RE/MAX of Nanaimo - Nanaimo Homes For Sale

What's Been Happening?

Although we have reached summer officially, according to the calendar, the thermometer at my home has failed to provide show proof of such. Once again the Real Estate market appears to be performing as well as the weather. There have been sales, but showings have been tough to come by and offers, when they do surface have been low. All of this despite the ongoing lowest interest rates in memorable history.
 
The federal government has had a few goes of making some changes to buying and spending habits of Canadians by tinkering with the mortgage rules. Twice now the maximum amortization has been adjusted as well as the maximum percentage a home owner can borrow against their homes. The best reasoning I have read in my research about the changes is that the interest rates being kept low stimulate the economy, however, when interest rates are low prices of homes tend to rise which creates artificial value in homes. This artificial value is very tempting to borrow against which increases consumer debt. The interesting regular conversation that comes up with anyone who was in a borrowing capacity in the 80’s was the “I remember when interest rates were…” followed by some number anywhere from 18-28% - interest rates may have been that high then but house prices certainly at the level they are now then. In Nanaimo our average house price according to the Vancouver Island Real Estate Board for the month of May was $349,554 – with current posted rates of 3.49% (4 year special rate - Source TD: Posted Rates) with 95% down (mortgage amount of $332,076) over 30 years the monthly payment is $1485/month (decrease the amortization to 25 years and the same mortgage with the same rate would cost $1,656/month - $171/month more). If we take a trip down memory lane – a 20% interest rate would have payments of $5,363/month (based on 25 years).
 
The positive spin on the maximum amortization  reduction in years is that when the interest rates do rise by providing the 30 year (or even 35 year) amortization option the effect of a higher interest rate will have a lesser impact. My prediction is that with this amortization change over the next 6-12 months we will see the average price of homes  decrease by around $30,000 - $40,000.
 
You still have a chance to benefit from a 30 year mortgage as long as you have an accepted offer prior to July 9, 2012 – after this date your mortgage payment will be more as it will take awhile for the prices to adjust. If you have been sitting on the fence wondering when to buy this is your opportunity to save $100-$200/month and get a great interest rate at the same time. Ready to buy? Call me ASAP at 250-751-1223 as there will be a rush on the market between now and July 9^th – Now’s your chance!.

How's the Market?

Looking at year to date sales for Nanaimo and comparing them to the last five years we are slightly behind last year which was significantly down from years past:
 
January 1^st– June 15^th:

 
Other than a blip in the 2010 the numbers show we are leveling out from the hay day of the rush on the market. If you were to talk with a seller on the market you’ll likely hear that it’s not very rosy – there are minimal showings and offers (if you’re lucky enough to see one) are coming in very low. The market continues to be heavily price motivated and if you are in a position where you must sell compensating on price is the way to get the job done. Looking at all the sales registered year to date the list price to sale ratio is 97.43% and the ratio of original price to sale price is 96.43% - to put some real numbers to these ratios – if you had your home listed at $349,900 you would be hitting market average if you got $340,907 and likely you probably started 1% higher at $354,900.
 
One thing is clear - there is lots of inventory on the market. In looking at the last full month of May there were 105 single family homes sold and there are currently 900 active single family listings on the market. With this number of listings active and just over 100 sales this explains why there are not many viewings. To get attention on the market with 900 active listings there is a lot of competition – the price has to be right and the home must be well presented and a good buy.

What's Been Selling?

In reviewing the market activity the charts below show all Single Family Home sales recorded from March 1, 2012 – May 31, 2012.

 
In Nanaimo the two most active zones were North Nanaimo at 20% and South Nanaimo/University District at 17%.
 
For days on market, over this same period of time the average time to sell was 50.7 days and 46% sold in the first 30 days on the market. Of those listings that sold but didn’t have a price reduction there were only 39 homes that sold and the average time on market was 131 days. Interestingly, of those that modified their prices 65% sold within 30 days while the rest lagged on the market.
 
If that sounded all mumble jumble – here’s the translation – if your home hasn’t sold in the first 30 days your best option in selling is to modify the price as the majority of sales happen in the first 30 days or within 30 days of a price change.

Most Expensive Sale Last Month:

List Price: $1.495M
Sale Price: $1.395M

The most expensive listing to sell was a custom designed walk on waterfront 4000 sqft+ residence on 1.53 acres in the Yellow Point area on Pylades Drive. Listed for $1.495M and sold for $1.395M in 81 days. I had the privilege of showing this home to some clients and it was a stunning place.

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What's the Forecast?

As summer has now technically arrived we will soon be entering our seasonal summer slow down. There will continue to be buyers that will buy, but we typically have a slower market during the summer months. However, in reviewing the number of sales during July in 2008-2010 the number of sales per month wasn’t too much offof our May numbers of just over 100 unit sales per month. There is always a chance that we could see a resurgence of the market at any given time – interest rates are still low, as well as a short term incentive for 30 year mortgages – both of which could encourage buyers off the fence to save money. Once again only time will tell.
 
My prediction, as mentioned previously, is that we will see a drop in the market average price of the entry level home prices with the upcoming reduction to 25 year mortgages. Buyers limitations in buying is typically based on what monthly payment their income can support – if the monthly payment is fixed and either the interest rate or the amortization changes the only number that can change is the price of home a buyer can afford. Increasing the interest rate or decreasing the maximum amortization results in a drop maximum house price.
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Personal Notes

Our young family continues to grow. Axton graduated from his preschool program Animal Crackers and will soon be starting kindergarten and soon Brydan will start Animal Crackers. It's going to be strange having Axton in school - however, in talking to friends before we know it he will be graduating, getting married and having kids! Caldan soon will be 5 months old and Chelli has her hands full on a daily basis trying to keep up with the three of them (and with me).

Now that Caldan is big enough to handle our family adventures we escaped a couple weeks ago up to Tofino for a weekend at Mackenzie Beach in a cute bechfront cabin. In typcial westcoast style it poured rain for most of our weekend excursion. Chelli found a great deal on a Bear Watching adventure tour on Groupon that was our main adventure of the weekend. The boys were excited for not only the boat ride but also the pleasure of finding two separate bears foraging on the shores of one of the smaller islands.
 
Earlier this week I had the privilege of attending a 2 day Real Estate training seminar in Vancouver. The seminar was filled full of great ideas in providing a superior level of service that I look forward to implementing over the coming months. Stay tuned to some fun events that I’ll be implementing.
 
Wishing you a wonderful summer – take the time to make some memorable expierences with your family and friends, whether it is just spending time or an escape away it’s the relationships that we have that spur on fullfillment in life. A recent thought was shared with me on Facebook that pointed out that
 
People were created to be loved, 
Things were created to to be used. 
 
The reason why the world is in chaos is because 
things are being loved and people are being used!
 
Love the people in your life and use your things :)

As always, if you find yourself in need of some advice in the realm of Real Estate feel free to drop me a call or an email anytime and I'll be glad to help. As you drive by my signs through the city give a wave to my fleet of "Dan Sells Homes" signs that decorate our fine city and when you hear of someone needing to buy or sell a home remember that "Dan Sells Homes!" ;)