Strong conditions persist, more affordable areas making big gains …

Single Family Prices and Volume

204 single family homes were sold in June, down slightly from 210 in May, but up 22% from June of 2015. The average sale price for a single family home continues to increase with June’s average at $466,490; this represents an increase of 3.39% over May’s average of $451,208 and an increase of over 17% when compared to June of 2015. To hopefully help put this into perspective, a 3.39% increase on a $500,000 property would result in a value increase of nearly $17,000, with a 17% increase representing $85,000 equity gain. This is also the third month in a row that the month-over-month increase has accelerated, a strong validation of the strength of the trend. 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. June’s median price was $439,900, which was an astonishing 8.62% month-over-month increase, and more than a 20% annual increase. This massive move in the median sales price suggests that homes at the lower end of the market are accelerating, and that there is not so much skewing resulting from big moves at the top of the market where executive and luxury homes are really pulling up the average sale price.

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 increased month-over-month from 76% to 83%. Of note, this represents a 23.88% increase from June of last year when it was only 67%, suggesting a much higher percentage of homes that are listed are successfully selling.

The sell price/list price ticked up to 100% which implies the average listing is selling at its asking price. Of course, not all homes are selling at the ask price as many competitive offerings are now selling well above the asking price, offset by overpriced and less desirable homes that are selling below the ask price. This ratio ticked up from 99% last month and 97% in June of last year.  Also of note, the average number of  days on the market was down 22% from May to 22 days. This is a 46% reduction from June of last year suggesting homes are selling  far quicker and closer to the ask price than we have experienced over the past number of years.

Current inventory numbers decreased slightly from 310 to 308. This is the first deceleration in the past 3 months, although not unexpected as we head into the summer season following a strong spring market. If you are currently searching for a home and you are finding that it seems like there not many options to choose from, you are certainly right. In June of 2015 there were 485 active listings, so the number of active listings is down 36.49% from this time last year. 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. All factors considered, 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: Hammond Bay, Departure Bay, the Old City, South Nanaimo and Lower Lantzville were the top performers when both price and volume increases were taken into consideration. Of note, Chase River, Uplands, Cedar, Extension, and Pleasant Valley were the biggest gainers month-over-month, supporting the fact that the more affordable neighbourhoods are now on the move, as buyers possibly become fearful of getting priced out of a fast moving market.  

The category that lead the way in June was lots, which was the first time this category has lead in recent memory. Single family homes were also strong, with condos pulling back slightly after a number of months on the increase.  

Opportunities

Although the average condo price slowed this month after a strong run, volume was up 78.57% indicating the demand remains strong and inventory is increasingly being chewed through. With condo prices still in many cases below their pre-2008 (great recession) highs of the last cycle, there still appears to be compelling value with more room to run during the current cycle.

Based on overall prices continue to rise and local buyers increasingly being priced out of other neighbourhoods, there is upward pressure on more affordable areas. We see opportunity in these more affordable neighbourhoods such as the University District, South Nanaimo and Chase River.  However, one area to watch would be the Uplands neighbourhood which has been largely out of favor, with prices and volume lagging for the first number of months of this 2016. Although dated in some areas, what Uplands has going for it is the location and close proximity to shopping and amenities. It is an area ripe for revitalization, and we feel over the coming years should be pulled up by the values of surrounding North Nanaimo, Hammond Bay, and Departure Bay.   

If you have any questions about market conditions or would like more details specific to your neighbourhood, please contact us at info@jahelkagroup.com and we would be happy to help.

Check out the Nanaimo Market Statistics Here: Monthly Stats Nanaimo June 2016

Source: VIREB