Buyer Demand and Low Inventory Drive Brisk Housing Market
The housing market in the Nanaimo area was busy in October, especially with homes priced below the $700K mark. Single-family home sales in October 2017 rose by 16 per cent from one year ago.
Perhaps the impending mortgage rule changes set to come into effect in January have had some effect or maybe it is the perennially tight inventory, regardless it continues to be way more fun to sell a home than to buy one in Nanaimo these days.
Single Family Home Inventory
At the current rate of sales, (absorption rate), it would take about 2.33 months to sell all single family homes currently listed in Nanaimo — and only 2.00 months to clear out Parksville/Qualicum.
In a balanced market there is about a 5-7 month supply. That means we are still solidly in a “Sellers Market”.
Regional October Stats
The Vancouver Island Real Estate Board (VIREB) reports that single-family home sales in October 2017 rose by 16 per cent from one year ago but dipped 10 per cent from September. Last month, 460 properties sold on the Multiple Listing Service® (MLS®) System compared to 398 one year ago and 511 in September. When looking at these sales figures, however, it is important to note that 2016 was a banner year for real estate. Some market correction was expected in 2017, but sales activity in the VIREB area is still robust.
“VIREB attributes most of the decline in unit sales numbers to ongoing inventory challenges.”
In fact, although the supply of single-family homes for sale has been steadily rising each month since VIREB hit a historic low of 859 in December 2016, inventory in October was just 1,138, down two per cent from last year and eight per cent from September.
In September 2017, the benchmark price of a single-family home in Nanaimo rose 1% to $501,400 from $498,300 a month ago, up 16 per cent from one year ago. (Benchmark pricing tracks the value of a typical home in the reported area.) The benchmark price of an apartment last month rose rose 1% to $284,100 from $282,000 a month ago, up 25 per cent from one year ago, while the benchmark price of a townhouse hit $322,800 from $321,000 a month ago, a 26 per cent increase from a year ago.
The average selling price of a single family home in Nanaimo in October was $516,394 with 129 units sold vs. $526,392 in September with 152 units sold. A year ago it was $473,203 with 114 units sold. The median selling price in September was
Over the last 12 months some 2196 single family homes were listed compared to 2112 a year ago. Of those listed, 1524 units were sold in the last 12 months. As of the end of September there were 301 single famiiy active listings in Nanaimo.
The Nanaimo HPI (Housing Price Index) continues to trend upward, rising to 224.4 in October from 223 a month ago, 219.5 three months ago, and 207.2 six months ago.
Just like last year, I think the market will be more active than usual over the winter months, regardless of seasonal norms. I think the impending mortgage rule changes will help push things along as well as pent up buyer demand from people who have yet to secure the home they desire, thus continuing to look and buy through the winter.
Looking ahead into early to mid 2018, I think the real game changer in this market may be the introduction of a passenger ferry between Nanaimo and Vancouver.
The idea of being able to commute to Nanaimo, where housing is roughly 1/4 the cost of housing in Vancouver, in less time than it takes to drive from Abbotsford, is very enticing to many. Add the fact that Translink wants the passenger ferries integrated into their overall regional transit plan, and it looks as if this could all come together.
Regardless of the skepticism expressed by many in Nanaimo, as this project continues moving forward, speculators may start grabbing properties here in expectation of rising demand.
From a real estate perceptive, this otherwise robust housing market we find ourselves in now, may just be the calm before the storm.
Commuting by ferry has been routine in Seattle for decades, why not here? Affordable housing for Vancouver residents is right here in Nanaimo.
I think if they build it, they will come, possibly in large numbers.
What does it all mean…
Sellers – It is a seller’s market BUT homes that are over priced will sit and languish on the market. The impending mortgage rule changes will effect people’s purchasing power. Other than that fact we don’t really know what if any impact there will be. However, if you’ve been thinking of selling and then buying, it may be a wise move to sell before the changes come into effect and then buy after.
Buyers – The impending mortgage rule changes will effect people’s purchasing power so even if you are already pre-approved, you may want to speak with your lender or mortgage broker to see how it will effect your own purchasing power, if it will you may want to buy now. Multiple offer situations are less common. Look for homes that hit the market with too high a price and as a result have been sitting for a long time.