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Real Estate on Vancouver Island Still Affordable (But For How Long?)

Written on Thursday, March 31st, 2016
Real Estate on Vancouver Island Still Affordable (But For How Long?)

The Vancouver Island Real Estate Board (VIREB) annual conference and tradeshow takes place tomorrow at Nanaimo's VI Conference Centre. Knowing the event was coming up and in light of our recent post on Vancouver's extreme housing market, we thought it would be interesting to examine the real estate situation on Vancouver Island.

A Yahoo Canada Finance article released earlier today suggests there may be a bit of a ripple effect on the Island as would-be Vancouver dwellers move away from the urban centre and towards the suburbs or even the Island.

VIREB President-Elect Janice Stromar told Yahoo,

“I think it’s a little early to call it a trend but I like to say it’s an ‘option’ for people now ... They can cash out on their really expensive homes in Vancouver, come here, buy a way nicer house for a third of the money and use some of that money to commute.”

Of the situation in Nanaimo, Stromar says,

“(Foreign investment) is definitely here but they’re about two per cent of our market and they’re not shopping in the market that most people in Nanaimo are shopping in – they’re in the $800,000-plus market. ... The meat of our market is $200,000 to $500,000… once you start getting into that, people want houses as mortgage helpers.”

For people who want to keep working in Vancouver, Stromar notes that while commuting from Nanaimo to the mainland by float plane, hele-jet or ferry isn't cheap, it could easily cost less than commuting, gas and parking combined on the mainland.

Price-wise, housing in Nanaimo is more affordable than in Vancouver, but prices are creeping upwards. Earlier this month Stromar, noted that sales in Nanaimo are up 44% from this time last year, and listings are down 23%, and that this will drive prices up eventually. The average single-family home price was just under $400,000.

And what about real estate in our province's capital city? Well, things seem to be heading down the same path as Vancouver. In mid-March, the Times Colonist reported that sales through the Victoria Real Estate Board reached 772 last month, the highest for February since 1992. The same forces that affect Nanaimo appear to be playing a role in Victoria as well:

The capital region’s market is attracting Vancouver residents cashing out to move here and purchasers from China, all fuelling higher prices. Buyers determined to get a property are making offers without any conditions.

And a month ago, another Times Colonist article reported that:

"[the capital region] is a seller’s market. ... Buyers are increasingly ready to make offers that are tens of thousands of dollars above the listed price. Some capital region houses have surpassed asking prices by more than $100,000 in recent weeks."

2016 VIREB President Margo Hoffman notes that migration to the Island is started to shift away from retirement-focused, saying that realtors are seeing young professionals cash out in Vancouver, buy nicer properties in Victoria, and simply commute to the Lower Mainland.

A Globe & Mail article from earlier this month profiles several people who have done just that. As noted by former Vancouverite Michael Reid, who now lives in Nanaimo, "Vancouver might be more fun, but will you have the money to enjoy it? As long as you can easily get to Vancouver when you need to, it’s not a problem living here.”  Bernie Dumas, president of the Nanaimo Port Authority, confirms that idea: "We’re really an annex to Vancouver. ... We’re seeing Nanaimo becoming the backyard of Vancouver.”

So while Vancouver Island's real estate market is undoubtedly in growth mode, it seems fair to say it's not quite as extreme as Vancouver's.... yet.

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