We have just come off the busiest December on record, with sales in the Vancouver Island Real Estate Board returning to somewhat normal levels in January. Last month, 290 single-family homes sold on the Multiple Listing Service® (MLS®) compared to 327 in December and 244 one year ago. 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 (Vancouver Island Real Estate Board) area. The number of apartments changing hands in January rose by 65 per cent with the supply of apartments and townhouses dipping by 19 per cent and 30 per cent respectively.
We need to watch economic headwinds which may appear in the form of higher interest rates and mortgage stress tests, as well as the new foreign tax levy and speculation tax. However, demographics in the Nanaimo area could temper the effects because many of our buyers are retirees who do not usually carry mortgages and are moving from within Canada.
BCREA expects economic growth in the province to slow this year, expanding at a respectable 2.8 per cent, but lower than we have seen in some time. Rising interest rates will erode affordability for some home buyers, and Guideline B-20 (Residential Mortgage Underwriting Practices and Procedures) could reduce the purchasing power of conventional mortgagors by up to 20 per cent. Again, demographics in the VIREB area are weighted with retiree buyers who are typically not impacted by higher ratio mortgages, if any. Vancouver Island communities, particularly the Parksville/Qualicum area, have some of the highest concentrations of seniors in the province.
Nanaimo’s benchmark average property price 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, dipping slightly from December 2017.
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