February 1, 2024
NORMAL JANUARY KICKS OFF 2024 WITH OPTIMISTIC OUTLOOK NANAIMO, BC
Last month, 152 single-family homes sold in the Vancouver Island Real Estate Board (VIREB) area, down six per cent from one year ago and up slightly from December 2023. Sales of condo apartments in January came in at 47, increasing by 12 per cent year over year and up 21 per cent from December. In the row/townhouse category, 40 units changed hands last month, an increase of 14 per cent from one year ago and up three per cent from the previous month.
Active listings of single-family homes were 807 in January, down from 861 the previous year. VIREB’s inventory of condo apartments was 258 last month, up from 239 one year ago. There were 282 row/townhouses for sale last month compared to 239 in January 2023.
“We had a fairly normal January, with unit sales of 354 compared to 340 last year,” says Ian Mackay, 2024 Chair. “REALTORS® are reporting that plenty of listings are hitting the system, and we’re sensing a lot of optimism regarding the spring market.”
However, interest rates and the mortgage stress test (Guideline B-20) continue to deter some buyers, as does the pervasive low inventory in the VIREB area, which limits the selection of affordable homes.
Mackay, who works primarily in Parksville-Qualicum, notes that properties listed in a moderate range are selling remarkably quickly.
The board-wide benchmark price (MLS® Home Price Index) of a single-family home was $749,000 in January 2024, up six per cent from one year ago and down one per cent from December. In the apartment category, the benchmark price was $380,600 last month, a slight decrease from the previous January and down one per cent from December.
The benchmark price of a townhouse in January was $546,600, up two per cent from one year ago and a slight increase from December. In Campbell River, the benchmark price of a single-family home was $650,500 last month, up seven per cent from the previous year. The Comox Valley’s year-over-year benchmark price rose seven per cent to $816,300. In the Cowichan Valley, the benchmark price was $746,600, a three per cent increase from January 2023. Nanaimo’s year-over-year benchmark price rose by six per cent to reach $783,100, while the Parksville-Qualicum area saw its benchmark price increase by six per cent to $856,700. The cost of a benchmark single-family home in Port Alberni was $517,600, up five per cent from the previous year. For the North Island, the benchmark price of a single-family home dropped slightly to $403,000. However, prices decreased from December 2023 in nearly every zone.
Regardless of market conditions, connecting with a local REALTOR® can help smooth the way to a successful real estate transaction. They have access to tools and custom analytics for developing a winning strategy, whether you’re buying or selling a home.
Housing Market Activity Picks Up to Start 2024
Vancouver, BC – February 13, 2024. The British Columbia Real Estate Association (BCREA) reports that a total of 3,979 residential unit sales were recorded in Multiple Listing Service® (MLS®) systems in January 2024, an increase of 29.4 per cent from January 2023. The average MLS® residential price in BC in January 2024 was up 10.5 per cent at $957,909 compared to an average price of $866,922, the low-point for average prices over the past two years. The total sales dollar volume was $3.8 billion, an increase of 42.9 per cent from the same time in the previous year.
"Home sales are on a clear uptrend to start 2024," said BCREA Chief Economist Brendon Ogmundson. "A sharp decline in fixed mortgage rates and expectations for future Bank of Canada rate cuts is driving sentiment in the market and bringing pent-up demand off the sidelines."
The total number of active listings, though up year-over-year, remains relatively low by historical standards. New listings activity has shown signs of normalizing following a down year in 2023. A steady pace of new inventory will be crucial in keeping markets balanced as sales accelerate.
Bank of Canada Interest Rate Announcement - January 24, 2024
The Bank of Canada maintained its overnight rate at 5 per cent this morning. In the statement accompanying the decision, the Bank noted that the Canadian economy has stalled since the middle of 2023 and that growth will likely remain flat until the second quarter of 2024. Slow economic growth has allowed supply to catch up to demand and the Bank now judges that the economy is operating with moderate excess supply. On inflation, the Bank expects inflation to remain close to 3 per cent in the first half of 2024 before gradually falling back to its 2 per cent target in 2025. However, the Bank cautions that while price pressure is falling across a broad number of CPI components, core inflation is not showing a sustained decline. As such, the Bank is still concerned about the risk to the outlook from persistent underlying inflation.
Today's interest rate decision and the tenor of the accompanying statement were not surprising given slightly hotter than expected core inflation in December. However, we expect inflation will resume on its trajectory down to 2 per cent, with some stickiness due to supply side driven shelter costs. Falling inflation, along with weak economic growth and a softening labour market will necessitate rate cuts this year to jumpstart a fledgling economy heading into 2025. We expect the Bank of Canada will lower its overnight rate in June, ultimately lowering to 4 per cent by the end of the year. Financial market expectations for more aggressive rate cuts prompted a steep decline in 5-year bond yields, and therefore 5-year fixed mortgage rates, to start 2024 but yields have since retraced slightly following December's CPI data. We anticipate that 5-year fixed mortgage rates, currently averaging 5.39 per cent, will eventually fall to 5 per cent by the end of the year and will settle near 4.5 per cent by the end of 2025.
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