It’s often said that December and January are not great predictors of the market, and for good reason.
December is typically slow as no one really wants to list their property for sale and buyers aren’t looking all that hard as they know there’s little product.
Traditionally January is a slow month too, as many new buyers are merely starting their search, and aren’t officially “active” yet. And the holdover buyers also know the year has just begun, and they want to see what else hits the market as the spring progresses.
So far in Nanaimo, however, the market has not gone according to plan.
Due to the January 1st mortgage rule changes, December 2017 was the busiest on record for unit sales, resulting in the lowest inventory on record in January, which further skewed the numbers and drove up prices — even though unit sales dropped.
All along, feverish demand from unsatisfied buyers has been chipping away at whatever new inventory hits the MLS® since then, if it’s priced right that is.
Having seen incredible activity last February/March/April, the data from here on out, and into the summer, is going to look raw from a year-over-year standpoint.
So now let’s see what the data says…
Market Stats for February 2018
Last month across the Vancouver Island Real Estate Board (VIREB®) area, essentially everything other than Victoria, 316 single-family homes sold on the MLS® throughout the central and island region compared to 288 in January (low inventory) and 345 one year ago (more inventory). The number of apartments changing hands in February rose by 28 per cent while townhouse sales decreased by four per cent.
There were 812 single-family homes for sale from Duncan north in February compared to 749 in January and 947 one year ago. The supply of apartments and townhouses also rose slightly from 2017, up three per cent and five per cent, respectively.
These modest inventory increases are welcome, but since new listings are snapped up so quickly, this additional supply will not move the VIREB® market out of sellers’ territory.
Broadening the scope of the Foreign Buyer Tax to include the Regional District of Nanaimo (RDN) has not and will not have a significant impact on the VIREB® housing market as only 4.4 per cent of RDN residential real estate transactions in 2017 involved foreign buyers. More troubling is the new speculation tax, which targets homeowners who do not pay income tax in B.C., including those who leave their homes, or recreation properties, empty but still contribute heavily to the economy.
Average: The 12 month trending average selling price (http://nanaimorealtyblog.com/real-estate-market-terms/) of a single family home in Nanaimo at the end of February was $521,920, up 14% from $457,283 a year ago, with 85 single family homes sold in February versus 96 a year ago. The trending 12 month median was $495,000. The average selling price of homes sold just in February was $551,961 while the median for the month was $545,000.
Benchmark: 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, up from $514,400 in January, $497,200 three months ago, and $445,600 a year ago. A year over year rise of 15%.
HPI: 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 as compared to 230.2 in January, 222.5 three months ago, and 199.4 one year ago.
Absorption Rate: At the current rate of sales, (absorption rate (http://nanaimorealtyblog.com/absorption-rate-defined/) ), it would take about 1.55 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 versus 23 in January, 16 in December, 55 in November, 28 in October, and 10 in September.
Inventory – Active Listings: There were 210 active single family listings in Nanaimo in February versus 239 last year. In February there were 65 condos, and 41 townhouses and 42 lots for sale as well.
Province Wide: The British Columbia Real Estate Association (BCREA®) reports that a total of 6,206 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in February, a 5.7 per cent decrease from the same period last year.
Real Estate Articles I Liked This Month
While Nanaimo is barely touched by the new Foreign Buyers Tax, (under 5%), we’re definitely affected by the hair brained “vacancy tax” that penalizes hard working Canadians who dare to own a vacation or second property – Albertans who own vacation properties in B.C. face new tax (http://www.cbc.ca/news/canada/calgary/alberta-property-owners-bc-tax-1.4548251)
Sellers and Buyers should both read this article that basically says … buyers, don’t be sucked in by staging and sellers, stage like there’s no tomorrow: “Don’t fall for the staging: Real estate expert on how to avoid rookie buyer mistakes.” (https://www.ctvnews.ca/business/don-t-fall-for-the-staging-real-estate-expert-on-how-to-avoid-rookie-buyer-mistakes-1.3811231?utm_source=Website+subscription+list&utm_campaign=fadfa7c19c-EMAIL_CAMPAIGN_2018_03_06&utm_medium=email&utm_term=0_79abdde31f-fadfa7c19c-189378021) There’s a reason I help my clients to stage ALL of my listings!
What It All Means
It all means we are still solidly in a “Sellers Market”.
And for Buyer’s things have gone from bad to worse.
Even with the new taxes, tougher lending rules, vacancy taxes, and higher interest rates, demand appears insatiable under $600K and almost circus like with anything under $400K. The market gets progressively calmer the higher you go and especially above $700,000.
Of course nothing goes up forever but for now it is party time for sellers — and stress time for buyers.
This market is like no other in Canada, ever. Really, it’s a perfect storm and here are the key factors …
* Vancouver Island is now the retirement mecca of Canada with a veritable tsunami of retirees just on the horizon;
* Nanaimo is close to Vancouver and prices are still relatively very reasonable;
* Victoria prices are beyond reach to many buyers and Vancouver is in the stratosphere;
* Interest rates are historically low and apparently stable again;
* Quality of life here is unbeatable;
* Investors can still ALMOST cash flow.
* Both BC Ferries (https://www.cheknews.ca/foot-ferry-between-nanaimo-and-vancouver-could-begin-in-july-418910/) and a private company (http://nanaimorealtyblog.com/nanaimo-vancouver-passenger-ferry/) promise fast, passenger only commuting ferries, downtown Nanaimo to downtown Vancouver, starting this summer.
Potential speed bumps along the road …
New construction is underway throughout Vancouver Island, with multiple housing units expected to complete in 2018 but that new supply will disappear quickly to pent up demand and we need more high paying jobs.
CREA®, the Canadian Real Estate Association, is predicting falling prices across Canada by years’ end, but only a tad in BC they say – and if you prescribe to the so called 7 year cycle idea, we’re well into year 6.
Or it just keeps going up like in Vancouver. No one knows what is coming around the next bend in the road.
Bottom line …. the only for sure thing about Real Estate is that it’s crystal clear in the rear view mirror. That being said, the fundamentals I just laid out promise things will stay crazy here for a while yet.
For now this is clearly the best time in history to sell a house in Nanaimo, period, and the most challenging time ever to buy one. For those who do however, they are seeing the values of their new home’s rise quickly after they buy, and that’s a great feeling 🙂
Buyers: Have your ducks in a row and be pre-approved or stay home. If you’re shopping under $500K, don’t try to get a deal, get a house instead. Go in with all guns blazing. Work with a REALTOR® who knows the local market and offer so much that if someone else gets it for a buck more, you’ll say they can have it.
Sellers: 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. When it stops it will just stop. If you’ve made a good profit and want to move, downsize or even up size, sell now. Don’t assume that by waiting you’ll make more, remember the bull and bear thing.
Hi, I’m Jeff Wood and I love living in Nanaimo! And I love helping people make their move!
My wife and I moved to Nanaimo from Richmond in 2015, after raising our two kids there. We brought along our two precocious Border Collies; Jake and Cochise, who are sure they moved to Doggy Disneyland in the process. We live in Upper Lantzville and love it!
Before becoming a Realtor, I was a professional investor owning 8 multi-family properties with 24 tenants. I also spent 20 years as an Executive Headhunter, finding talented people for Fortune 500 clients in the USA and Canada. In that role, I functioned regularly as a professional negotiator, working with both sides to create a win win scenario. I also helped candidates relocate to start their new jobs and thus I have a lot of relocation experience.
Now as a realtor I apply all of these hard earned skills to the benefit of my clients, whether they’re buying, or selling, delivering results that move them!