As the summer ends and the fall season arrives, BC residents can look back on an eventful year, and can bet on a fall with just as much happening in the news cycle.
The topic on the mind of most homeowners is inflation, with rising rates and consumer costs dominating headlines, which is a much different story than this time last year.
Gas prices are still high, and seemingly shoot back up to the stratosphere whenever drivers get too comfortable. Construction costs are still high, and skilled labour remains in high demand, so some renovations and new builds are delayed.
Homebuyers are feeling the pinch, and for the first time in what feels like forever, we saw a slowdown in the BC and Nanaimo real estate markets recently.
But it’s not all doom and gloom out there. There are still opportunities to be found in a slowing local real estate market – and the headlines don’t always tell the full story.
Read on for Jeff’s Nanaimo real estate market update for Fall 2022.
Let’s start with market reports for the month of August.
Nanaimo single-family detached home sales dropped nearly 50% in August 2022 compared to 2021.
Because of this, homebuyers are keen to wait for prices to drop further, especially since the Bank of Canada announced a 75 basis point interest rate hike on September 7th putting the interest rate at 3.25%.
This results in fewer bidding wars and falling prices. Many prospective buyers have been waiting for any signs of a slowdown in home sales, but with rising living costs and high inflation, the latest economic news likely does not mean that more people will be able to afford homes.
So what does all of this mean for the immediate future in the Nanaimo real estate market (and elsewhere in British Columbia and Vancouver Island)?
First, when it comes to major economic events, we don’t have a crystal ball. Interest rate changes are happening too quickly for anyone to know what will happen months in the future.
However, as far as the Vancouver Island real estate market is concerned, we still know a few things for sure.
- Demand to move to Vancouver Island is still high, especially for retirees.
- The only homes that remain on the market for an extended period are new builds, since builders are keeping prices high due to increased labour, land, and construction costs.
- Home sales will slow down slightly around the holiday season.
Canada’s top economists and real estate specialists are split about what these market conditions mean for pricing.
Here’s John Pasalis, president of Toronto-based Realosophy Realty Inc. in an interview with Nanaimo News Bulletin.
“The fall is going to be interesting because we’re going to see probably more buyers jumping into the market and you don’t need a ton more buyers to provide a little bit more stability to prices. Just a little bit of a bump in demand could be the difference between homes selling in three, four weeks versus selling in two weeks or selling a lot faster.”
Other experts point to localized market factors that have big impacts – which is more reason to trust in a realtor with significant experience in your area. Sherry Cooper, chief economist at Dominion Lending Centres was also interviewed by the Nanaimo News Bulletin.
“It’s the markets that experienced the 50 per cent increase in home prices that have seen the biggest correction, and that’s what you’d expect because those are the most expensive homes in Canada with the largest outstanding mortgages.”
However, there is one thing most experts will agree with on the record. If buyers don’t need to buy right now, it’s probably best to hold off.
Why This Matters To You
The Bank of Canada’s mortgage rate forecasts claim we are experiencing the worst of belt-tightening measures right now.
However, the reality is interest rates are changing too quickly for us to really know what to expect.
In difficult economic times like these, there are a few caveats for buyers and sellers in the Nanaimo real estate market.
Even though prices are coming down, they are still high. Buyers who are thinking about moving to Vancouver Island from the mainland can afford to make a purchase and still have money left over. This could involve taking out a smaller mortgage to protect themselves from higher interest rates.
In addition, now is a great time for younger buyers to take a page from their parents’ book and open themselves up to buying a fixer upper (tk fixer upper article). Take the time to search for hidden gems that may need a little work, but can be purchased for a better deal with a smaller mortgage.
Want to stay in the know with the latest in Nanaimo real estate news? Sign up for the Jeff King Real Estate newsletter for weekly updates.