1. Market Overview Heading into 2026
Victoria’s real estate market has shown resilience throughout early-2025, with moderate price growth, constrained inventory, and sustainably low mortgage rates (despite modest increases). With continued population inflows, especially from interprovincial migration and newcomers drawn to British Columbia’s lifestyle and job opportunities, housing demand remains healthy.At the start of 2025, Victoria home prices were up roughly 4–6 % year-over-year, while active listings remained lean, maintaining a seller-favored tone in many segments. Looking ahead to 2026, we expect:- Average price growth to moderate further to 2–4 % YoY, reflecting both affordability pressures and cooler demand.
- Listing activity to improve modestly, particularly in suburban and entry-level segments, as some sellers respond to rising borrowing costs and changing lifestyle needs.
2. Buyers in 2026
a) First-Time and Entry-Level Buyers
First-time buyers continue to form a substantial share of demand in Victoria, especially in more affordable areas like Langford, Colwood, and Saanich’s suburban pockets.Expectations for 2026:
- Increased competition among first-time buyers in lower-priced listings (e.g., attached homes or small single-family houses), although slightly improved inventory could help ease bidding wars.
- Greater reliance on mortgage stress testing, continued increases in down-payment barriers, and elevated interest rates (relative to the ultra-low era of 2020–2023) will likely squeeze budgets, pushing many toward pre-built condos or co-ownership arrangements.
- Continued demand for multi-generational housing, as younger buyers seek affordability and accessory dwelling units (ADUs) remain popular for rental income or family housing.
b) Move-Up and Downsizing Buyers
Move-up buyers, often selling existing homes in suburbs or farther away, may find that transitioned home equity is helpful in competing for higher-priced Victoria properties.Outlook:
- A modest increase in supply of move-up seller listings may emerge, as owners take advantage of favorable sale conditions to advance or downsize.
- Down‐sizers, especially retirees seeking walkable neighbourhoods near beaches or amenities (e.g. Fairfield, James Bay), will boost demand in select “lifestyle” niches.
c) Investors and Second-Home Buyers
With potential cooling in price growth but steady rent appreciation, rental investors may remain active—especially for multi-unit properties in core Victoria, Fernwood, and Oak Bay.2026Highlights:
- Favourable long-term fundamentals (e.g., supply limits, rental demand from students and professionals) may attract continued investment.
- However, political pressure for tighter rental regulations and vacancy taxes could temper speculative over-activity.
3. Sellers in 2026
a) Active Sellers
Sellers in 2025 have generally benefited from low-inventory conditions and historically high prices. Heading into 2026, several seller-types will have nuanced approaches:- Equity-rich sellers, particularly those who purchased before 2020, will likely continue to list, capitalizing on profits even if gains are slower than in prior years.
- Lifestyle sellers—families seeking more space, remote rural living, or affordability—may list suburban or central homes to move out of greater Victoria.
- Cautious sellers, however, will pay attention to carrying costs. Rising interest rates and inflation may push some to wait for late-2026 or 2027 advantages.
b) Pricing Strategies
As market growth cools:- Expect more strategic pricing—listings at or just below fair value to prompt multiple offers.
- Longer time-on-market becomes more likely—sellers might allow 40–60 days versus 30 or less common in past red-hot years.
- Incentives, such as covering closing costs or offering home warranties, may become more prevalent to entice buyers.
4. Market Stats & Forecasts
While precise numbers depend on macroeconomic context, let’s sketch plausible scenarios:- Price growth moderation: As borrowing costs remain elevated compared to mid-pandemic lows, price hikes slow from brisk (~5 %) to modest (~3 %) territory.
- Listings rise modestly: Motivated sellers (e.g., for equity or lifestyle moves) cautiously reenter, offering more choice—especially for townhomes and condos.
- Market pace normalizes: Buyers adjust to a less feverish pace, with fewer multiple offers and extended negotiation periods.
- Rentals stay tight: Apartment and basement suites remain in demand—especially among students, young professionals, and temporary workers—keeping vacancy rates historically low.
5. Economic Growth & Broader Factors
Victoria’s housing market does not exist in isolation—various economic and policy forces will shape 2026 outcomes:a) Interest Rates & Inflation
- Lenders and Bank of Canada are expected to continue gradual rate normalization. A Bank of Canada forecast (as of mid-2025) anticipates modest rate cuts—though still quite elevated relative to 2020–2021 lows.
- Inflation easing could relieve cost pressures, but unless rates drop significantly, borrowing costs will remain a restraint on buyer power.
b) Employment & Population Trends
- Provincial economic growth, supported by sectors like technology, government services, education, and tourism, should sustain employment and wages around Victoria.
- Population growth, driven by immigration and interprovincial migration, remains a powerful housing driver. Victoria’s desirability will likely continue to attract newcomers.
c) Policy & Supply
- Any new local measures—like zoning reform to encourage more ground-oriented density (e.g., townhomes, multiplexes)—could gradually improve supply in key areas.
- Continued emphasis on gentle density (e.g., allowing secondary suites, laneway homes) may ease rental pressure and support affordability over the longer term.
6. Implications & Advice for Stakeholders
For Buyers
- Be ready to move quickly—but smartly: Pre-approval, local agent, and readiness matter—but expect less frenzy than in previous years.
- Explore multi-housing options: Townhomes, condos, or ADU-friendly properties may offer better value and flexibility.
- Consider timing: If possible, waiting for early 2026 might bring slightly more favourable inventory or negotiation room.
For Sellers
- Price competitively: Don’t assume previous spikes will persist. Align pricing close to current value to attract attention.
- Highlight appeal: In a cooling market, staging, professional photos, and highlighting unique features can make a difference.
- Be flexible on terms: Offering financing options, faster closing, or other concessions can set your listing apart.
For Policy-Makers & Planners
- Support moderate densification, especially near transit corridors and mixed-use nodes, to help alleviate pressure without altering neighborhood character.
- Monitor rental market carefully, as sustained low vacancies could make workforce housing scarce and inflation-exacerbated rent hikes politically sensitive.
7. Upside & Downside Risks
Upside Scenarios
- Interest rate cuts mid-2026 spark renewed buyer confidence, gently accelerating growth beyond 4 %.
- Stronger-than-expected job creation, particularly in tech or government sectors, boosts wages and demand.
- Zoning reforms bear fruit—increased housing starts improve supply, stabilizing prices while easing affordability hurdles.
Downside Scenarios
- Persistent inflation forces the Bank of Canada to hold rates higher longer—weakening affordability and sidelining some buyers.
- Economic slowdown (e.g., due to weaker global growth) cools migration and dampens housing demand.
- Regulatory crackdowns on rental market (e.g., vacancy tax, rent caps) discourage investors and shrink rental supply further, intensifying rent pressure.
