June 1, 2021
The Cowichan Valley Real Estate market continues to be in a seller's market like we have never seen before but showed signs of slowing down in May. There were 81 single-family home sales in the Cowichan Valley last month, down substantially from the 121 that sold in April. That number is up 50% from the 54 sales recorded in May of last year. Keep in mind, last May was the onset of the pandemic and tight restrictions. For a different comparison, in the past 12 months, we’ve seen 983 total sales, compared to 652 in the 12-month period before that.
The average single-family home in the Cowichan Valley sold for $687,290 last month in comparison to $553,169 in the same month last year; that’s a 24.25% increase. The average price for the last 12 months came in at $630,156 compared to 522,027 for the previous 12 months. Another indicator of what prices have done over the last year comes from figures in the MLS Home Price Index, a benchmark for Realtors in a group of home sales. That gauge shows single-family homes in the Cowichan Valley going from $533,100 in May 2020 to $671,600 in May of this year; that’s a 26% gain.
So why are prices rising so fast? There are a number of factors that have built up over the years in my opinion. The time, cost, and levels of obstacles developers and builders have to jump through have increased significantly, lowering the amount of risk tolerance. Environmental restrictions, new building codes, engineering requirements, development cost charges have all tightened up significantly over the years adding significant cost and time to develop. Wood costs have risen sharply due to production limits and other factors, immigration to replace the aging workforce, and people not spending their money traveling are all factors. Of course, a big factor is the record low-interest rates that have increased mortgage qualification. Another huge factor is inflation; the government has printed a lot of money during the pandemic reducing the value of a dollar. To put it simply, one-hundred dollars at the start of the pandemic is just not worth one-hundred dollars anymore.
At this time, the overall supply continues to be at a record low level in the Cowichan Valley. We only had 88 active listings on the market at the end of May but, that number is up from the 67 homes on the market at the end of April.
The homes that sold last month had been on the market for an average of just 22 days, compared to 43 days in May of last year. Note that in 2010 that number was as high as 65.
Condominium apartment sales were also up dramatically in May with 24 sales compared to the 5 that sold last May, as well as up from the 15 sales in April 2021.
Condominium apartments in the valley saw the average prices in May down to $316,889; that's down 10.5% compared to last May. Keep in mind, we are in a small market and lower priced condos sold in May bringing the average down. The benchmark price, which is probably a more accurate picture, saw prices up to $293,000; a 28.6% gain over last year.
The inventory of apartments on the market is also very low with 6 on the market at the end of May.
Today, new mortgage stress test rules are coming into effect making purchasing homes a bit harder, especially for first-time buyers. The stress test raises the minimum qualifying rate, which is a gauge of whether borrowers can handle payments should interest rates increase. According to the Office of the Superintendent of Financial Institutions, the rates would rise to the contracted rate plus two percentage points or 5.25 percent — whichever is higher of the two; the old rate was 4.79%. The stress test will reduce overall borrowing power by approximately 4-4.5% experts say. It will be interesting how this change affects the market, and I will be watching closely.
I wish you all the best over the summer months and that you enjoy it to the fullest with your family and friends. Remember, you only have so many summers in a lifetime.
BC Markets Calming but Sales Still on Record Pace
Vancouver, BC – May 12, 2021. The British Columbia Real Estate Association (BCREA) reports that a total of 13,683 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in April 2021,
an increase of 312.3 per cent over April 2020 when the onset of the COVID-19 pandemic prompted a lockdown of the provincial economy. The average MLS® residential price in BC was $946,606, a 29.1 per cent increase from $733,330 recorded in April 2020. Total sales dollar volume was $12.9 billion, a 432.2 per cent increase from last year.
“Although provincial home sales were down slightly from an all-time high in March, sales activity was the highest on record for April,” said BCREA Chief Economist Brendon Ogmundson. “Home sales continue on a record pace, though we do see a calming environment compared to the frenzied activity of recent months.”
Total active residential listings were down 14.5 per cent year-over-year in April but did tick higher on a seasonally adjusted basis for the second consecutive month as new listings activity ramped up.
"We are starting to see very strong new listings activity in several markets,” said Ogmundson, “however, it will take quite some time for total listings to return to the level needed to balance out markets and temper growth in home prices.”
BCREA 2021 Second Quarter Housing Forecast
Vancouver, BC – May 5, 2021. The British Columbia Real Estate Association (BCREA) released its 2021 Second Quarter Housing Forecast today.
Multiple Listing Service® (MLS®) residential sales in the province are forecast to rise 33.6 per cent to 125,600 units this year, after recording 94,013 sales in 2020. In 2022, MLS® residential sales are forecast to pull back 20.3 per cent to 100,150 units.
“Home sales across the province are on pace to shatter previous records,” said Brendon Ogmundson, BCREA Chief Economist. “However, there are early signs that markets are calming from the frenetic pace of recent months and could balance out over the second half of this year.”Many markets, especially those outside of major metro areas, remain very low on supply. As a result, market conditions are extraordinarily tight and prices are rising rapidly. We are forecasting a 14.3 per cent rise in the MLS® average price this year, followed by a further 3.1 per cent in 2022.
Here is a link to this month’s Graph Stats for the Cowichan Valley, courtesy of the Vancouver Island Real Estate Board: Cowichan Valley Graph Stats.
I hope you find this current market information informative. If you have any questions about the market please feel free to contact me anytime.
Thinking of selling? Please feel free to contact me for advice on preparing your home for the market. What money should you spend if any? When is the best time to list? I am happy to consult with you anytime even if you are not planning on selling for some time.
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