The Market Continues Upward At An Accelerated Pace…
Single Family Prices and Volume
210 single family homes were sold in May compared to 188 in April which is a 12% volume increase month-over-month and a 40% increase compared to the same time frame last year. The average sale price for a single family home continues to increase with May’s average at $451,208; this represents an increase of 3.2% over April’s average of $437,232 and an increase of over 13% when compared to May of 2015. To hopefully help put this into perspective, a 3.2% increase on a $500,000 property would result in a value increase of $16,000, with a 13% increase representing $65,000 equity gain. However, it must clearly be stated that the average price increases aren’t the only determining factor in assessing the strength of a market. The median sell price is relied upon as a secondary measure which will not be skewed by a few high priced homes selling at the top end of the market. As such, May’s median price was $405,000. Although this represented a 3.45% month-over-month increase, the year-over-year increase was more moderate at 8.14%, further suggesting executive and luxury homes at the higher end of the market are skewing the increase in average sale prices.
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 dropped minimally month-over-month from 79% to 76%. However this does still represent a 24.59% increase from May of last year when it was only 61%, suggesting a much higher percentage of homes that are listed are successfully selling.
The sell price/list price has remained unchanged from April but increased year-over-year from 97% to 99%, while the number of days on the market actually increased by 1 day from 26 to 27 in May, which is inconsequential. More importantly, this number represents a 10% decrease year-over-year suggesting homes are selling quicker and closer to the ask price than we have experienced over the past number of years.
Current inventory numbers continue to increase as one would expect at this time of the year, although this growth is coming at a decelerating pace. May saw an increase from 283 active listings in April to 310 – a 9.54% increase month-over-month, far less than the 31.49% increase seen between March and April. It is also worth noting that despite the month-over-month increase, this does still represent a 33.19% decrease when compared to May 2015 when there were 464 active listings on the market. Taken with all other metrics, this would suggest that there are not enough listings to satisfy current demand when you factor into it how many “active” properties are likely tied up and in the process of being sold. Taken together, the strong demand and lack of inventory is continuing to propel the rapid price increases we are seeing.
Top Performing Neighbourhoods & Categories
Several areas showed strength in both price appreciation and sales volume: The usual suspects in North Nanaimo, Hammond Bay, Departure Bay and Brechin Hill saw year-over year increases in the average sale price while North Nanaimo, Departure Bay and Brechin Hill also experienced month-over-month and year-over-year increases in sales volume (Hammond Bay remained stable when compared to April and in fact dropped year-over-year compared to May 2015). Of note, North Nanaimo’s May sales volume was up 50% over last year, with the average price up 22.22%. On reduced volume, average Hammond Bay prices were up nearly 27% year-over-year. Meanwhile, the Old City, Cedar, the University District, Diver Lake and Pleasant Valley also saw month-over-month and year-over-year increases in price appreciation as buyers are looking for less expensive neighbourhoods to call home.
Undoubtedly, the category that lead the way in May was waterfront homes, with a month-over-month increase in the average sale price of 7.45%, year-over-year increase of 51.49% and volume increase of 125%. However across the board all categories showed both price and volume increases.
Condos continue to experience strong price and volume increases. The price appreciation appears to be accelerating in this category with a month-over-month increase of 12.26%, when the year-over-year increase was only marginally higher at 13.81%. With condos prices still in many cases well below their pre-2008 (great recession) highs of the last cycle, there still appears to be compelling value and a lot more room to run during the current cycle.
With average single family home prices still under $400,000, a few areas to watch would be Central Nanaimo, University District, South Nanaimo, Chase River and Extension. As prices continue to rise, local buyers are increasingly being priced out of other neighbourhoods which will put upward pressure on these more affordable areas.
If you have any questions about market conditions or would like more details specific to your neighbourhood, please contact us at email@example.com and we would be happy to help.
Check out the Nanaimo Market Statistics Here: Monthly Stats Nanaimo May 2016