Eric James has a downpayment and nowhere to spend it. Through combined savings and a modest inheritance, he and his girlfriend have managed to set $50,000 aside, which they hope to put toward a condo in Greater Victoria—if only the prices would come down a little further. (The median price, according to the Victoria Real Estate Board, was $550,000 in July.)

The former Canadian military member finds himself in a growing group of Victorians priced out of the housing market, and hoping for a more significant drop in prices, before they’re able to get a foothold in the region.

But it may not come as fast as he’d hoped, either. While prices of all housing types have dropped from Victoria’s peak in January and February, some experts are forecasting a more significant cooling won’t come until at least next year—and even that would still stretch the bounds of affordability for many.

‘A shift is in the works’—but how much?

In his nearly 14 years as a realtor, Curtis Lindsay has watched Victoria’s average single-family home price climb from $524,000 to more than $1.4 million—a jump spurred, in no small part, by four years of low interest rates and pandemic-fuelled migration to the Island.

That’s beginning to change, Lindsay says.

“I think a shift is in the works, and most realtors will tell you that it’s happening… Going through the pandemic, we had one of the tightest real estate markets in all of Canada for limited inventory to buyers. And we're still seeing the residual of that.”

Prices have dropped by 1% from their peak valuation in Victoria, per the Canadian Real Estate Association—a far cry from the national average of 9.9%.

But those hoping for a significant drop in prices might have to wait until next year—or change their expectations.

“I don’t foresee a major correction,” Lindsay says, pointing to continued low inventory. “If nobody's selling, and no one's willing to give a deal, then buyers aren't going to find those deals.”

How much are prices expected to drop?

Forecasts differ on how much Victoria will be affected by a national housing correction. The latest Desjardins report predicts BC’s housing prices will fall, on average, by 22% from their peak to December 2023—more than Saskatchewan, Alberta, Manitoba, Quebec, and Newfoundland, but less than Ontario, PEI, Nova Scotia, and New Brunswick.

That would put the average single-family home in Greater Victoria at about $1.1 million, and the average condo at roughly $529,500 by December 2023—cheaper than their peak prices, but hardly affordable by most homeownership metrics. (Earlier this year, a National Bank report found it would take you 31 years and 10 months to save up for a down payment on a typical Victoria home, assuming a saving rate of 10% and a median annual income of $74,693.)

Would ‘missing middle’ housing make a difference?

The City of Victoria’s proposed "missing middle" housing initiative would, in theory, create room for less expensive housing options, by rezoning to allow for more housing types between condos and single-detached homes. But as we’ve reported, it’s not a silver bullet for affordability either.

“It will make things less bad in the long run,” Tom Davidoff, an associate professor at UBC’s Sauder School of Business, told Capital Daily.

“A townhome is a lot cheaper than a detached single-family home because you're sharing the land, and for rental purposes, the rents on these things are certainly within the means of some working people … the income that can afford them is less than the income that can afford a single -family home.”

James says that while he has “some concerns” about missing middle housing and the interest of developers, he’s “really interested” in how it could play out in Victoria.

“I’m all for removing bureaucracy and red tape… [and] I think that having housing of many different shapes and sizes that allows people to transition and move through the various phases of their lives will keep costs down and allow people to access housing as they need it.”

What does this mean for renters?

Despite the beginning of a decline in housing prices, that hasn’t fully translated into relief in Greater Victoria’s rental market, where listings have, in some instances, become more expensive.

According to the latest Rentals.ca report, Greater Victoria is the fifth-most expensive Canadian region for a one-bedroom apartment (where the average monthly rent rose by 16% from June to August, to $2,107). Rent of a two-bedroom apartment has tapered off, holding relatively steady at $2,836/month (up $13 from June). But that still makes the capital region the fourth-most expensive Canadian market for a two-bedroom apartment, behind Vancouver, Toronto, and North Vancouver.

High housing costs—and low wage increases—have taken a toll on Greater Victoria’s workforce, both in the wake of the COVID-19 pandemic and the years before it. As we reported in our Pay Check series, worker retention and recruitment has been a “number-one challenge” for years, according to Jeff Bray, executive director of the Downtown Victoria Business Association.

He sees three driving factors behind the labour crunch: the cost and availability of housing, the cost and availability of transportation, and the lack of affordable and accessible child care.

“If [someone is] going to make their wage in Victoria and make the same wage, say, in Osoyoos, where the housing is much cheaper, their paycheque goes a lot further.”

That isn’t lost on James, who says he and his girlfriend have considered moving up-Island or elsewhere in BC for lower-cost housing. A friend just moved to Prince Edward Island and bought “a really nice house” for an affordable rate.

But he doesn’t want to leave.

“It gets a little bit discouraging, because you have these discussions with people about wanting to have affordable housing... And then you're given all these reasons why it's okay for you to leave, or you should leave... [But leaving] doesn't solve anything.”

—With files from Shannon Waters and Jackie Lamport