Months of Inventory

Supply has shot up in recent months. In November this year, there was nearly four times the inventory of the previous November. There is a massive buildup of Condos/Townhouses as only 7 sold out of 422 this November compared to the previous year of 35 sales. Texada and Regency Vista and others are attracting few buyers since being listed in the spring/summer, and we have yet to see any huge price decreases. Perhaps the developers are waiting for the buyers to return. But will they return? Currently there is an economic downturn and people are finding it harder to get financing these days as well as being unable to put 0% down on a house.

Is it a good time to buy?

Well...here goes the first post of this blog. I came across an article in the Nanaimo Daily News about real estate at:
http://www.canada.com/nanaimodailynews/news/story.html?id=a4453218-6c9a-408d-b090-18dc4689ae4b&p=

There are a few points I'd like to discuss:

With financial institutions lowering mortgage rates to levels not seen in decades, it may just be a perfect time to purchase residential and investment real estate.

Speaking in terms of your monthly payments, you are saving a lot of money over time if your interest rate is lower. On a 300k mortgage over 25 yrs, the savings are almost $200 a month for each % drop.

Don Fauchon, a mortgage broker with Invis in Nanaimo, said "it is an excellent time to invest in real estate here."
In November of this year, 50 homes were sold in Nanaimo compared to 104 during the same month last year.

When sales drop by that staggering amount, it affects a lot of people. Brokers rely on these transactions or they won't make any money. It is in the best interest of a mortgage broker to tell people it is a good time to buy. It probably always is a good time to buy for them since money and a job is on the line. Imagine clients sitting at their desk and the broker ever saying "Now is a bad time to buy, you better hold off on that".

But according to statistics from VIREB, more homes were sold in Nanaimo during November than any other VIREB reporting area.

Of course more houses will sell in Nanaimo each and every month! This is not a new trend by any means. Nanaimo has a lot of more people and inventory than any of the other areas. Perhaps this sentence was included to make Nanaimo look like it is more desirable than other areas.

Matthews said some homes in Victoria and Vancouver could drop in price by as much as 30% to 40% and homes would still be more expensive than equivalent homes in Nanaimo.

Nanaimo boomed just like those two cities did during the escalation of prices. Why would it not join them on the way down? This should read "and homes would still be more expensive than equivalent homes in Nanaimo at current prices." Take a look at what is happening in Kelowna, it is literally a meltdown.

Over at Realty Times, Rob Grey gives us an honest look at the big picture
http://realtytimes.com/rtmcrcond5/British_Columbia~Nanaimo~robgrey

On a day to day basis watching the market intently I have viewed downward price adjustments averaging over 8% since Spring '08. Buyers have a large inventory of homes from which to choose with sellers demonstrating much more movement on price both in the form of price adjustments and additional movement on price during negotiations. This latter statistic is based on the average selling price being 97% to 98% of the current list price - this stat was common during the 2003 to Spring 2008 markets; as of October '08 the selling price was 94% of list price.

Let's use his statistic of 8% downward price pressure until October. Let's say your home would have fetched 400k in the Spring. It should be worth about 370K these days for a loss of 30K. Take a look at property listed during the summer months that is still for sale, it will have dropped considerably and many homes still won't sell while there is a year's worth of inventory. And some people are still saying "it's the best time to buy". Let's have some discussion everyone!