Tech boom gives boost to Victoria real estate.
SHIFT TO REMOTE WORK ALSO LIFTS DEMAND
David Grant appears to act somewhat ahead of the pack. At least, he did when he and his wife purchased a detached home in Victoria in late 2018.
The couple realized they would soon outgrow their 600-squarefoot condominium in Vancouver, given their family plans. The pair, now expecting their first child, ultimately moved to Victoria at the start of 2020, when the technology company he works for agreed his job would become remote. Victoria’s real estate market felt “relatively hot” in the months leading up to the couple’s purchase, before settling a bit, Grant said. But over the last year, there’s been “a significant increase.”
With its sea air and temperate climate, Victoria has long been known as one of the country’s favourite places to retire. Yet, seniors in British Columbia’s capital are seeing some new neighbours now. Bidding wars are already underway, as the city’s thriving tech sector is driving significant gains in the housing market. Victoria’s location, size and offerings make it a top choice for tech companies to house their operations or for tech workers to relocate to, seizing on what they expect will be a long-term shift to remote work.
“Lots of people [are] looking to move to the Island,” said Grant, director of consulting services at Traction on Demand. That old paradigm of moving to the big city for big jobs is changing, he observed. “People are looking to move somewhere that is better for them from a work-life perspective or a lifestyle perspective, and Victoria is a pretty nice place and is probably high on the list of places to end up outside of a big city.”
In Greater Victoria, the benchmark price for a single-family house rose 10 per cent from $753,000 in December 2019 to $828,400 in December 2020, according to the Victoria Real Estate Board. In Victoria’s core, single-family home prices climbed up to $915,100, or 6.8 per cent, in December 2020. Greater Victoria townhouse prices climbed 7.4 per cent while condo prices fell 0.6 per cent as buyers sought more space, spurred by the pandemic. The board’s president Sandi-jo Ayers called it “an unexpected year on many levels” in a statement, noting the pandemic, low interest rates and shifting consumer priorities “resulted in record-setting sales for the last several months of 2020.” (The historically low interest-rate environment has propped up several housing markets throughout Canada. The actual average home price in Canada hit a record $621,525 in January 2021 — up nearly 23 per cent from the same time last year, according to the Canadian Real Estate Association.)
Real estate firm Engel & Völkers called Victoria “a market to watch” in its 2020 year-end Canadian luxury real estate report. Sales for homes priced at $4 million and up grew more than 500 per cent, according to the report, with the firm brokering 22 deals in that price range in November 2020, compared to nine in the same month the previous year.
“We never foresaw the markets doing what they were doing this year,” said Scott Piercy, licence partner at the company’s Victoria operations. Sales at his office, based on commission income, rose more than 60 per cent from 2019 to 2020. “We had our best year ever,” he said.
Bidding wars, once a domain of Vancouver and Toronto’s hot markets, became commonplace. Piercy recalls a waterfront property he showed a few weeks ago listed at $2.3 million. Fourteen parties made offers, including one $350,000 over asking that still fell short. In that $2-million price range, “that’s unheard of,” Piercy said.
The firm expects housing prices overall in the city will increase by eight per cent this year. Already in February in Greater Victoria, the benchmark price for single-family homes rose 10.8 per cent year over year and townhomes increased eight per cent; meanwhile, condo prices stayed relatively flat, up 0.1 per cent, according to the real estate board. The continued growth is expected as Victoria’s tech sector continues to grow and attract workers to reside there, especially as work-from-home arrangements become more common. Tech is Victoria’s biggest industry, employing nearly 17,000 workers and claiming an economic impact of $5.22 billion in 2018, according to a study by the Victoria Innovation, Advanced Technology and Entrepreneurship Council (VIATEC).
WE NEVER FORESAW THE MARKETS DOING WHAT THEY WERE DOING THIS YEAR.
The group does not have more recent figures, but chief executive Dan Gunn said he believes the industry remains the city’s biggest to date.
“Our economic-impact numbers are quite conservative,” he said.
There’s lots to love about the city for these workers, said Piercy, highlighting short commutes, abundant access to the outdoors and a lower cost of living. Housing is still “relatively underpriced” in Victoria, according to the report, and definitely cheaper than the frothy Vancouver market.
In Metro Vancouver, also in December 2020, the benchmark price for a detached home was over $1.55 million, according to the Real Estate Board of Greater Vancouver. That’s about $726,000 more than in Greater Victoria. Victoria is also close enough to several major tech hubs, Piercy said. Vancouver is a short flight or ferry ride away from the Island, with Seattle and Silicon Valley a bit farther afield.
Last month, the benchmark price for single-family homes reached $851,200 in Greater Victoria, according to the Victoria Real Estate Board. That’s up 10.8 per cent.
Initially, the pandemic challenged Victoria’s tech industry, like most others. Before the virus started to spread throughout Canada, VIATEC’S job board hosted about 100 listings, said Gunn. In the early days, that number fell to about 35 jobs, before recuperating back to over 100 currently.
He’s seeing two trends heading into the second year of the pandemic, with much of the tech industry continuing to keep its staff at home. VIATEC’S member companies — about 400 — have become more comfortable hiring staff outside Victoria and, on the flip side, companies headquartered outside the city can consider hiring employees located elsewhere, like Victoria.
Gunn expects some firms will also consider hybrid models — small regional offices in places like Victoria instead of just large headquarters in tech centres like San Francisco. Traction on Demand, for example, launched what it called the “small-town initiative” and opened its first remote office in Nelson, B.C. A few months ago, CEO Greg Malpass told The Logic the company wants to build the next two in Vernon and Mill Bay, about 29 kilometres northwest of Victoria. Both tech companies and employees tend to be drawn to the city’s amenities, like its accessibility to nature, Gunn explained. “Most tech companies don’t set up here to be close to their customers … They set up here because they fell in love with the city, because they went to school here, because they did research here or because there’s a great talent base here that they want to work with.”
It’s the same for workers moving there in his estimation. “A lot of people visit Victoria as a tourist, and then they fall in love with the place and decide they want to stay,” said Gunn, who did exactly that himself in 1999 after visiting a friend. He stepped off the plane after flying in from Toronto and was amazed to go golfing with his friend in February.
Grant moved to Victoria for a number of reasons, including affordability and proximity to family. Now he says some of his colleagues are considering the Island city, too, especially as Traction and the tech industry overall appears willing to consider work-from-home arrangements beyond the pandemic.
“Now that those options are available, I think you are seeing a bit more of a migration than you would have. People might have always had the desire, but now they actually have an ability to do it.”