook as an extension of this. Read on for the current numbers. Otherwise, you can skip to the trade analysis and forecast by clicking here.
Current Real Estate Numbers
Alright, let’s break this down and dive into the numbers. February 2025 turned out to be a solid month for Greater Victoria’s real estate market, with some key stats showing growth. A total of 528 properties were sold last month—that’s up by 12.3% compared to February 2024, which had 470 properties sold. Looking at January 2025, sales jumped by 25.1%, a big leap.
Condo sales were up 26.3% from February 2024, with 192 units moving off the market. Single-family home sales saw a more modest increase of 4.5%, with 234 homes sold. So, we've definitely seen action across the board.
Dirk VanderWal, Chair of the Victoria Real Estate Board, put it simply: "February was another stable month for local real estate." And when you dig into the numbers, it’s clear why. Inventory is slowly growing, sales are up, and the market’s holding steady—creating a balanced environment for both buyers and sellers. It’s not just the steady prices that are helping; favorable interest rates are also a key factor. For anyone looking to get in or out of the market, 2025 has been starting out well so far.
Now, let’s talk listings. By the end of February, there were 2,630 active listings on the Victoria Real Estate Board’s MLS®—a 9.8% increase from January and an 11.3% jump from February 2024. So, the inventory is creeping up, giving buyers more options. But as VanderWal points out, for properties to sell, they’ve got to be priced right and presented well. As we move into the typical spring market, which tends to peak in late spring, we could see even more listings come into play to meet the growing demand. However, global economic shifts are increasingly likely to play a role in how things evolve.
As for prices, here’s where things get interesting. The benchmark price for a single-family home in the Victoria Core area rose 3.7% from February 2024 to February 2025, landing at $1,309,500. That’s a nice jump from January’s $1,287,200. Condominiums, on the other hand, saw a slight dip—down 0.5% year-over-year, with the benchmark value sitting at $551,900 in February 2025, up from $548,100 in January.
The current real estate activity indicates that it's been a good time to buy and sell in Victoria so far. The real question is whether this improving market will continue to grow in light of recent developments. In a normal market, the current growth and stability might suggest that the market is poised for some movement as we head into spring. Under normal circumstances, we would look at potential interest rates as a kicker in this equation. However, with a broad-based hit of 25% tariffs on Canadian goods and 10% on energy imports to the US, this throws our baseline assessment and any previous forecasts out the window.
March 6th, 2025 Update: President Trump has set another 1-month pause on all goods and services that fall under the The Canada-United States-Mexico Agreement (CUSMA). Although this doesn't guarantee an end to the current trade hostilities, it pushes us closer to our Scenario 3: Best Case Scenario listed below.
Canada US Trade Tensions
Where Did This Come From?
A natural first question might be, why are we in a trade war with the US in the first place? Although it's a reasonable question, there may not be a good answer. President Trump initially justified an executive order to place trade tariffs on Canada and Mexico in response to a fentanyl epidemic that has been plaguing the US, presumably at the fault of Canada, Mexico, and China. As far as Canada is concerned, the federal government has been quick to point out the fact that less than 1% of illegal drugs and only 1.15% of illegal immigrants come into the US from Canada. While some House Republicans might try to make the argument that a lot of illicit drugs are coming in from Canada through unchecked sources like the $800 de minimis exemption (products too small to be considered), there doesn't seem to be any solid evidence supporting this claim. On the contrary, the tools and drugs of the fentanyl trade are commonly known to originate primarily from East Asia, with drugs, tools, and lab supplies mainly entering through the Mexican border. Placing the blame on Canada also fails to overlook the fact that as a synthetic drug, much of the production and supply of fentanyl originates in Mexico and domestically from local US producers.
Why Is Canada A Target?
Although I agree that Canada's border security is long overdue for improvement, especially when it comes to cargo port entry, it seems unlikely that President Trump is solely targeting Canada for the sake of improving security on the northern border. Canada's efforts to invest $1.3 billion in additional security and appoint a new Fentanyl Czar to crack down on the illicit drug trade have seemed to fall on deaf ears. Additionally, Trump has simultaneously threatened to force Canada to join the US as its 51st state through economic coercion while actively failing to state what he wants from Canada to avoid a trade war. Based on his statements and actions, it seems like Trump truly believes that trade tariffs are an effective strategy for building domestic wealth and raising tax revenue from other countries. This is an ill-conceived understanding of how tariffs work since tariffs tax companies and consumers who import products, not the countries that export them. Regardless, it's reasonable to believe that Trump's ambitions fall somewhere on the scale between securing a better trade deal, making America great again through stern tariff action, and attempting to annex Canada through economic coercion. Whatever Trump's aim might be, it seems likely that the root goal is a Trump-style vanity project. Accomplishing some big, impressive wins to show the American people how bright, strong, and powerful Trump can be. Unfortunately for Canada, that means the outlook of our economy may likely hinge on the temperament and whim of Donald Trump's sporadic and shifting sentiments. Not a Great Plan.
Trade Tariffs, Retaliation, and Growing Tensions
Regardless of the primary goal, Trump is probably looking for a quick win with the American public. Whether the plan is to derive that from bullying a better trade deal out of his neighbours, isolating the US to rebuild industry at home, or something else is anyone's guess. However, for now, don't expect any immediate and sudden improvements. While Canada may be able to pull out some new concessions and accomplish a return to normalcy within the next 2-3 months before real economic damage begins to set in, we can't count on it. Instead, we should hope for the best and be prepared for the worst. With that in mind, let's go through some scenarios:
Scenario 1: Worst Case Scenario
Tiff Macklem wasn't shy about saying that a sustained trade war would cause permanent economic damage. The reality is that Canada makes a substantial amount of its revenue from exports to the US. The current growth forecast for Canada without tariffs is 1.8% in 2025 and 2026. In a trade war scenario, Canadian output would fall almost 3% over two years, wiping out any economic growth and likely throwing Canada into a recession. What's worse is that the combined tariffs from both Canada and the US would likely increase inflation over time, with the Bank of Canada predicting an additional +0.655% spike in inflation in 2026, +0.45% in 2027, and +0.543% in 2028. That's over and above current prevailing inflation rates. So, we could face off against recession and continued affordability concerns caused by rising inflation.
Scenario 2: Bad Case Scenario
Although it seems unlikely we will get into a multi-year gloves-off trade war with the US, it's entirely possible that the US and Canada could be on the offensive for another 6-12 months or longer. Tiff Macklem explained that even 3-4 months of US Trade Tariffs could cause permanent structural damage. This means a sustained and permanent decline in long-term economic growth. In a short to medium-term crisis, it's reasonable to expect our fragile economy to dip into a recession, even if it ends up being mild. That would mean job layoffs, deferred and lost investment, and potentially billions of lost revenues to Canadian businesses and employees. Not a great time. Exports to the US account for roughly one-quarter of our national income, so while specific industries will feel the impacts first and more than others (i.e., automotive, manufacturing, retail), even a medium-term tariff conflict will impact everyone.
Scenario 3: Best Case Scenario
Now that US tariffs have landed, the best-case scenario is one in which cooler heads prevail, and a successful negotiation can quickly end trade tariffs. It's also possible that the US Supreme Court will throw out Trump's executive order since its rationale as an emergency response to illegal fentanyl smuggling from Canada is questionable at best. This possibility is not off the table, but we don't know if and when this issue might be resolved. Even if this can be accomplished, it's worth pointing out that consumer and investor confidence have already taken a hit leading up to this previously threatened trade tariff deadline. That means that economic growth is likely to be impacted this year, even in the best-case scenarios, and that will have some effect on all of Canada. Hopefully, these impacts will be minimal, but only time will tell.
Impacts on Canadian Real Estate
The impacts on Canadian real estate will depend on the scenario we are heading into. However, for the sake of caution, let's assume the worst-case scenario as a starting point, and you can imagine a lower-impact variation of this in scenarios 2 and 3. As mentioned, an economic recession is guaranteed in the worst-case scenario, potentially a bad one. Although fortunes are made in a downturn, those opportunities are reserved for individuals uniquely positioned with time, money, patience, and resources ready to deploy. Not everyone has these things in equal supply, but the one thing we can all take advantage of is patience. When economies go into recession, the two things that disappear immediately are consumer confidence and demand. You need these to make a market, and if housing demand evaporates, you can expect a correction in home prices. However, this doesn't happen overnight in the real estate market. The last local real estate market correction occurred between February 2022 and September 2022. A full seven months from peak to trough, and even then, the average month-over-month decline in demand was substantial. That means if there is going to be a significant real estate correction, it won't happen overnight, so don't feel like you have to rush in.
Now, there are two more impacts to keep in mind: interest rates and inflation. Since inflation is close to the 2% target rate, if the economy begins to nose dive toward recession, the Bank of Canada will likely continue cutting interest rates, contributing to mortgage affordability. While this may seem like a golden opportunity, given the rise in mortgage rates in recent years, don't get sucked in. If demand declines and home prices fall, you may be better off waiting for a better purchase price than locking in a reasonable rate today.
Finally, we can't forget about inflation. Although a fall in demand is likely to lower home prices in the short term, trade tariffs increase the cost of imports, and Canada's retaliatory tariffs will make it more expensive to buy materials to build new homes. That means a sustained trade war will increase the price of homes over time. It's difficult to say which will be the more potent force regarding declining demand versus growing costs. Although demand usually falls in the face of rising prices, a trade war could result in stagflation, a declining economy, and rising prices. It isn't good for anyone except those who already own assets (i.e., real estate). So, while there may be an opportunity for buyers to save money by waiting for home prices to go down in the short to medium term, buyers who wait too long could see home prices go up. And here is the kicker. If demand remains strong enough relative to supply, it's possible that home prices could stay flat and then begin rising despite a weakening economy. In a worst-case scenario, it's most likely that home prices will decline in the short to medium term and then eventually start to rebound due to growing inflation. However, in a more moderate scenario, where real estate demand doesn't take a nose dive, we could see additional home price pressure building on top of our pre-existing affordability crisis. If this happens, it will directly impact newly built homes due to the rising costs of building materials.
Thoughts and Considerations
Usually, this is where I would provide some recommendations for buyers and sellers. However, it's difficult to say precisely what buyers and sellers should do in this rapidly changing environment. So, instead, I will leave you with these considerations. If you are a buyer, now is the time to watch the market closely. If home prices and demand seem to be declining, it's probably time to pause and see what happens next. Remember what I said: patience is key. If the tide is going out, let it go out and wait patiently until the market has seemed to have found a relative bottom. At the same time, if demand persists and prices remain stable, we might be in a situation where trade tariffs are easing or sellers are choosing to stay put rather than list in an uncertain market. This could be a scenario where a lack of supply makes the difference, and the rising cost of materials causes the price of new homes to rise instead of fall. So, as a buyer, if the market feels like it's beginning to pick up quickly, you want to be ready. Watch the market, watch the evolving trade situation, and be prepared to make a move when the time is right. We never know if and when an off-ramp might emerge that resolves the current trade conflict. It could be a sudden clever trade deal, it could be a Supreme Court defeat of President Trump's questionable executive order rationale, or it could be a response to trade tariff fatigue being raised by US businesses and consumers 6-12 months down the road.
Opportunities for ordinary people looking to get into their first home, or move up into an affordable nicer home are still out there, it just takes a bit of diligence, and ideally the support of a committed agent.
Conclusion
The goal is to give you insight into what the overall market view looks like in Victoria and Vancouver Island. I have included more Resources below so that you can dive in and read more at your leisure. I will also make sure to include a new Glossary Term each month, and define it to add to your knowledge of common industry terms.
Feel free to contact me if you want to learn more or if you have any questions about the broader market trends.
Glossary Term
Home Equity Loan
Home Equity Loan: A type of loan that allows homeowners to borrow against the equity in their property, often used for home improvements or other expenses.
Resources
1. VREB Insight:
2. Mortgage Calculator:
3. Mortgage Rate By Bank:
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