Let me begin by wishing you all a happy, healthy and prosperous New Year! I must admit that I look forward to January 1st every year, because the annual sales data becomes available from the Vancouver Island Real Estate Board. You see, not only am I a real estate addict, but I also studied economics and statistics in University. Confucius famously said, “Choose a job you love, and you will never have to work a day in your life.” Well, I guess I have the day off! I hope our team’s clients, and everyone in the Alberni Valley, finds this information helpful. Please don’t hesitate to call, email, or leave any questions you may have, in the comments section below.
How did the real estate market do in 2013? What’s in store for 2014? If you own a house, read the newspaper, or live on the planet earth, you’re probably aware it’s been a rough five years for real estate. I’m optimistic that those days will soon be in the rear view mirror.
If my memory serves me, 2013 started out slow, and I was not feeling overly optimistic at the time. As the year progressed the market chugged along, slowly gaining momentum. There were two surges in sales in the year, both tied to increases in mortgage rates, causing buyers in the market to make decisions more quickly than they otherwise would have. By late summer, early fall, the market seemed to really pick up momentum. Our team’s sales board was completely full for most of the time, and Coast Realty Group even had to go out and buy a second sales board, because there was no room left on the first one. Between Christmas and New Year, I helped two different clients write offers on houses, and two different sellers negotiate on the sale of their houses. In the five holiday seasons prior, I don’t believe I wrote a single offer. Like I said, I’m feeling optimistic.
However, those are only anecdotes and feelings, neither of which is very scientific. Now let’s look at the facts about real estate in the Alberni Valley. In 2013, 640 single family house listings were reported, in the valley, by the Vancouver Island Real Estate Board. In comparison, there were 263 houses reported sold. The average sale price was $240,828 and the median sale price (a better statistical representation in my opinion) was $205,750. The average days on the market, for those houses that sold, was 77 days.
In comparison, the year before 716 listings were reported and there were 261 houses reported sold. The average sale price was $231,405 and the median sale price was $206,250. The average days on the market, for those houses that sold, was 85 days.
My interpretation is that the market was relatively flat, but showing slight signs of becoming healthier. The mean sale price actually dropped nominally, while units sold were up nominally. Meanwhile, the numbers of listings on the market decreased by approximately 10%, as supply and demand began to move towards a more balanced state.
Land sales in the Alberni Valley continued to be weak. In 2013, 186 listings were reported, and 37 units were reported sold. The median sale price was $115,000 and the average days on the market, for the land that did sell, was 187 days. In 2012, 240 listings were reported, and only 32 units were reported sold. The median sale price was $89,500, and the average days on the market, for the land that did sell, was 137 days. I must caution that the sample size is so small, such that the increase in mean sales price, almost certainly does not represent an increase in land value overall. I don’t expect land sales to return to a healthy equilibrium, until after the resale residential market begins to recover. Generally speaking, as resale homes become more expensive, building new homes becomes an increasingly attractive option, spurring land sales.
Much like land, strata condo/townhouse sales were not strong in 2013. There were 55 strata listings were reported, and only 10 units sold. The median sale price was $107,500, and the average days on the market, for the strata properties that did sell, was 175 days. In 2012, 69 listings were reported, and 20 units were reported sold. The median sale price was $145,750 and the average days on the market, for the successful sales, were 70 days. Once again, the small sample size, and the wide diversity of properties that fall in this category (strata properties at Sproat Lake vs. patio homes in the Alberni Valley vs. modest condos), makes drawing any meaningful conclusion from this data difficult. However, I believe that condo sales will remain slow in the short term, as the increased affordability of the low end single family house market continues to provide an affordable alternative to some buyers. In the long term, I believe there will be increasing demand for this type of housing in the Alberni Valley.
For your convenience (and for my pleasure), below I have graphed single family house sales data, for the past 20 years, in the Alberni Valley. The first graph shows both Units Sold and Average Sale Price. The second graph shows Units Listed and Units Sold (supply and demand), over top of the Average Days on the Market for the successful sales. You will notice that Unit Sales is, in general, a leading indicator for average sales price; meaning that when unit sales increases, average sale price increases the year after (and vice versa). The market was at a high point in 1995 (for average sale price), then declined until the next low in 2001, followed by an unprecedented upswing until the high point in 2008. On the Units Listed/Units Sold graph, you will notice that there is a significantly lower ratio of houses sold to houses listed during the declining markets, and a significantly higher ratio of houses sold to houses listed during the rising markets. This is Economics 101 – simple supply and demand.
The gap between supply and demand has begun to decrease over the past year, or more, which would seem to indicate a move towards a healthier market. Likewise, Unit Sales has slightly increased. Predicting markets is a risky business for a Realtor, and I ask that you use the above facts to draw your own conclusions. However, if I had to take an educated guess as to what 2014 holds, I expect that we will see flat prices, with a mild increase in unit sales, and a continuation of the closing of the supply/demand gap. I cannot day we have pulled out of this low market yet, but I am cautiously optimistic about the future!
Thanks for reading - I'd love to answer any questions or receive any comments you may have.
Chris Fenton, BCom
The Fenton Team