Guideline B-20 Stress test continues to impact housing sales in BC but Vancouver Island is a bit more sheltered. The Vancouver Island Real Estate Board, which stretches from North of the Malahat on Vancouver Island, reported sales of single-family homes in February dropped by 28% year over year but were up 10% from January.
Last month, 228 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 315 in February 2018 and 208 the previous month. Apartment and townhouse categories found sales dipped by 20% and 21%, respectively. The inventory of single-family homes in February rose by 23% from one year ago (812 to 999) while active listings of apartments climbed by 17% (224 to 261) year over year and townhouses by 28% (127 to 163).
In its 2019 First-Quarter Housing Market Update, the British Columbia Real Estate Association (BCREA) expects residential sales in the province to increase 2.1% to 80,000 units this year, after recording 78,345 in 2018. MLS® residential sales are forecast to increase a further 6.9% to 85,500 units in 2020, while the 10-year average is 85,800 units. BCREA does believe the negative shock to affordability and purchasing power created by the mortgage stress test (Guideline B-20) is expected to continue constraining housing demand throughout the province this year, cutting the homeownership aspirations of many millennials off at the knees. Locally, the population demographics on Vancouver Island have offered some protection from B-20’s negative fallout, however VIREB’s housing market has not emerged unscathed. The stress test is reducing demand for higher-priced properties and pushing buyers towards less expensive homes, which in turn is compressing the lower end of the market. So far, declining demand has not reduced house prices in the VIREB area. Although Buyers are starting to have more choices, currently inventory still remains tight in several categories.
The benchmark price in Nanaimo of a single-family home rose 3.45% from one year ago to $545,700 and up slightly from January. (Benchmark pricing tracks the value of a typical home in the reported area.) In the apartment category, the benchmark price climbed to $338,900, up 11.76% from last year and almost 2 % from January. The benchmark price of a townhouse hit $357,600 last month, up 8.38% over February 2018 and 3% from January.
The benchmark price of a single-family home board-wide was $507,800 in February, a 6% increase from one year ago and up slightly from January. In the apartment category, the benchmark price climbed to $324,500, up 11% from last year and 2% from January. The benchmark price of a townhouse hit $413,600 last month, up 11% over February 2018 and slightly higher than in January.
Broken down into areas, the benchmark price of a single-family home in the Campbell River area hit $418,100, an increase of 8% over February 2018. In the Comox Valley, the benchmark price reached $504,500, up 7% from last February. Duncan reported a benchmark price of $463,100, up 7% from February 2018 but down slightly from January. The Parksville-Qualicum area saw its benchmark price increase by 9% to $586,400. The cost of a benchmark single-family home in Port Alberni reached $307,100 in January, up 14% from one year ago.
Trend-wise, despite continued price increases, VIREB’s housing market has transitioned from one favouring sellers to one that is balanced or near balanced. Balanced markets offer buyers more choice and more room to negotiate, while sellers may need to curb their expectations. A balanced market does not really favour one over the other. Sellers need to be realistic and price their home correctly as Buyers are very savvy and are less willing to jump into a purchase and many are choosing not to compete in potential multiple offer situations. In Naniamo Single Family homes are still selling within 98% of their listing price if priced correctly.
“When fewer buyers are competing for a property, sellers need to be far more strategic, which is why the advice of a local REALTOR® is so beneficial,” says Kaye Broens, 2019 VIREB President. “We’ll conduct a comparative marketing analysis using recent sales data to determine an optimal selling price for your home.” Broens adds, however, that sellers need to realize the glory days of 2016 and 2017 are over. “We’re seeing a clear disconnect between buyers and sellers,” says Broens. “Many people still want to list their homes at 2016 and 2017 prices, and that just isn’t realistic.”
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