Nanaimo Market Update July 2023
In June of 2023 the Nanaimo real estate market was very similar to one year ago in the majority of categories. From last June to July, the Bank of Canada rate increases caused a dramatic decline in the amount of transactions in a monthly period. With less transactions happening, we were thrown from a Seller’s to a Buyer’s market abruptly which caused decreases to the average home price, longer days on market and multiple offers became rarer. This continued through to the end of the year, and from the start of 2023 the Nanaimo real estate market has been making leaps towards a recovery.
Year over year there is less than a 1% difference to the average home price, indicating that home prices are nearly identical to last year. The average home price of $876,671 is also a 5.5% increase from May of 2023. Looking at both of these statistics indicates that while the average price is fairly unchanged from a year ago, we are still trending upwards from where we were. With the average home price being a minor indicator of the real estate market, it’s important to look at all of the other stats that will paint a clearer picture of where the market is, and where it may be headed.
Another important factor to look at is the days on market. Days on market itself doesn’t typically have an effect on home prices as this is the measure of how long it takes for a home to sell at a given price point. In different price points, the days on market may be lower, such as a single family home under $600K. They may also be higher for listings that require a specific type of Buyer. These different property types with ranging days on market do a fairly good job at keeping the average days on market less volatile month over month, but when the market goes through bigger changes, this number can change quite quickly. In June of 2023 the average days on market decreased by 22.5% to 24 days on market. These double digit shifts indicate that the Nanaimo real estate market is seeing a shift in supply and demand that is effecting the competitive landscape of the real estate market. This added competition has Buyers trying to see homes as soon as they come on the market so that they can beat the rush of multiple offers.
At this point, multiple offers isn’t anything new to Nanaimo and the majority of Canada. During the pandemic almost every property sold had multiple offers. When the markets started to decline in the summer of 2022, we saw multiple offers start to disappear, which saw more Buyers feel confident in their purchasing power and they started to come back out of the woodwork. As this started to happen we were also effected by rising interest rates which limited the number of Buyers that were able to afford the type of home that they wanted, making this a very gradual reentry to the market. As bond yields continued to hold low, fixed mortgage rates also stayed lower than variable rates, which brought more Buyers into the market. Combining these two pieces of information with the fact that we are now in the busy summer real estate market leads us to where we are today. With the average home price on the rise, while days on market is steadily falling, the market is showing that the demand that we have for housing is currently outpacing our supply. Year over year, the amount of sales in June was only 2.5% less than 2022, but we have 18% less new listings than we did in 2022. These figures attribute to the average house price increase by using scarcity to keep prices higher.
Despite the higher prices, Buyers still need a place to live, and they start to get the fear that if they don’t buy now, they will be priced out of the market, which puts more pressure on the real estate market by creating the mentality that if a Buyer sees a home that they like they must be writing an offer almost immediately. This feeds into creating situations of multiple offers and lower days on market because every Buyer wants to write their offer as soos as possible so that less Buyers get the opportunity to see the property and compete. To do this, Buyers are writing offers within the first few days of a property being listed and very close to the asking price. Once an offer is received any one else who saw the home needs to decide if they are also going to write an offer, often with only a few hours to get prepared. This can be supported by the sale to list price ratio which increased to 99.81%. For reference, this would be a $1 million home selling for $998,100.
The statistics all indicate that we are in a Seller’s real estate market for the time being, but that doesn’t mean that purchasing a home is impossible! Having the right strategy to identify properties, create strong offers, and getting creative with terms can have a big impact on your success.