Victoria's housing market continues to revive with strong sales and a tighter inventory, but a Royal LePage report cautions that the market isn't necessarily heading for a boom.
The average price in the third quarter -- July through September -- for a detached bungalow rose 5.9 per cent to $465,000 from $439,000 in the same period last year. A bungalow is a one-storey house.
"Overall, consumer confidence is coming back to the market," said Carol Geurts, managing broker for Royal LePage Coast Capital Realty in Victoria.
Most listings are selling for below the asking price but bungalows are a "hot commodity," she said yesterday.
Prices slid in the third quarter for a standard two-storey house by 3.4 per cent, to $449,000 from $465,000 in the same months in 2008, the report said. They also dropped by 2.5 per cent for a standard condominium to $275,000 from $282,000 a year ago.
"First-time buyers are a factor, but Victoria is a special market. It's a destination of choice, particularly for people moving from eastern ÎÚÑ»´«Ã½," Geurts said.
Interest in the local market was also reflected in numbers from the Victoria Real Estate Board, which saw 776 sales in September -- the highest number for that month in 17 years. Last month's average price for a single-family home was nearly $620,000 and the median moved up by $10,000 to $550,000.
Last month's inventory in Greater Victoria was 3,419, down from 4,754 in September 2008, the board said.
Although the economy is climbing out of recession, Royal LePage said the increase in sales and firming of house prices are the products of a normal market correction, and not the beginning of another "aggressive expansionary cycle."
What's providing the illusion of a boom is the return to the normal sales cycle, which was disrupted by the recession and a tight supply of homes for sale, the real estate company said.
On Vancouver Island, work began on 264 new homes last month, up seven per cent from 229 in August, said ÎÚÑ»´«Ã½ Mortgage and Housing Corp.
Greater Victoria saw a boost of 39 per cent with 132 homes started in September, an increase from 95 in August. Langford led municipal housing starts with 40 single-family dwellings getting underway last month.
Despite recent increases, Island year-to-date starts of 1,558 are down 53 per cent from last year's numbers of 3,318 for the same months, CMHC said.
A healthier housing market helps bolster the overall construction industry, which saw building-permit values rise to $71.9 million in Greater Victoria in August, up by 68.5 per cent from $42.7 million in July, Statistics ÎÚÑ»´«Ã½ said.
Nationally, building permits rose to $5 billion in August, an increase of 7.2 per cent from July, the federal agency said. Canadian municipalities issued $2.9 billion worth of building permits in August for the residential sector, a rise of 11.2 per cent.
The bulk of the national increase is due to building plans in ÎÚÑ»´«Ã½ and in Ontario, Statistics ÎÚÑ»´«Ã½ said. In this province, overall building permits jumped to $912.7 million in August, a 47.5 per cent increase from $619 million in July.
ÎÚÑ»´«Ã½ non-residential permits soared to $566.7 million -- up an impressive 131 per cent -- in August, compared with $245.3 million in July. However, residential permits slid by 7.4 per cent month-over-month to $346.1 million from $373.7 million.
