Nanaimo housing market in a word, Schizophrenic …
From this REALTOR™’s perspective there are multiple housing markets at play, all coinciding with one another, and yet distinct from each other. Bottom line, there is little to no logic at play and nothing is consistent right now.
REALTORS™ are scratching their heads more often than usual. In fact trying to keep track of it all is enough to cause this REALTOR to lose the rest of his hair (and there’s not much left to lose).
The high-end is really slow; houses under $500K are selling well, yet not always; homes that make sense to investors are selling, most of the time; houses above $600K are slow; condos are selling briskly as are patio homes and townhouses; mobiles in good parks are going to multiple offers; houses above $800K are languishing; most million dollar homes are sitting (yet a $1,.3 million walk on beachfront home SOLD this week AND had 5 offers)… in other cases homes with awesome views are sitting whereas a year ago they would have garnered multiple offers and sold above asking price, often the day they hit the market.
A so-so home may go for a bigger dollar than a much better home a few doors down that hits the market a few days later.
All of a sudden someone will overpay for a property for no apparent reason, often from out of town (they should follow my blog.
Way more new listings are coming from North Nanaimo than South Nanaimo.
Ladysmith has an inventory crisis and as a result things are selling faster than normal.
The data showed a 30% plus drop in March single home sales in both Nanaimo and Parksville/Qualicum while inventory was constant year over year. With such a big drop in unit sales across the board I was really concerned about April and anticipated a similar drop, however the data shows that it was not a bad month for unit sales after all.
If that’s the silver lining, then the other dark cloud has got to be the huge jump in the number of price reductions in April and so far in May.
February saw 27 price reductions, March saw only 14 and April saw 76 price reductions, a really big number. There were 23 in January, 16 in December, 55 in November, 28 in October, and 10 in September. There was only 1 price reduction in April 2017.
Market Stats for March/April 2018
Sales of single-family homes, apartments, and townhouses in the VIREB area (all of Vancouver Island outside of the Victoria Capital Region) all dipped in March 2018, likely due to a combination of government policy changes, stricter mortgage qualification rules, and consumer uncertainty.
Last month, 476 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 398 in March and 476 one year ago. The number of apartments changing hands in April decreased by six per cent year over year while townhouse sales rose by 26 per cent.
VIREB’s inventory of single-family homes climbed by eight per cent from March 2018 however decreased by six per cent from one year ago. The supply of apartments dropped in April, down 12 per cent from one year ago, but townhouse inventory rose by 30 per cent.
The British Columbia Real Estate Association (BCREA™) reports that housing sales in many B.C. jurisdictions are down compared to last year. Guideline B-20 and uncertainty surrounding new provincial taxes appear to be taking their toll on sales in some markets.
Broadening the scope of the Foreign Buyer Tax to include the Regional District of Nanaimo (RDN) should not have a significant impact on the VIREB housing market. Only 4.4 per cent of RDN residential real estate transactions in 2017 involved foreign buyers. More troubling is the new speculation tax, which is supposed to be implemented later this year. The tax will apply to Nanaimo and Lantzville, but it will take a few months to see whether it has a detrimental impact on sales.
BCREA™ also expects the Bank of Canada to increase interest rates in the next couple of months, which introduces another risk factor into the housing market.
For now, however, demand is still outpacing supply in the VIREB area, particularly in some price ranges. Properties in the $300,000 to $500,000 range generate multiple offers and sell quickly. However, higher-priced homes are taking longer to sell.
Average (still rising): The 12 month trending average selling price (http://nanaimorealtyblog.com/real-estate-market-terms/) of a single family home in Nanaimo keeps rising. It was $521,920 at the end of February, $525,712 in March, and $530,252 in April — up 13% from $470,186 a year ago.
The Median Selling Price (still rising) at the end of April was $532,000.
Benchmark (still rising): A far better indicator than average price, the benchmark price (http://nanaimorealtyblog.com/real-estate-market-terms/) of a single-family home in Nanaimo in February was $524,400, it was $528,900 in March, and $537,800 at the end of April — a year over year rise of 16%.
HPI (still rising): The Nanaimo HPI (http://nanaimorealtyblog.com/real-estate-market-terms/) ™ (Housing Price Index), probably the best indicator of all, rose in February to 234.7, in March it was 236.7 and 240.7 in April. A year ago it was 207.2
Absorption Rate: At the current rate of sales, (absorption rate (http://nanaimorealtyblog.com/absorption-rate-defined/) ), it would take about 2.37 months to sell all single family homes listed for sale in Nanaimo. As of the end of January it was 1.54, and in December 2.38 months. In a balanced market there is about a 5-7 month supply.
Price Reductions: February saw 27 price reductions, March saw only 14 and April saw 76 price reductions, a really big number. There were 23 in January, 16 in December, 55 in November, 28 in October, and 10 in September. There was only 1 price reduction in April 2017
Inventory – Active Listings: There were 308 active single family listings in Nanaimo in April versus 272 in March.
What It All Means
It has become a good time to be a Buyer.
Price reductions are common place while prices retreat to those we saw 6 months ago, or even longer.
The market is in flux and behaving unpredictably right now. It may continue to soften or it may turn to the upside or just sit there and go sideways for a while and take a rest.
The market seems to have peaked in the higher end while it can still feel like a Seller’s market in the lower end.
Condos are hot.
Properties that are priced between $600K and $800K are getting very few showings but are selling. Prices above $800K are not. Homes in the lower end that are priced well are still occasionally getting multiple offers, especially if they have a suite and are in a hot area.
No question government intervention is working and so are the effects of rising interest rates.
Where we go from here is anyone’s guess. No one has a crystal market and no one can time the market.
Surprises to the upside may come from the proposed private commuter ferry from Island Ferries, slated to start operating this summer, although they have been silent now for a few months. And baby boomers are, and will continue to flock to this, the best area to retire in Canada!
This is the best time to find a deal in 4 years. Don’t try to time the market, you can’t. The market may go up, or down in the short run. Buy what you like and can afford. You will make money in the long run no matter what happens in the short run. Remember the more above $500K, the more the deck is stacked in your favour — under $500K it’s still more in the Seller’s hands, for now at least. Many properties are over priced so try a lower offer when it makes sense.
The old stock market saying … Bears and Bulls make money, Pigs get slaughtered, applies right now. Don’t be greedy and don’t try to time the market, you can’t. No one has a crystal ball. If you actually want to sell now, price it to sell now. If you’re in the market already and think you should drop your price, do it now. If you hold out for that elusive higher price for too long, the market may slip away from under you, causing you to sell for even less in the long run. Sellers should always try to stay ahead of the market trend, whether it’s going up, or down.
On the Fence
Homeowners keen to move yet waiting for that perfect next property to come onto the market first, run the risk of missing the market entirely as it slides downward.
Another strategy is to sell higher now and then buy lower in a couple months.
How? By utilizing a “Rentback” to gain the time you need to find that perfect next home. A “Rentback” affords you the chance to sell now, while the market is still relatively high, and then buy later, while the market either stalls, or even falls. Again no one can time the market but there is nothing on the horizon to indicate a rise in prices anytime soon and this is a way to realize your dreams — and maybe pocket some extra cash in the process.
To learn how a “Rentback” works, please call me anytime at 250-797-7028 and I’d be happy to explain.
Good luck out there!