As one of the leading real estate teams on Vancouver Island, we are committed to keeping our clients informed about the latest trends and statistics in the local market. In this article, we present an overview of Nanaimo, then a cross-section of the Vancouver Island Real Estate Board (VIREB) area's performance, then a broader look at the Canadian Real Estate market touching on consumer confidence, interest rates and sales across Canada.
Sales and Listings Statistics
Single-Family Homes in Nanaimo: There were 488 sales in May 2023, representing an 8% increase compared to the previous year and a significant 25% increase from April 2023.
Single-Family Homes: There were 979 active listings in May, slightly higher than the previous year's 976 listings.
Buyers and sellers are taking a more measured approach, resulting in smart pricing and measured offers.
Benchmark Prices (MLS® Home Price Index):
National Home Sales:
We observed a significant upturn in market activity during April, largely driven by higher interest rates and more affordable home prices. Our Chief Economist, Shaun Cathcart, remarked, Given the top-tier interest rates and favourable home prices, the surge in buyer activity was anticipated. However, the supply hasn't quite kept up with demand, which has led to price escalations across the nation from March to April.
As we move forward, the initial week of May saw a slight rise in new supply, likely as a response from existing homeowners who were attracted by April's buyer activity. This could potentially create a positive feedback loop that encourages more first-time buyers to enter the housing market this year.
In terms of new listings, we saw a modest 1.6% increase in April compared to the previous month. However, it's essential to note that new listings remain near a 20-year low, illustrating the urgent need for more housing stock.
The demand continues to outstrip the supply, as evidenced by April's sales-to-new listings ratio, which rose to 70.2% from 64.1% in March, a figure significantly above the long-term average of 55.1%.
Furthermore, the national inventory shrunk to 3.3 months' worth at the end of April 2023, down from 3.8 months at March's end. This is far below the long-term average of approximately five months. This data paints a clear picture: there's substantial demand in the market, making it an opportune time for existing homeowners to consider selling.
Month-over-Month: National home sales experienced a significant surge of 11.3% in April 2023 compared to the previous month.
Year-over-Year: However, when compared to April 2022, the actual (not seasonally adjusted) monthly activity was 19.5% lower.
The Canadian real estate market experienced a notable increase in home sales in April 2023, indicating renewed activity. However, the supply of listed properties remains low, contributing to a competitive market environment. Despite the monthly increase in the MLS® Home Price Index, there is a significant year-over-year decline in both the HPI and national average sale price, indicating a cooling trend in prices. As the market continues to evolve, it is essential for buyers and sellers to stay informed and adapt to the changing dynamics.
In British Columbia, starts fell by 33 percent in May to 40,536 units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 7 percent m/m to 6,207 units, while multi-family starts fell 39 percent to 32,010 units. Starts in the province were 3 per cent below the levels from May 2022. Starts were down by 22k in Vancouver, while rising by 0.6k in Victoria, 0.6k in Kelowna, and 1.7k in Abbotsford. The 6-month moving average trend fell 2.6 percent to 49.9k in BC in November.
We understand that a robust job market directly impacts the real estate landscape. In March 2023, Canada's unemployment rate remained steady at 5%, representing an impressive 8.4% drop from its peak in June 2020. This figure is currently below the historical average, indicating a healthy labour market.
We've noticed a substantial increase in employment opportunities. In March alone, the economy added 57,000 new full-time jobs, bolstered by a gain of 11,800 part-time positions, contributing to an overall boost of 68,800 jobs. These numbers emphasize the robustness of the Canadian job market and its positive effect on the real estate industry.
Since hitting a low point in October 2022, full-time employment has made a significant comeback and now stands at an all-time high. This trend is nationwide, with every province except New Brunswick reporting full-time job growth in March 2023.
Various sectors contributed to the uptick in full-time job positions in March. We saw an increase from utilities, construction, manufacturing, trade services, finance, healthcare, accommodation & food services, and public administration. However, some sectors, including natural resources, business & building services, and information & cultural services, reported a dip in full-time jobs.
Please note, all these figures are seasonally adjusted three-month moving averages, a process that filters out normal seasonal variations, providing a clear perspective of the underlying job market trends. This strong job growth bodes well for potential home buyers and sellers in the real estate market.
To be a leading real estate team, we need to closely monitor financial trends that might impact the housing market.
The Bank's insights suggest that global economic growth, though stronger than projected, is expected to slow down due to monetary policy tightening in numerous countries. It made special mention of an anticipated deceleration in certain US sectors that will likely impact Canadian exports.
The Bank of Canada today increased its target for the overnight rate to 4¾%, with the Bank Rate at 5% and the deposit rate at 4¾%. The Bank is also continuing its policy of quantitative tightening.
Globally, consumer price inflation is coming down, largely reflecting lower energy prices compared to a year ago, but underlying inflation remains stubbornly high. While economic growth around the world is softening in the face of higher interest rates, major central banks are signalling that interest rates may have to rise further to restore price stability. In the United States, the economy is slowing, although consumer spending remains surprisingly resilient and the labour market is still tight. Economic growth has essentially stalled in Europe but upward pressure on core prices is persisting. Growth in China is expected to slow after surging in the first quarter. Financial conditions have tightened back to those seen before the bank failures in the United States and Switzerland.
On the domestic front, Canada's economic growth in the first quarter exceeded expectations, as per the Bank's analysis. Labour shortages are starting to alleviate thanks to strong population growth. The Bank also noted that housing activity is somewhat subdued and consumer spending is expected to moderate as households renew their mortgages at higher rates. Projected GDP growth for Canada is 1.4% in 2023, 1.3% in 2024, and a more robust 2.5% in 2025.
The Bank anticipates CPI inflation to gradually taper off to around 3% by mid-2023 and continue its decline to hit the 2% target by the end of 2024. However, it has flagged service price inflation and wage growth as potential challenges to achieving its inflation projections. In response to these risks, the Bank is prepared to hike the policy rate further if necessary to return to its target.
We also closely track shifts in consumer confidence, which can profoundly influence market dynamics. The latest data reveals that national consumer confidence has experienced its fourth consecutive monthly rise in April 2023, according to the Conference Board of Canada's consumer confidence index.