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Is It Still A Seller’s Market?

The Vancouver Island Real Estate Board reported last month, 444 single-family homes sold on the Multiple Listing Service® (MLS®) System
compared to 518 in May and 617 one year ago. The number of apartments changing hands last month dropped by
21 per cent, but in the townhouse category, sales increased by 26 per cent.

Housing demand in the VIREB area has shifted lower in the first half of 2018 as stricter mortgage qualifications for
conventional borrowers and rising interest rates took their toll on household purchasing power and affordability. It
is unclear whether the June slowdown is reflective of seasonal summer market conditions or if demand-side policy
changes are finally beginning to play a larger role in VIREB’s housing market.

Despite lower sales thus far in 2018, lack of inventory continues to tilt the market in favour of sellers and push
prices upwards. The number of single-family homes for sale has been slowly increasing, hitting 1,336 in June, up
only three per cent from May but a significant increase from the 893 properties available in January. The supply of
townhouses rose by 33 per cent from one year ago, but many of the listings behind these modest inventory gains
in both property types are being quickly snapped up by buyers.

In its 2018 Second-Quarter Housing Forecast, the British Columbia Real Estate Association (BCREA) anticipates that
MLS® residential sales in the province will decline by nine per cent to 94,200 units this year from 103,700 in 2017.
“B.C. housing markets have benefited from the provincial economy expanding well above trend growth over the
past four years,” says BCREA chief economist Cameron Muir. “However, economic growth is expected to slow and
reflect the long-term average this year.”

On a local level, BCREA predicts that over the next eight months, VIREB’s long-term sellers’ market will begin
shifting towards more balanced conditions. Further, the pace of price increases will slow if demand keeps
declining, but it is unlikely that prices will drop until additional inventory enters the market by way of new
construction or buyer appetite decreases drastically.

In the meantime, competition for homes – especially in the $300,000 to $500,000 range – is still modus operandi in
the VIREB area, with multiple offers a commonplace occurrence on properties in that price range. Despite buyer
demand, however, homes at most price points still need to be reasonably priced.
“For sellers, properly pricing your home remains an important factor,” says Don McClintock, 2018 VIREB President.
“Buyers are savvy, and overpriced homes take longer to sell.

Connecting with a local REALTOR® is especially crucial in a competitive housing market.
“REALTORS® have specialized knowledge of their communities and can help streamline the buying and selling
process to ensure the best possible outcome for our clients,” says McClintock.

The benchmark price of a single-family home in the VIREB area reached $510,300 in June, a 15 per cent increase
from one year ago. (Benchmark pricing tracks the value of a typical home in the reported area.) The benchmark
price of an apartment last month was $313,300, a slight decrease from May but a 24 per cent increase over last
June. In the townhouse category, the benchmark price hit $405,000, up 18 per cent over June 2017.

Last month, the benchmark price of a single-family home in the Campbell River area climbed to $425,800, an
increase of 22 per cent over June 2017. In the Comox Valley, the benchmark price reached $510,700, up 17 per
cent from last year. Duncan reported a benchmark price of $450,500, up 12 per cent from June 2017. Nanaimo’s
benchmark price rose 11 per cent to $534,300, down slightly from May, while the Parksville-Qualicum area saw its
benchmark price increase by 16 per cent to $575,800. The cost of a benchmark home in Port Alberni reached
$293,800, up 22 per cent from one year ago.

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Single-Family Benchmark Price Surpasses $500,000 in May

NANAIMO, BC – The benchmark price of a single-family home in the VIREB area broke the $500,000 mark in May,
rising to $507,700, a 17 per cent increase from one year ago. Sales of single-family homes were down 17 per cent
from last year but posted a month-over-month increase of nine per cent.
Last month, 520 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 476 in April
and 630 one year ago. The number of apartments and townhouses changing hands in May dropped by six per cent
and 11 per cent, respectively.

VIREB’s inventory of single-family homes continues to climb, rising from 749 in January 2018 to 1,215 in May. The
supply of apartments dropped slightly last month, down six per cent from one year ago, but townhouse inventory
rose significantly.

In its 2018 Second-Quarter Housing Forecast, the British Columbia Real Estate Association (BCREA) anticipates that
MLS® residential sales in the province will decline by nine per cent to 94,200 units this year from 103,700 in 2017.
“B.C. housing markets have benefited from the provincial economy expanding well above trend growth over the
past four years,” says BCREA chief economist Cameron Muir. “However, economic growth is expected to slow and
reflect the long-term average this year.”

Housing demand in the VIREB area shifted lower in the first four months of 2018 as stricter mortgage qualifications
for conventional borrowers took their toll on household purchasing power and affordability. Other economic
headwinds that could dampen demand include higher interest rates and new provincial taxes. However, the
attractiveness of Vancouver Island to retirees and millennials is expected to mitigate their impact somewhat.
Despite lower sales thus far in 2018, lack of inventory continues to tilt the market in favour of sellers and push
prices upwards. The pace of these increases could slow somewhat if demand keeps declining, but it is unlikely that
prices will drop until additional inventory enters the market by way of new construction.

“Housing starts are up on Vancouver Island, particularly in Nanaimo, so there is some relief on the horizon,” says
Janice Stromar, 2018 Past President. “However, in the multi-family category, the time between conception and
completion can take several years, which doesn’t help people looking to buy now.”

Since limited inventory is keeping the VIREB area in a sellers’ market, competition for homes – especially in the
$300,000 to $500,000 range – means buyers and sellers should strongly consider using a REALTOR®, says Stromar.
“As experienced professionals, we can help streamline the buying and selling process to ensure the best possible
outcome while reducing associated risks,” says Stromar.

As noted above, the benchmark price of a single-family home in the VIREB area reached $507,700 in May, a 17 per
cent increase from one year ago. (Benchmark pricing tracks the value of a typical home in the reported area.) The
benchmark price of an apartment last month rose to $314,000, up 25 per cent board-wide from the previous year,
while the benchmark price of a townhouse hit $397,100, an 18 per cent increase from May 2017.

Last month, the benchmark price of a single-family home in the Campbell River area climbed to $417,500, an
increase of 20 per cent over May 2017. In the Comox Valley, the benchmark price reached $500,500, up 17 per
cent from last year. Duncan reported a benchmark price of $450,700, an increase of 15 per cent compared to May
2017. Nanaimo’s benchmark price rose 14 per cent to $538,500 while the Parksville-Qualicum area saw its
benchmark price increase by 17 per cent to $57

SALES HOLDING STEADY AMID RISING HOUSE PRICES

NANAIMO, BC – The Vancouver Island Real Estate Board (VIREB) reports sales of single-family homes in the VIREB area rose by 20 per cent month over month in April but remained static from one year ago.

Last month, 476 single-family homes sold on the Multiple Listing Service® (MLS®) System compared to 398 in March and 476 one year ago. The number of apartments changing hands in April decreased by six per cent year over year while townhouse sales rose by 26 per cent.

VIREB’s inventory of single-family homes climbed by eight per cent from March 2018 but decreased by six per cent from one year ago. The supply of apartments dropped in April, down 12 per cent from one year ago, but townhouse inventory rose by 30 per cent.

The British Columbia Real Estate Association (BCREA) reports that housing sales in many B.C. jurisdictions are down compared to last year. Guideline B-20 and uncertainty surrounding new provincial taxes appear to be taking their toll on sales in some markets.

Broadening the scope of the Foreign Buyer Tax to include the Regional District of Nanaimo (RDN) should not have a significant impact on the VIREB housing market. Only 4.4 per cent of RDN residential real estate transactions in 2017 involved foreign buyers. More troubling is the new speculation tax, which is supposed to be implemented later this year. The tax will apply to Nanaimo and Lantzville, but it will take a few months to see whether it has a detrimental impact on sales.

BCREA also expects the Bank of Canada to increase interest rates in the next couple of months, which introduces another risk factor into the housing market.

For now, however, demand is still outpacing supply in the VIREB area, particularly in some price ranges. Properties in the $300,000 to $500,000 range generate multiple offers and sell quickly. However, higher-priced homes are taking longer to sell.

Janice Stromar, 2018 Past President, encourages sellers to take advantage of our current market conditions before any economic headwinds weaken demand. “Our market has favoured sellers for a long time now, but it won’t last forever,” says Stromar. “However, even in a sellers’ market, you need to price your home correctly because overpriced homes take longer to sell.”

In a competitive housing market, using a REALTOR® can help streamline the buying and selling process to ensure the best possible outcome while mitigating associated risks, adds Stromar. “REALTORS® are equipped with sales tools, such as custom analytics, to help buyers prepare winning offers and ensure sellers receive the best price for their home,” says Stromar.

In April 2018, the benchmark price of a single-family home in the VIREB area reached $499,600, up 18 per cent from one year ago. (Benchmark pricing tracks the value of a typical home in the reported area.) The benchmark price of an apartment last month rose to $305,300, up 25 per cent board-wide from the previous year, while the benchmark price of a townhouse hit $393,200, a 22 per cent increase from April 2017.

Last month, the benchmark price of a single-family home in the Campbell River area climbed to $410,000, an increase of 22 per cent over April 2017. In the Comox Valley, the benchmark price reached $487,100, up 17 per cent from last year. Duncan reported a benchmark price of $444,700, an increase of 17 per cent compared to April 2017. Nanaimo’s benchmark price rose 16 per cent to $537,800 while the Parksville-Qualicum area saw its benchmark price increase by 18 per cent to $562,800. The cost of a benchmark home in Port Alberni reached $282,000, up 24 per cent from one year ago.