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!
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Congratulations on setting up your new blog!
ReplyDeleteReaders should get the facts about Nanaimo Real Estate before buying. Here is a site with statistics going back to 1995,
Nanaimo MLS Statistics
Here is what really happened in October:
Single family homes: 50 sold and 630 active listings. 146 new listings in November. Sell Price/List Price Ratio of 92%
Condos: 3 sold and 311 active listings. 39 new listings in November. Sell Price/List Price Ratio of 92%
Townhouses: 4 sold and 11 active listings. 13 new listings in November. Sell Price/List Price Ratio of 83%
The December and January stats will be worse given all the inventory out there and a recession on the way
Thanks for that link Roger, much better stats package than VIREB provides!
ReplyDeleteSo, anyone know if they've canceled the Pamela Anderson condo development yet?
ReplyDeleteNanaimo Daily News had this story today:
ReplyDeleteGloomy forecast has a bright side
Housing prices have yet to drop in Nanaimo, like they have in Vancouver or other larger city centres, but people looking for new homes can find small incentives. Plus, those prices may soon fall as real estate sales continue to drop.
The number of homes sold in November dropped 50% compared to the 104 sales from the same month in 2007, according to data from the Vancouver Island Real Estate Board. Costs, however, have increased with the price of a single-family home in Nanaimo reaching $379,000, up from a year ago when the average price was $364,000.
To encourage sales in Nanaimo, developers offer cash rebates, free appliances and some have even offered to pay strata fees or taxes for a year to give buyers incentives during the real estate slowdown. The latest trend marks a shift from the seller's market of just a year ago to one that gives the buyer a bit of an edge.
Housing prices across the country had price tags far higher than their worth, according to a recent report that analyzed home values in Canada's major cities.
The research shows housing prices began to soar in 2001 and have only begun to slow down this year, nearly two years after the slump hit the U.S. market. With real estate values dropping in areas such as Vancouver, smaller markets can expect similar trends.
"Sales tend to drop off before prices do," said University of B.C. economist Tsur Somerville, who co-authored the report 'Are Canadian Housing Markets Overpriced?' Most homeowners reluctantly lower the price tags when they come out of a boom period, he explained.
"It's what's known as sticky prices."
Nanaimo could soon see prices falling. Real estate inventory remains high as sales plummet and owners will have to price their homes accordingly if they want to sell, according to Subhadra Ghose, VIREB president.
"Any overpriced listing will sit there," she said. "It's not like last year, where you had multiple offers for one home. From a buyer's point of view this is the best time to buy."
Thanks for the link Roger. Article was well written.
ReplyDeleteFUNNY IT will take decades for real estate to come back: read it here:
ReplyDeletehttp://www.thecomingdepression.blogspot.com
I know someone who is moving to Nanaimo if/when their house sells in Victoria. My acquaintance was mentioning how prices in Nanaimo were shockingly high, almost as high as Victoria. This was a surprise to the seller.
ReplyDeleteWith the cyclical nature of resource towns, which aside from retail, is exactly what Nanaimo is, and the slowdown in construction around BC, not to mention the dropping prices in Vancouver, is there any chance of Nanaimo staying as expensive as it is now?
I almost told my acquaintance to wait and not buy, but I'm not an investment advisor. It was difficult not to point out the obvious.
Excellant point Greg and one that should have rung out a loud warning bell years ago to economists.
ReplyDeletePrior to the last few years, real estate prices have been highly local. In the early 1990's BC prices were going up while Ontario's prices were going down.
This last cycle, real estate prices were going up EVERYWHERE!! Even in northern BC towns with falling populations, prices were going UP.
Some cities, like Regina, came to the party a little later, but home owners were enjoying champagne and caviar dreams. When a Fort Macmurray back hoe operator can own a million dollars in real estate paper, you know something is dead ass wrong. It was all to do with the global ease of credit and not local economics.
And now, its correction time. The pool of prospective purchasers has been drained, unemployment is about to skyrocket, due to the crash of new construction, divorces (most marriages break up over finances), and court ordered sales are set to increase.
Everyone, thanks for commenting/reading my blog. I am glad that there are people out there reading it. I hope to have another entry on Friday.
ReplyDeleteThankyou for starting this blog since I am especially interested in following the RE scene here. The Victoria blog has been great but a little sparse at times. The Island intrigues me as a refuge (an island after all) from what could come down in the future, depending on how nasty a prolonged downturn could get. It's easy to speculate that towns like Port Alberni could just die but perhaps the "Hub" might have some chance.
ReplyDeleteit's lovely description for a mortgage broker....thanks
ReplyDeleteNanaimo mortgage brokers