Nanaimo Median Single Family Sales Price Falls More Than 10% in Past 2 Months

 

Single Family Prices and Volume

76 single-family homes sold in November, 45 less than the 121 sold in October, over 34% less than the 116 that sold in the same timeframe last year, and the lowest number of single-family home sales since January 2017. The average home price decreased by almost 5% in November to $532,299 from October’s average of $559,149, which is only marginally higher than last November when the average home price was $531,307. This decrease comes on the heels of a 3.95% decrease from September. Taken together, the average single-family home price in Nanaimo has dropped 8.56% in the last two months. The median sale price dipped back under $500,000 for the first time since January 2018, coming in at $495,000 which is 6% less than October’s $525,000, more than 10% below September’s median price, and just over 3% less than last November’s median sale price of $512,000. 124 homes were listed in November representing a decrease of over 38% from the 201 listed in October, and a decrease of 8% on the 135 listed in November of 2017.

Insights: For the second consecutive month we have seen a significant decrease in average and median sale prices for single-family homes, leaving the average single-family home price down 8.56% and the median single-family home price down 10.27%. The market has essentially given back any gains it achieved in 2018 with the average price marginally above and the median price hovering around the range we experienced from May to December of 2017. On its own, is this enough to hit the panic button? Probably not, however, is it a strong warning sign to stay on high alert? You bet it is! The other figure that stood out was the 37% month-over-month and 34% year-over-year decrease in sales volume. While there are fewer listings now than October, this is historically the case as colder weather and the upcoming holiday season keeps many sellers on the sidelines. Despite the decreased number of new listings, the active inventory of 313 was higher than we have had in 24 of the last 36 months, and we have only had 4 months with lower sales volume, all occurring in either December or January. So what is going on? Have you turned on your Vancouver-based evening news lately? If you have, you know the sky is falling...May I reference our 2018 Market Forecast, in reiterating “the Greater Vancouver market is really the “straw that stirs the drink” in our provincial housing market…(and) if the Lower Mainland was to be hit by a more serious correction, a ripple effect is likely to impact Vancouver Island communities, which would no longer be as attractive from an affordability standpoint relative to Vancouver.” The reality is that real estate market volatility is driven by fear and greed. I’d suggest one of the primary reasons sales numbers were down significantly month-over-month and year-over-year is media-induced fear. Social media and other digital marketing has magnified the impact of fear and greed on our society, and while we have benefited through one of the greatest upswings our market has seen over the past four years, please don’t underestimate the power of the media and the fear factor when looking at the downside risks for our local market.

Strength of the Trend

Factors we also look at when analyzing a market to validate its strength are sell/list ratio; sell price; days to sell, and current inventory numbers:

The sell/list ratio increased by 1% to 61% in November, which is a 29% reduction from November of 2017 when the ratio was 86%.

November’s sell price/list price increased to 98% from October’s 97%, which is down just over 1% from November 2017 when the sell price/list price was at 99%.

The average days on the market decreased almost 13% to 27 in November from 31 in both October of this year and November of last year.

As of the end of November, the number of active listings was 313, down 6.5% from the 335 active listings in October, but over 18% higher than inventory levels at the same time last year.

Insights: Looking at each of these figures on their own, there are no major concerns, in fact, we actually have some improvements from some of October’s figures. However, the untold story here is that these figures are largely based on the homes that did sell, which was significantly less than November sales figures for the last 3 years. Had there been more sales, these figures would not have appeared so rosy. With inventory levels at 313 and only 76 sales, the reality is there were 237 sellers that weren’t willing to price their property at a level where there was demand from a buyer. Eventually, if they would like to sell, something will have to give. For the 76 sellers in November something already has, and as a result, the average price was down nearly 5% with the median price down nearly 6%.

One note on the sell/list ratio which for November still looks fairly strong at 61%. Historically November sees a sell/list ratio higher than normal as the number of new listings hitting the market typically decrease heading into the holiday season and pent-up buyer demand eats through much of the existing inventory. As such, the last 3 Novembers have experienced sell/list ratios of 104%, 77%, and 86%, so while 61% is respectable, it is down noticeably from the last 3 Novembers, and potentially a leading indicator of dwindling buyer demand heading into the new year.

Top Performing Neighbourhoods & Categories

9 of the 18 sub-areas defined by the real estate board in Nanaimo saw an increase in the average selling price (trailing 12 months) from October to November, with 15 of the 18 also experiencing increased prices year-over-year. When looking at these neighbourhood figures, it is important to note that we use trailing 12-month figures to limit volatility caused by lower transaction volumes in some neighbourhoods, where a few high priced or low priced transactions could tremendously skew results. A trailing 12 figure will always be slower to react than simple month-over-month, so that is why the results here are not going to be as pronounced as the figures used in the stats we report above. Moving on, these year-over-year average price changes range from -5.69% in South Jingle Pot to 20.85% in Pleasant Valley, with Pleasant Valley holding the number one spot dating back to August. Top risers month-over-month were Cedar (for a second month) and Diver Lake. Top performers year-over-year were Pleasant Valley, Old City, Departure Bay, Diver Lake, Chase River, and Uplands. Looking at volume, the only month-over-month risers were North Jingle Pot, Diver Lake, and Upper Lantzville with no areas experiencing increases both monthly and annually.

Insights: While there are markets that are still showing increases on a month-over-month and year-over-year basis, the number of decreasers is on the rise, and year-over-year percentage increases are trending downwards. While there are some anomalies, the gainers are the historically more affordable neighbourhoods, while the underperformers are the historically higher priced neighbourhoods, which are first to rise in the early stages of a boom, but first to reach the point where affordability comes into question and buyer demand cannot sustain further upward pressure on prices, as buyers are forced to the more affordable, and often further out locations, which explains why late in this cycle we are seeing these areas outperforming.

Single-family (waterfront) on low volume, townhomes, and lots were the only categories that saw an increase in average sale price from October to November, although all categories, except single-family (water), saw increases year-over-year. Lots were the only category to experience month-over-month and year-over-year increases in sales volume.

Insights: Really not much to add here. Month-over-month, volume was down between 33 and 45 percent for single-family, waterfront, apartments, patio homes, and condos. With low volume across the board, a few higher or lower priced sales can have a pronounced impact, and as such, some categories are up and some are down, but there are really no noticeable trends or insights to highlight. Lot sales volume increased, however, if you caught our November newsletter, you may remember that we highlighted that we had seen a tremendous decrease in lot sales over the preceding six months relative to the past few years. Given the time of year, it would be expected that a few lots would move as builders shore up their spring projects.

Opportunities

In a best case scenario, we believe the market is moving towards more balanced market conditions. Pent-up buyer demand has dissipated, either being satisfied by increasing inventory levels, reduced based on government intervention (speculation tax, etc.), stricter lending requirements, higher interest rates, or investors recognizing that the opportunity to acquire cash flowing residential property in the area is now pretty much impossible.

What this means is that discerning buyers who were patient through the heights of the market craziness will now have more selection. With a sell to list price for the four months in the 97 to 98% range, there once again may be some room for negotiation. The drop in sales volume further supports this point as more properties are sitting on the market, so sellers needing to sell are going to be getting increasingly anxious heading into the winter months, and may be ripe for fairly reasonable price concessions. This brings me to another point... As a group when we look back over the past number of years, we often reference the period from about December 20 to January 10, as producing some of the most incredible buys for our clients. "Why?" you ask...Well, who is it that has their house on the market in December, especially if it extends into the holiday season? While this generalization won’t apply to everyone, those on the market need to sell. Whether it be a job-related move, the sellers have purchased another property (possibly subject to sale), divorce, death, or mounting financial pressures, the reality is there is no better time of year for those looking for a deal to find one. However, to maximize your potential savings, ensure when selecting a Realtor that they have the proven negotiating skills and market expertise to be able to put together a strong business case to support getting you the very best price in this shifting market.

If you have been following our market updates, you know that in this segment for many months our commentary has become quite repetitive…“ the opportunity is clearly on the sell side".  So, for sellers, if you have been trying to time a market top to list, (which is nearly impossible and highly risky in our opinion), increasingly you have likely missed your opportunity. With that said, the average price is now only 8.5% below the all-time high, the list/sell ratio of 61% is still reasonably strong for November, and the average days on market is still low by historical standards. While we don’t have a crystal ball to tell you where the market is going (at least not until next month when we will release our 2019 Market Forecast), we do know that unless you bought at any time after May 2017, in all likelihood you are going to be able to lock in some substantial gains should you decide to list in early 2019. However, with more listings currently on the market and fewer buyers, it is all the more vital that the home is priced accurately and competitively to maximize exposure when interest is the highest. Selecting a Realtor with a strong marketing platform and an active approach to marketing your home is becoming increasingly important. While we went through a period for the last few years where a For Sale sign and an MLS listing were enough to entice buyers to write an offer, (definitely not our approach), in this market that haphazard approach is simply not going to cut it.

For investors, on the buy side, patience is going to be rewarded. If you are considering an income property, you are likely best served by looking at other markets or waiting it out as there is no way you are going to cash flow on a leveraged purchase. Given what we have outlined above, we would not recommend speculating on further price appreciation with a negative cash flow property in this market. Just our take…

Remember, over time real estate generally appreciates. We just know there are peaks and valleys. Buy on the way to the peak and you are positioning yourself for success, buy on the way to the valley, not so much. It is our mandate to provide you with information that you can use to determine which side of the peak we are on, and ultimately to help you make informed decisions that you will not regret. On that note, a word of caution: Be very careful where you get your information on the real estate market. The reality is most who are providing an opinion (us included), have their income level influenced by the real estate market and therefore have a vested interest in keeping this juggernaut going. Be cautious… watch the headlines...Make sure you get the full story…

For a consultation specific to your situation, or if you have any questions about market conditions, please contact us at info@jahelkagroup.com and we would be happy to help.

Check out the Nanaimo Market Statistics Here: Monthly Statistics for November 2018

All the best for a joyful holiday season with those closest to you!

Source: VIREB