2019 Nanaimo Housing Market at a Glance
While the Vancouver and Victoria markets are still in recession in 2019, Nanaimo housing market is balanced and shows slight growth. Four distinguished trends can be observed:
- Reduced volume and stable price
- Luxury market frustrated while affordable homes get more expensive
- Seasonal fluctuation shows new signal
- Reduction of inventory
Let’s explore these four aspects and analyze their implications.
1.1 Reduced volume and stable price
The volume of properties reduced in 2019 for the Nanaimo Real Estate market but the prices are still stable.
Table 1： 2015—2019 Nanaimo Price Trend
Date from Vancouver Island Real Estate Board
Table 1 shows prices of single family homes and condos rose slightly , but the increase was less than 5% , and the volume has reduced both in 2018 and 2019. Nanaimo’s single family house sale volume has reached its lowest rate since 2015. Compared with 2018, sale volume of lots in Nanaimo has increased and the price has dropped slightly. Town house average price was up by 10.70% in 2019, and was the only property type that experienced significant price increase among all four major housing types.
1.2 Luxury market frustrated while affordable homes get more expensive
Table 2 :2015-2019 Nanaimo Waterfront Single Family and Acreage– Price Trend
Date from Vancouver Island Real Estate Board
Comparing Table 2 with Table 1, it can be observed that the luxury market went through a downturn while affordable homes get more expensive. Ocean front and acreage are major luxury home types, and the average price of these two property types both reduced in 2019. In comparison, affordable housing types still showed price increase to some extent.
1.3 Seasonal fluctuation shows new signal
Golden Spring Silver Autumn refers to the existence of seasonal factors, Nanaimo real estate market prices normally starts getting hotter from early spring, reaches the peak of the year around May, and then gradually goes lower, creating the second higher point of the year around October, and then cools down when the end of year approaches. Spring peak was usually seen in previous years, but in some years, the fall boom doesn’t necessarily appear.
Figure 1: Average monthly price and sales volume of Nanaimo Single family home in 2019
From Figure 1, it can be seen that the phenomenon of golden spring and silver autumn is very obvious in 2019. From January to March, the price of ordinary detached houses increased slowly, and rose rapidly from March to May. Then in May 2019, the average hit a record high of nearly $600,000. Since then, from May to August, the price has gradually decreased, and then after a small climax in September, it began to decline again, and reached a second peak at the end of 2019.
From January to October 2019, the trend did not deviate from the scope of previous years. However, from November to December 2019, a new situation occurred, which is a very active market at midyear, and a secondary price peak at the end of the year. This may herald a new change in the market: after continuous rises in affordable housing, higher-end housing types such as water front and acreage may usher in a new round of growth. The following shows the price chart of single family detached home from 2015 to 2018. Readers are welcome to compare.
Figure 2: Average monthly price and sales volume of Nanaimo Single family house 2015- 2018
1.4 Reduction of inventory
The decline in stock here refers to: at the end of 2019, the inventory of detached houses in the Nanaimo real estate market has decreased significantly compared with the end of 2018. As shown in Table 3, at the year end of 2015, 2016 and 2017, the entire Vancouver Island, including Nanaimo, held a record low inventory, which demonstrates how hot the market was. At the end of 2018, the stock of detached houses in Vancouver Island and Nanaimo both increased to a certain extent compared with the end of 2017, which illustrates the downturn in the real estate market in 2018.
Table 3: Inventory of single family detached home at year end of 2015-2019 ( Vancouver island and Nanaimo)
Note: The above data is from Vancouver Island Real Estate Board
In 2019, the inventory of the market is different from 2018: the inventory of detached houses in Nanaimo and Vancouver Island has declined. It is worth noting that in the last two months of 2019, Nanaimo’s detached house listings have shrunk extremely, while sales have been basically stable, resulting in November and December sales ratios of 108.53% and 97.10%, respectively. This phenomenon has important significance.
Analysis of housing price trends in Nanaimo real estate market in 2020
In reviewing the market in 2019, we need to pay special attention to the end-of-year effect of the Nanaimo real estate market, which means that there is a large backlog of buying interest in the market. If these interests are not effectively released, it will push the market price up. The mainstream of Nanaimo real estate, single family detached houses, reached a sales-to-new listings ratio of about 100% in November and December 2019. The most recent case of this phenomenon was at the end of 2015. The following shows the average prices sales-to-new listings ratio of single family houses in Nanaimo for November and December 2015 and November and December 2019.
Table 4: Nanaimo sales-to-new listings ratio November and December 2015 and 2019.
Note: The above data is from Vancouver Island Real Estate Board
In fact, Vancouver’s real estate market also experienced a similar trend at the end of 2019, and sales have increased significantly. Looking at Table 6, in December 2019, Vancouver’s sales of detached houses, townhouses and apartments were almost double the same period last year.
Table 5: Comparison of Vancouver real estate market sales in December 2018 and December 2019.
The above signs indicate that the real estate market in major cities in BC is in short supply. If there is no special black swan event in the next year, a rise may be in the pipeline.
If you are considering buying or selling in 2020, the following are my personal suggestions:
Buying a home
There is no need to wait any longer if you are looking to buy a home to live in. Judging from the performance of the Nanaimo real estate market over the years, its prices usually continue to rise from January to May, and the seasonal lows that may occur in July and August are not necessarily lower than those in January and February at the beginning of the year. In addition, for homes for personal use, they often has strong individualized needs. Nanaimo is a relatively small market and there are not a lot of homes that suit a specific need. Newly added listings tend to attract more market interest in the early stages of listing and it is usually more difficult to negotiate prices. Therefore, once you find your own home (especially in existing inventory), you should consider taking quick action.
Buying an investment property
From investment property, the following two aspects need to be considered:
① Whether to transition from an investment model focusing on rental returns to on asset appreciation.
② Whether a major black swan incident could happen.
Potential black swans include:
A. In the year of the US election, will US stocks experience a cliff-like decline, and if so, how will it affect Canadian real estate?
B. Whether the Sino-US trade war will continue
C. Whether the Canadian economy will experience sharp decline
D, Whether there will be significant changes in Canadian immigration policy
E. Whether China-Canada relations will experience significant changes. This article will not elaborate on these topics one by one.
The above opinions are for reference only. Real estate is the largest family investment. In 2020, the beginning of the new decade, everyone should consider their own family needs and make decisions that fits best.
If you are considering buying and selling in 2020 and are not sure what’s the best move, I’m happy to discuss with you. Feel free to call me!
