The Nanaimo Housing Market is on fire! It even feels busier than this time last year, and that’s saying a lot.
Here’s my February 2018 Nanaimo Housing Report based on data for the month of January and my take on what’s happening on the ground in town right now.
Many find housing market data cold, unemotional, and factual while the media and some buyers, and some sellers, prefer to ignore that data sometimes and instead try to will the market into being what they want it to be.
Some Buyers start off slowly, like they have all the time in the world. They assume something better will come and they try lowball offers, and miss out, and gradually learn its very competitive out there.
And some Sellers put off selling their home, thinking the market will always be in their favor and will keep going up forever. That unlike everyone else, they can “time the market’. So they decide to wait until they think they’ve hit the top and only then decide to sell. Of course the market doesn’t care and doesn’t warn you before it corrects, it just does.
Out on the street, places are selling fast, often with multiple offers, with no end it sight.
For now it’s up up and away…
Market Stats for January 2018
Coming off the busiest December on record, sales in the VIREB area returned to seasonally normal levels in January. Last month, 290 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 327 in December and 244 one year ago. The number of apartments changing hands in January rose by 65 per cent while townhouse sales remained static from the previous year. Inventory of single-family homes dropped to 749 in January, a 16 per cent decrease from one year ago and a new low for the VIREB area. The supply of apartments and townhouses dipped by 19 per cent and 30 per cent, respectively.
Average: The average selling price of a single family home in Nanaimo at the end of January was $522,608, up from $518,449 at the end of 2017, with 1605 units sold in 2017 vs. 1698 units sold in 2016. The median selling price was $499,900, up from $489,900.
Benchmark: In January 2018, the benchmark price of a single-family home, in Nanaimo, rose 19 per cent to $514,400, while the Parksville-Qualicum area saw its benchmark price increase by 14 per cent to $519,700 from one year ago, and dip slightly from December 2017.
HPI: The Nanaimo HPI (Housing Price Index) was trending almost flat for the last quarter of 2017 but rose in January to 230.2 as compared to 224 in December, and 224.4 three months ago, and 219.5 six months ago. It was 194 one year ago and 151.1 three years ago.
Absorption Rate: At the current rate of sales, (absorption rate), it would take about 1.54 months to sell all properties listed for sale in Nanaimo, as of the end of January, (it was 2.38 in December). In a balanced market there is about a 5-7 month supply. That means we are still solidly in a “Sellers Market”.
Price Changes: January saw 23 price reductions in Nanaimo, 16 price reductions in December, 55 in November, 28 in October, and 10 in September.
Inventory: Inventory of single-family homes dropped to 749 in January, a 16 percent decrease from one year ago and a new low for the VIREB area. The central island had its busiest December on record, with 667 housing units changing hands.
What It All Means
While Nanaimo is currently a hot, rising market, some economic headwinds are already evident: rising interest rates in Canada AND the USA; tough mortgage stress testing rules; slowing economic growth expected this year in BC.
While these headwinds are of concern, baby boomer demographics in the VIREB area could temper their effect because many of our buyers are retirees who do not usually carry mortgages and as I’ve said before, this is the retirement mecca of Canada. I also think the advent of a “reliable” commuting ferry in 2018, will have a very positive effect on the Nanaimo market, especially to the perception of this being a place to invest.
New construction is underway throughout Vancouver Island, with multiple housing units expected to complete in 2018. Lantzville is about to explode in growth with literally many hundreds of single family homes slated to be built.
More housing supply is good news for prospective home buyers but could temper rising home prices and move the market toward more balanced conditions, which would impact sellers.
Buyers: Multiple offers are commonplace, especially for properties in the $300,000 to $500,000 range. Have your financing and all your other ducks lined up. Connecting with a local REALTOR® is especially crucial in a competitive housing market.
Sellers: Prices are still rising, but that cannot continue indefinitely. If you list now you’ll take advantage of 3 years of rising prices and a ton of buyers. At some point, buyers will begin bowing out of the market due to affordability issues. And a jump in supply could have a negative effect on price.
Real Estate Articles I Liked This Month
If you thought the 15% foreign buyer’s tax in Vancouver was a good idea, what about an outright ban on foreign ownership? There is some support for this market crushing idea. “Horgan Dismisses Call To Ban Foreign Ownership Of B.C. Real Estate.”
The idea that BC mayors think they can cool housing prices without creating a crash by targeting speculators, sounds risky to me. These municipal politicians say they can create a “soft landing” that eventually leads to “stability” and some semblance of affordability. Just cool the market a bit then. Not risky at all. Nuts.“BC mayors start targeting speculators to cool housing prices.”
I’m here to help.
Royal LePage Nanaimo Realty
Market Data Source: Vancouver Island Real Estate Board Reports