Nanaimo Market Rockets Higher

2021 Nanaimo Real Estate Forecast.

2021 Nanaimo Real Estate Forecast. Nanaimo is hitting 2021 running wth a seemingly endless supply of Buyers competing for an extremely constrained housing supply, hampering sales while pushing up prices.

“May you live in interesting times” is an old curse that came home to roost in 2020. A year that will forever be used as a benchmark in historical texts. Especially ones about real estate.

Contrary to what most of us would have expected to see in the midst of a pandemic, 2020 saw a super red hot housing market evolve nationwide, a phenomenon that seemingly will continue well into 2021. Once December data is added to the 2020 totals the year will no doubt go down in Canadian real estate history.

Covid Housing Boom

Trying to buy a home in Nanaimo these days is tough. Every “sharply priced” detached house seems to go into a bidding war on day one. 

Nationwide November 2020 saw home sales rise 32.1 percent from November 2019, with 49,564 units sold compared to 37,516. Prices were up too with the 12 month average price of a home sold in Canada rising to $603,344 — a whopping 13.8 percent rise from $530,035 last November.

Here in Nanaimo we saw 129 single-family detached properties sold on the MLS® System compared to 102 in November 2019, a 26 percent increase even though sales dipped by 17 percent from October due to low inventory. The 12 month running average price of a detached home in Nanaimo in November was $611,181 as compared to $562,124 the previous November. A gain of 8.7 percent. Condo unit sales rose in town by 40 percent from last year while prices utterly flatlined with the 12 month running average price of a condo in Nanaimo stuck at $317,174, essentially unchanged from the year before when it was $317,553.

Overall this scenario was not one that I nor many others would have predicted in the year of a Pandemic. 

Market Drivers

The unexpected Covid housing market boom continues to persist across the country, in my opinion due to the following three factors:

  • Crazy low interest rates coupled with an intense appetite more physical space;
  • The Feds are flooding the system with cash so banks can lend out way more money;
  • Supply shortages persist across the country due in large part to municipal red tape that causes crazy delays like 2 years to subdivide a piece of dirt and 3-4 years to start a condo development.

K-Shaped Recovery

Covid will leave us with a chasm of disparity. While some suffer — many prosper — a classic K-shaped recovery. 

“Despite what may be the worst recession in B.C. history, the housing market had a record fall season, and prices are rapidly rising as pent-up demand floods into an under-supplied market,” says the BC Real Estate Association (BCREA). 

A K-shaped recovery splinters the economy as it widens the gap between those who are doing well — from those who are not. In the end a K-shaped recovery makes any existing problems of economic inequality much worse.

Home is Changing

The pandemic has had an effect on where people choose to live and what to live in as demand has shifted more towards detached homes and away from condos in major markets like Vancouver. At least for now. 

In Nanaimo we have seen a big increase in overall demand for all housing types, including condos, due in part to our low population density and easy access to nature. Living in Nanaimo just makes more sense to more folks than ever before. 

On the Horizon

Lost amongst the Covid noise, talk of a potential game changer for Nanaimo re-surfaced during the provincial election. According to Nanaimo News in October, Nanaimo MLA Sheila Malcomson, made a statement that a fast commuter ferry from downtown Nanaimo to downtown Vancouver is… “at the front of the NDP wish list for federal infrastructure dollars. Dollars that are sitting and waiting.”

According to NN, Malcolmson and former transportation minister Claire Trevena met with fast ferry investors numerous times and she remains “optimistic” the service will come to fruition.

“The federal government does have a dedicated fund called foot passenger ferry, established during the Stephen Harper Conservative government. The funding was secured and awaits a final funding decision.” she said.

Like octane poured into our housing market it would have a dramatic effect on pricing and growth as it brings us physically “closer” to Vancouver, one of the least affordable real estate markets in the world. While not directly related (I think), just look at all the condo developments in the area within walking distance to 100 Port Way where the dock is proposed to be located and you can imagine the changes it would create.

Looking Ahead

Nanaimo is hitting 2021 running wth a seemingly endless supply of Buyers competing for an extremely constrained housing supply, hampering sales while pushing up prices.

A market where over half of all buyers each year come from off island, buying homes on the island but not selling on the island, resulting in one of the tightest housing inventory levels in North America. Until demand diminishes or supply somehow increases I do not think we will see an end to the current market tempo in Nanaimo for a while yet. As out of balance as it is. 

That said if the nation’s housing market gets too overheated the Feds may step in to cool it down at some point. While forced to keep rates low to keep the economy going the Feds have other policy tools at their disposal that they can use to dampen demand. Which they have done in the past without warning. Something to keep an eye on.

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