Comox Home Prices Jan 2015 to March 2017
The following chart shows how Comox single family home prices have climbed when compared to the previous two years and how they continue to climb as we are into our third month of 2017.
To see why this past year has been remarkable let’s go back in time and look at home prices in the Comox Valley for the period 2010 to 2015.
Comox Valley Home Prices Jan 2010 to Jan 2015
Changes in the Market
Following the significant correction in our market right after the peaks of 2007 the market turned into a buyers’ market. In general over that time period listings were plentiful and prices oscillated up and down for about 5 years until they hit bottom in the fall of 2015. At that point in time there were signs that prices would start to rise as listings dropped off. By the spring of 2016 prices started their sustained upward trend and they have stayed that way since.
The Situation in March 2017
The current real estate market favours home sellers in many different (but not all) sectors. New listings and total listings are down from previous years and prices are up. This notwithstanding, sellers must still price homes competitively even in the current market. Home buyers are savvy and have a great deal of information at their fingertips with which to compare.
Here are a few examples of the current market:
Single family homes in the Town of Comox – average price up 27% over the past year
Single family waterfront in the Comox Peninsula – sell to list price of 97%
Single family homes in downtown Courtenay – days to sell average down to 56 from 111
Condo apartments in Courtenay East average sell price down 16%
Single family acreages in Courtenay North – total sales dollars down 40%
Clearly, statistics are informative but only to a point. They must be used and understand in the context of the entire market and applied to specific situations. While some homes sell like hotcakes in the current market this is not the case for all homes. Things like condition and presentation still play a very important role as do other factors. Take a look at the following chart for Dec 2016 to see some of the variances.
Where is the Market Headed?
Expect the market to continue to favour home sellers in 2017 and into 2018 unless we experience a major change in the number of new listings or in the prime interest rate. As long as listings remain low, prices will continue their upward trend. With a provincial election on the horizon in early May, it is always possible to be surprised with the resulting impact. However, it is not just the provincial government that can adversely affect us and our livelihoods. The federal and municipal governments can do that as well.
Economic Storm Clouds are on the Horizon
Have you noticed how expensive groceries have become over the past year? The construction industry and many other businesses are feeling this economic pain in Canada as well. Our falling Canadian dollar and the growing debt and deficits at the federal and provincial levels are key contributors to this effect and rise in prices. When the cost of building materials goes up so does the cost of building homes and there is often a spillover effect into the resale home market.
Take a look at your net income and ask how you can raise it? Likely you will conclude that you either have to make more money, or reduce expenditures. Have you noticed lately how many Canadian businesses are starting to charge us in $US dollars for their fees, products and services online? When business expenses go up so does the cost of products and services. Almost everyone today is a consumer of internet products and services and like it or not the $US dollar is a key standard by which products and services are provided via the internet. When our dollar is low it costs us all more to live. Yes it is that simple. When it comes to trade, our country sends nearly 85% of what we produce to the US and they send about 25% of what they produce to us. A low Canadian dollar currently sitting at around 74 cents to the US dollar is not good for us. It was not that long ago when we read an article that said Loonie below par for the 1st time since November.
Governments that are not pro business or ones that spend recklessly and rack up our deficit and add to our debt can do damage to our real estate market and other areas of the economy. Within BC our total debt sits around $67 billion and within Canada our debt sits at about $680 billion. At the federal level the deficit and debt are both increasing dramatically and the impact on us could be significantly negative. The counties economic growth projections have been reduced to only 1.7% over the next five years. Federal government spending is costing us too much and too much of our tax dollar base is being wasted. At the current debt to GDP nearly 30% of all government tax dollars collected goes to paying interest on the debt instead of being directed at programs that benefit us. This article by the Fraser Institute that our combined Canadian Debt stands at about $1.3 trillion dollars – a staggering figure for a country of over 35 million people. What is even more concerning is the more than $600 million of the total debt that is owed to creditors outside of our country. We should all be alarmed by governments such as the current federal government that is making this situation worse. If we all continually spent more than we made we would be bankrupt.
Besides the dollar and our country’s debt and deficit, government inefficiency also costs us money as taxpayers. Bureaucrats at all levels share some blame in this. Yes there are bureaucrats who work tremendously hard to provide us services but there are far too many who seem to forget why their jobs exist in the first place. Having worked within and with bureaucracies for more than 44 years there is not much I have not seen or experienced. Consider the following few examples:
a public servant who is entitled to two sick days a month and always take them (often on Fridays);
a public servant who does not delegate decision making so when they go on holiday for a month things grind to a halt;
a public servant who do not believe that they are responsible to us as taxpayers; and
bureaucrats who ensure that they spend “end year” money at the end of each fiscal year to ensure their budgets do not get cut.
As I said earlier this attitude is not rampant in government but every instance of such behavior is bad for us as taxpayers.
So, a low Canadian dollar, a high debt and deficit and inefficiencies in governments at all levels are contributing to the rising costs that we are all now facing. The real estate market is affected by rising costs like many other sectors of our economy and we all end up feeling the economic pain.
What Can Be Done?
1. Hold the Prime Minster accountable for getting the deficit back to ‘0″ and for starting to reduce the debt;
2. Hold Premiers to the same standard;
3. Hold the Prime Minster accountable for explaining to us what he is doing to peg our dollar to the US dollar, a currency owned by our single largest and most important trading partner and one which is a standard measure for most of the world; and
4. Holding all levels of government accountable to eliminate inefficiencies and red tape that cost us time and money. Do we really need all of the local bureaucracies (City, Town, Village, Region and District level) for a population of 66,527 people?
We all share a responsibility to elect people to represent us who will be economically responsible with the tax dollars collected from us. Yes we all like services being provided to us but they all cost money. How many people do you know that talk about free health care in Canada. It is NOT free. Health care in Canada costs us nearly $230 billion each year and the costs are rising. If our government were to get our deficits eliminated and over time get our debt back to 0 (yes it used to be 0) think of all the money currently spent on paying interest on the debt (to creditors within and outside of the country) that could be freed up to provide us needed services.
Summary of Our Real Estate Market
Our real estate market is experiencing low supply and rising prices. While local conditions do impact our market so do much larger economic issues. Our beaten down dollar compared to the $US dollar, government spending that is racking up annual deficits and total debt, and inefficient bureaucracies all make things worse economically. The price of construction materials has gone up significantly and this, in part, has drive up prices in our market.