I said last month that the Nanaimo real estate market was acting schizophrenic. What I meant then was that the market was acting like a bunch of different sub-markets, each performing independently and differently from one another. On the street it felt, err, well, schizophrenic.
Now if feels like it is settling into a new normal. And it feels more stable.
The new normal seems to be that single family homes say under $600,000 are selling relatively well and are getting showings, while homes in the higher end, especially about $800,000 are not getting many showings and are selling far slower. In between $600,000 and $800,000 the same trend prevails wherein the higher the price, the longer it will sit on the market. Condos, just like in Vancouver and Toronto continue to sell briskly.
Now that we are in June things will be gradually slowing down as we close in on Summer. This is a normal part of any real estate market cycle as families with school aged children typically want to move in July or August so they buy and sell in April, May and June. Of course our market is heavily influenced by baby boomers moving here from elsewhere so we typically remain seasonably active throughout the summer albeit slower than during Spring.
As for me, I work straight through it all regardless what the market is doing, servicing the needs of my clients, both Sellers and Buyers, and doing 4 open houses every weekend along the way.
I also make sure I get out every morning and hike with my two Border Collies, Jake and Cochise and I work on my semi-rural property when I can.
My daughter Rachel is getting married in October so in my off time I watch reruns of Father of the Bride over and over again LOL.
Nanaimo Real Estate Stats Including Parksville / Qualicum
The benchmark price of a single-family home in the VIREB area broke the $500,000 mark in May, rising to $507,700, a 17 per cent increase from one year ago. Sales of single-family homes were down 17 per cent from last year but posted a month-over-month increase of nine per cent.
Last month, 520 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 476 in April and 630 one year ago. The number of apartments and townhouses changing hands in May dropped by six per cent and 11 per cent, respectively. VIREB’s inventory of single-family homes continues to climb, rising from 749 in January 2018 to 1,215 in May.
The supply of apartments dropped slightly last month, down six per cent from one year ago, but townhouse inventory rose significantly.
Housing demand in the VIREB area shifted lower in the first four months of 2018 as stricter mortgage qualifications for conventional borrowers took their toll on household purchasing power and affordability. Other economic headwinds that could dampen demand include higher interest rates and new provincial taxes. However, the attractiveness of Vancouver Island to retirees and millennials is expected to mitigate their impact somewhat.
Despite lower sales thus far in 2018, lack of inventory continues to tilt the market in favour of sellers and push prices upwards. The pace of these increases could slow somewhat if demand keeps declining, but it is unlikely that prices will drop until additional inventory enters the market by way of new construction.
12 Month Trailing Average – Single Family Detached (still rising):
Nanaimo: The 12 month trending average selling price of a single family home in Nanaimo keeps rising as it hit $533,464 in May, up from $530,252 in April. Up 11% year over year, it was $479,204 last May. The average for Condos was $285,097 in May, up only slightly from $284,273 in April.
Parksville/Qualicum: The 12 month trending average selling price of a single family home in Parksville/Qualicum hit $588,341 in May, up from $582,145 in April. Up 16% year over year, it was $506,069 last May. The average for Condos was $269,203, up from $265,116 in April.
Median Selling Price Single Family Detached (still rising):
Nanaimo: The Median Selling Price of a single family home sold in May was $555,000 with a 12 month trailing Median of $507,000 in May vs. $500,000 in April. The Median for Condos was $237,000 with a 12 month trailing Median of $259,000 in May vs. $256,900 in April.
Parksville/Qualicum: The Median Selling Price of a single family home sold in May was $610,000 with a 12 month trailing Median of $544,900 in May vs. $535,000 in April. The Median for Condos was $330,000 with a 12 month trailing Median of $245,000 in May vs. $245,000 in April.
Benchmark Price (still rising):
Nanaimo: A far better indicator than average price, the benchmark price of a single-family home in Nanaimo was $538,500, up only slightly from $537,800 at the end of April. A year ago it was $474,200. Similarly the Benchmark price of a Condo in Nanaimo in May was $317,600, up from $311,200 in April. A year ago it was $255,500.
Parksville/Qualicum: the Benchmark in Parksville/Qualicum was $575,000 in May 38,500, up from $562,800 at the end of April. A year ago it was $491,500. The Benchmark price of a Condo in May was $338,000, DOWN from $342,600 in April. A year ago it was $292,000.
House Price Index or HPI (still rising):
Nanaimo: The Nanaimo HPI™ (Housing Price Index), probably the best indicator of all, rose slightly in May to 241.0, up a tad from 240.7 in April. A year ago it was 212.2.
Parksville/Qualicum: The HPI in Parksville/Qualicum was 234.0 in May, up solidly from 229.0 in April. A year ago it was 200.0.
Absorption Rate: In a balanced market it takes 5-7 months to sell everything listed.
Nanaimo: At the current rate of sales, (absorption rate), it would take about 2.82 months to sell all single family homes listed for sale in Parksville/Qualicum. In April the rate was 2.37.
Parksville/Qualicum: At the current rate of sales, (absorption rate), it would take about 2.73 months to sell all single family homes listed for sale in Parksville/Qualicum. In April the rate was 2.12.
Nanaimo: There were 77 price reductions in May, relatively unchanged from April when there were 76 reductions. There were zero reductions in the MLS last May.
Parksville/Qualicum: There were 42 price reductions in May, relatively unchanged from April when there were 17 reductions. There were zero reductions in the MLS last May.
Inventory – Active Listings, Single Family Detached:
Nanaimo: There were 358 active single family listings in Nanaimo in May vs. 308 in April.
Parksville/Qualicum: There were 165 active single family listings in Parksville/Qualicum in May vs. 134 in April.
Inventory – Units Sold, Single Family Detached:
Nanaimo: There were 139 single families sold in May in Nanaimo with a Sell/List Ratio of 52% and a Sell Price / List Price ratio of 99%. That means in aggregate, Sellers received 99% of their ask price in May. That’s good.
Parksville/Qualicum: There were 58 single families sold in May in Parksville/Qualicum with a Sell/List Ratio of 49% and a Sell Price / List Price ratio of 97%. That means in aggregate, Sellers received 97% of their ask price in May. Not bad.
What It All Means
I’d say the bottom line in this real estate market is it is still a Seller’s market under $500K and in Condos while the market is more of a balanced market in the higher ranges.
Any market that stays too one sided, either favouring just Buyers or Sellers, for too long, is not healthy nor sustainable. Markets get tired and ahead of themselves and this market had been rising without a break since 2014.
My gut read is that the market will continue to stabilize and seek a balance for a while yet. Were upon the slower selling pace now experienced in the higher ranges will continue to move down the food chain until it effects all price ranges.
Looking forward I continue to feel that this market will hold it’s own due to its unique proximity to the Lower Mainland and the fact that this area is arguably one of the best and most popular retirement targets country wide (over 50% of buyers are from off-island). That being said I do not feel that there will be a significant drop in prices as inventory continues to be constrained. And as always, no one can time the market and the market will do what it does.
And like a broken record, I am still optimistic about the proposed Nanaimo to Vancouver commuter ferry and it’s potential to alter the balance in Nanaimo — if and when it gets going and if they execute effectively.
If you’re shopping about $500K take a chill pill. That is to say, you have more time to shop and decide. Make slightly more aggressive offers. Get solidly pre-approved. There are still too many buyers losing out of their dream home because they thought they were pre-qualified or that they’d have no problem getting financing. It is now very tough to borrow money. Get your ducks in a row, before you get buying. 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.
Jeez I am sounding like a broken record. Same as last month Sellers — 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. And make sure you “stage” your house.