The regional district real estate market has slowed down with less than a month until Christmas. Many people will soon start to prepare for the festive season. Therefore, I believe that it is useful to provide a recap now of what happened in the Comox Valley Real Estate market this year. I will also provide my sense on the upcoming year, from a real estate perspective.
Before discussing what happened this year, let’s briefly recap what led us to the current real estate market environment. As you may recall, U.S. housing prices peaked in early 2006. This peak was followed by increased foreclosure rates in 2006 and 2007, and sharp declines in prices. The 2007 sub-prime mortgage crisis had its roots in falling home prices, and it was one of the first indicators of a larger financial crisis in the U.S. in 2008 that led to, among other things, unprecedented intervention by the U.S. Government. At the time, the International Monetary Fund called the US predicament the “largest financial shock since the Great Depression.” In December 2008, the Standard and Poor’s Case – Shiller home price index reported its largest U.S. housing price drop in history. According to a recent U.S. Census Report, the number of U.S. homeowners that moved between March 2010 and March 2011 was at an all time low. Many homeowners currently either cannot sell or don’t want to sell given the drop in home prices.
Global concerns over the U.S. situation in 2008 led to a tightening of credit around the world. While Canada’s economy did better than many countries, it too, felt the impact of the global economic slowdown. By the summer of 2011, the world was starting to feel the impact of other concerns related to the Greek Debt crisis, and the financial stability of the European Union.
Within Canada, overall homes sales peaked in 2007. For the subsequent four years, the total number of home sales was near or below the ten year average. Within BC, British Columbia Real Estate Association MLS ® residential statistics show that sales actually peaked in 2005 at 106,290. In 2007, sales were down about 3% from this peak to 102,831. However, residential sales dropped by 31% in 2008 to 68,923 (down 35% from the peak in 2005). Sales rebounded to 85,028 in 2009, and then dropped to 74,640 in 2010. In 2011, sales are expected to finish at about 77,000. This is still 25% below 2007 and nearly 28% below the 2005 peak.
Let’s now take a look at the Comox Valley real estate market and Comox Valley home sales. In 2007, Vancouver Island Real Estate Board statistics showed that there were a total 1054 single family homes sold. This number dropped 30% to 734 in 2008, was up slightly to 770 in 2009, and then down slightly to 724. Year-to-date in 2011 (through Oct) is 635. The total in 2011 should come in slightly above last year but still nearly 30% below the 2007 total. When we look at the combined total number of single family homes, condos, patio homes, townhomes and duplexes, the statistics are similar. In 2001 there were 1645 sold compared to 1113 in 2008 (a 32% drop), 1053 in 2009, and 1005 in 2010. Courtenay listings of locally owned properties were down as were prices.
There are specific Comox Valley homes neighbourhoods and price ranges where the statistics are even more telling. Based on the preceding statistics, it should be clear that the 2008 financial crisis took its toll on the Comox Valley real estate market (either directly or indirectly). Given the number of homes that I saw come on the Comox Valley real estate market each week in 2011, I got a sense that some home sellers were not aware of the dramatic change in the market from 2007 to 2008 and how these changes are still being felt in 2011 to date. Some homes were priced to sell, yet others were listed above (and in some instances well above) the market.
Other real estate statistics are revealing. In December 2007, the average time to sell a single family home was 47 days. This figure rose from an average of 61 in 2007 to 73 in 2008 to 84 year-to-date. There were a number of months this year where this statistic exceeded 100 days. Another statistic that is noteworthy is the supply of homes on the market. In Dec 2007 there was about a 6.8 months home supply. This figure rose dramatically to 10.6 in Dec 08 (expected given the dramatic drop in home sales), it then sat at about 6.9 in Dec 09 and rose to 8 in Dec 10. During the summer months this figure has steadily risen from 4.7 in Jul 08, to 5.1 in Jul 08 to 5.7 in Jul 10 to about 6.6 in Jul 11. Locally owned Comox homes listed for sale were also similarly affected.
Clearly, there are exceptions to the picture painted by these general statistics, but the overall Comox Valley real estate market trends should be clear. The real estate market up to 2007 was significantly different than the market of today. Compared to then, the number of sales is down significantly, the time to sell is up, and the supply is up. Other conclusions could be drawn from sell to list ratios and list to sell prices but these types of analysis are best left to specific situations.
What, then, about the future? This is the “million dollar” question. There are currently conflicting views from economists across the country as well as those in the US about what the future will bring.
As a Comox Valley real estate professional who works in, and follows the Comox Valley real Estate Market closely, my sense is that 2012 will not be all that much different from 2011 given a financial climate that is comparable to that which exists today. For buyers, the Bank of Canada’s overnight interest rate is expected to remain low into early 2012, but it is also expected to start rising as 2012 unfolds. When it does, mortgage interest rates will rise making home buying more expensive. The Comox Valley property market should remain favourable to home buyers in early 2012.
What about sellers? Some parts of the Comox Valley real estate market will remain challenging to sellers as 2012 unfolds. Having said this, there are a number of things that can be done to help sellers in this kind of market. Price, preparation, presentation, and marketing will all be important elements. There are many other things that are important considerations as well that I cover when I present options to sellers.
Whether you are considering buying or selling in the Comox Valley real estate market, as a seasoned professional, I can help you. Contact Brett Cairns of RE/MAX Ocean Pacific Realty to get the most out of your next home purchase or sale in the Comox Valley and for peace of mind in this highly competitive real estate market.