The real estate industry is the healthiest it’s been in over 20 years— with less drama due to a more stable economy. So what’s in store as we look ahead in the year to come?
We might see Millennials delaying their home purchase as a result of feeling financial pressure from student loan debt; coupled with relatively low wages, this makes it difficult to put a downpayment on a home. In higher-priced areas, many feel squeezed out of the market, unable to purchase even a so-called starter home. The 2016 market changes caught us by surprise and then the 2017 market started to balance out. There are still affordable options in Nanaimo with our average home price around $550,000, and we will see a more stabilized market in 2018.
Rising interest rates and new mortgage rules will play a role in cooling our market for 2018, which we are seeing some signs from the Vancouver housing market on the higher priced Single Family side. In my recent meetings in Calgary, I see the market starting to turn around, helped with prospects of more stable oil prices. Calgary plays an important part in our Nanaimo market, with home sales returning in this area we will see more people renewing their plans to retire on the Island.
The Vancouver Island Real Estate Board had its busiest December on record, with 667 housing units changing hands last month, which was probably due to buyers getting in before the new mortgage rules came into effect. Sales of single-family homes increased by 35 percent from December 2016. Annually, 5,612 single-family homes sold on the Multiple Listing Service® (MLS®) System in 2017 compared to 6,059 the previous year, a decrease of seven percent.
Inventory of single-family homes dropped to 762 in December, the lowest recorded since VIREB began tracking inventory in 1999. The supply of apartments and townhouses dipped by 13% and 33%, respectively. Diminishing housing supply and high consumer demand are driving rising benchmark prices of single-family homes, apartments, and townhouses in all markets.
The below chart gives you a cross-section of Nanaimo. North Nanaimo remains the strongest sales market with South Nanaimo following, keeping in mind that other areas don't have the new supply or inventory to compete.
The British Columbia Real Estate Association (BCREA) notes that the housing market in B.C. is thriving due to strong economic fundamentals, such as robust retail sales, job growth, and population growth. BCREA’s Fourth Quarter Housing Forecast states that the provincial economy is on track to expand by 3.8 percent, the fourth consecutive year of three percent or more real GDP growth. The cumulative effect has fuelled employment growth to its strongest performance in almost 20 years, with the provincial jobless rate at its lowest level in nearly a decade.
The graph below shows a cross-section of Vancouver Island prices for single-family homes averaging a 17% increase over the year.
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