Market Update

Quick Real Estate Stats December 2019

Vancouver Island  Real Estate Activity December 2019

Real Estate Market Changes December 2019

Mortgage Rate Forecast Update, December 2019

BCREA Hosing  Forecast Update, November 2019

Updated January 19, 2020

2018 was a turning point in the real estate markets on the Island.  Demand was dropping, due to the B20 mortgage stress test, which resulted in a 19% reduction in sales.  New listings were slow to recover, thereby slowing the increasing the inventory (active listings).   However, 2018 did see an increase in inventory levels from 41.2% in 2017 to 50.9% in 2018. 

Unfortunately, this trend did not continue in 2019 with inventory levels remaining flat and settled at 50.5% for 2019 compared to the 2007 - 20114 average.  See graph of the inventory levels since 2007. 

These lower inventory levels continue to exert upward pressure on home prices.  It is very possible, with more traditional inventory levels, that markets on the Island would be in a balanced market, or even perhaps in a buyer's market, as seen on the mainland.

Most markets here on the Island remain in a seller's market with the exceptions been Parksville/Qualicum, which had a 1% decrease in home prices, representing a soft buyer's market.  Nanaimo's price increase of 2% is on par with inflation and a balanced market.

For 2020, in the BCREA November 2019 Housing Forecast they are recommending a 3.6% increase in price and a 6% increase in sales (see page 15).  Their estimates for 2019 were a little low for price increases and reduction of sales.  Plus, since 2016 when inventory levels dropped, they have consistently underestimated the impact on price due to our low inventory levels.  Therefore I am estimating that price increases for 2020 will be in the 5-8% range.

Some changes in the Canadian economy and financial markets have reversed the mortgage rate increases in 2018 and sub 3% mortgages are back.

Underwater picture of a school of salmon preparing to spawn up the Puntledge River near Courtenay.

Pink Salmon (Oncorhynchus gorbuscha) gather in a school to spawn in the Puntledge River, near Courtenay. 

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Quick Real Estate Stats December 2019















While sales continue to drop, the rate of decrease is much lower than it was in 2018.  However, inventory levels are slow to recover in most markets as the number of new listings remain low.  The sell/list ratio also continues to drop with it being at 62% for the Board area.  This means that in the last 12 months, 62% of the listings sold.  Price increases are still positive, but again lower than 2018.  The exception is Parksville/Qualicum area which had a 1% drop in home prices.  The remaining markets were under 10% with the Board area showing a 5% increase in average home prices.

Real Estate Market Changes December 2019

Please note these comments relate to single family homes in markets covered by the Vancouver Island Real Estate Board (VIREB), which covers all of the Island from the Malahat north. The Victoria Board covers Victoria, all of the Saanich Peninsula and west to Port Renfrew and is not covered in these comments. Some comments on the provincial real estate market are also included from time to time. The quick stats above cover major Real Estate Markets in the VIREB area.

Snow covered trees and ground with blue sky on a Mountain in the Comox Valley

Beautiful winter scene in the Beaufort Mountains in the Comox Valley.

The 2018 slow down in demand due to the mortgage stress test continues in 2019.  The  second mortgage stress test, called B20  (for buyers with 20% or more down payment), introduced in January 2018, is having a more sustained impact.

The slow down continues in 2019 though at a slower rate.  In 2018 home sales were down 19% for the VIREB Board area and in 2019 the decline was 9%.  However, the number of new listings is lagging and the increase of inventory experienced in 2018 was flat for 2019.    In this graph, inventory for the Board area is 50.5% the 2007 to 2014 average.  This low inventory has upward pressure on pricing.

The decline in sales is having an impact on price increases.  For 2019, home prices increase 5% for the Board area, compared to 10% in 2018 and 15% in 2017.  These increases would not have been as high with normal inventory levels, as is experienced in other markets such as the lower mainland.

The following new graph plots the monthly price change with the same month of the previous year (i.e. December of 2019 compared to December of 2018) on the blue line against the 12 month average on the orange line.  The unit sales in a month are too low to be statistically accurate, you can see that the blue line jumps around quite a bit.  For example, the month to month increase in January 2019 was 9% over January 2018.  Two months later it was 0% in March, and back up to 7% in April.  Prices just don't jump around that much in a month.  

Despite the inaccuracy of the monthly price change, when graphed over time these results can be an indicator for the overall direction of prices.  When the monthly changes stay above or below the 12 month average for a sustained period, it does suggest a trend in that the long term price changes will follow suit.  Which makes intuitive sense to me.  For 2019 the rate of price increases fell accordingly with the last five months being above and below the 12 month average leading to no movement in the rate of price increases.  This suggests to me that price increase will remain stable at 5% for the next few months.  

Unfortunately, the monthly unit sales in the subareas, such as the Comox Valley, are just too low (less than 100) to provide meaningful data.

 The sell/list ratio are approaching balanced market territory.  In December of 2018 the sell/list ratio was 67% for the Board area and ranged between 80% and 57% for the sub markets.  This December the Board area is at 62% and the range is 67% to 57%.  See chart for a market by market breakdown.

Usually 50-60% signals a balance market.  The sell/list ratio is the number of listings that have sold in a 12 month period.  A 60% ratio means that 60% of the listings sold and 40% did not sell.  Nanaimo, with a 58% sell/list ratio had a price increase of 2%, which is keeping pace with inflation and a balanced market.  Parksville, with a 56% ratio had a 1% reduction in price.

See What are Balanced, Buyer's and Seller's Markets for an explanation on sell/list ratio.

Vancouver Island Real Estate Activity December 2019

2019 saw a continued slow down in the housing market.  Unit sales of single family homes, continue to decline by 18% to 3%, with the Board area showing a 9% decrease in home sales, compared to a 19% drop in 2018.  Since 2017, sales have decreased 27%.  However, new listings continuing to lag, as well as the inventory levels remained flat.  After a slight increase in 2018, inventory was 50.5% for the Board area in December 2019 (was 50.9% for 2018), compared to the 2007 - 2014 average, see graph

The sell/list ratio is falling in all markets and is 62% (down from 67% last year) for the Board area.  Campbell River has the highest at 67% (down from 80%).  A sell/list ratio of 50% to 60% usually indicates a balanced market, which the markets would be heading toward if the inventory levels were a little higher.

Changes for all markets can be seen in the December Comparison Chart.  The rate of price increases is down for all markets compared to 2018.  I have found that plotting monthly changes for the Board area, compared to the 12 month average, indicates a trend as seen in the VIREB Month to Month Comparison.  When the monthly price changes (or three month average) are above or below the 12 month average, the 12 month average tends to follow suite.  The last five months have been above and below the 12 month average, leading to a stable 12 month average price increase at 5% for the Board area.

Unfortunately, the number of sales a month in the sub-areas of VIREB are just to low (less than 100/month) to have accurate enough data to show similar trends. 

Most markets remain in a seller's market position, though not as strong as 2018.  The exemptions are Parksville/Qualicum which posted a 1% decrease in price, a soft buyer's market and Nanaimo had a 2% price increase keeping pace with inflation, which is a balanced market.  Other markets are in the 5-9% price increase range. 

Entire Board area: Seller’s market, last 12 months to December 2019, results are:
Read More

Cowichan Valley: Seller’s market, last 12 months to December 2019, results are:
Read More

Nanaimo: A balanced market, last 12 months to December 2019 results are:
Read More

Parksville Qualicum: Soft buyer's market, last 12 months to December 2019, results are:
Read More

Port Alberni & West Coast:  Seller's market, last 12 months to December 2019, results are:
Read More

Comox Valley: Seller’s market, last 12 months to December 2019, results are:
Read More

Campbell River: Seller’s market, last 12 months to December 2019, results are:
Read More

North Island:  Seller’s market, last 12 months to December 2019, results are:
Read More

Note: Port Alberni and North Island have lower activity which can lead to stats being more volatile.

People meet on the Sheraton Greenway in Comox.

The Sheraton Greenway in Comox is one of the newly created walkways that abound throughout the Comox Valley

BCREA Hosing  Forecast Update, November 2019

A woman in yoga pose by the ocean at Kitty Coleman Beach campground in the Comox Valley.

A woman greets the early morning sun during a yoga pose at Kitty Coleman Beach campground.

BCREA's Housing Forecast, November 2019 notes that provincially sales have trended upward in the last half of 2019.  After the shock of the 2018 B20 mortgage stress test and slower economy, BCREA expects home sales to return to trend, rather than the heights of previous years.  For most markets they are forecasting prices to keep pace with inflation, which is a balanced market.

For 2019 in the VIREB market, it reports that sales continued to decline and are forecasted to decline a further 10% for 2019 (actual was 9% in 2019).  Part of the reason for this has been weak employment growth mostly in the forestry sector with tariffs and low demand from the US.  Active listings (inventory) also remain low, "near historical lows despite softer housing demands.  As a result, market conditions continue to favour sellers," the forecast notes.

Looking forward, single family sales in the VIREB Board area are forecasted to pick up 5.9% in 2020 and "As stronger home sales in the Vancouver Island region meet low supply (inventory), we anticipate the market conditions will remain fairly tight, leading to a second year of over 4 per cent price growth."

While I can't comment on the 6% increase in sales, I feel that if that is realized and we don't have an appreciable increase in new listing, the resulting low inventory will push prices higher, perhaps in the 6-8% range.  While BCREA notes the low inventory, over the years they have underestimated the effect on price increases. 

For the BC economy, the forecast states: "The BC economy, feeling the effects of a policy-driven decline in the housing market (B20 stress test) and a volatile global trade environment, is likely to post a second consecutive year of slowing real GDP growth in 2019."  They are forecasting a 2% increase for 2019 and expect the growth to turnaround for 2020 to 2.4% growth, which is the long term trend.

They forecast that the worst of the 2018 housing shock is behind us and a recovery of home sales is underway.  In addition, the fall in Canadian bond yields has led to sub-3% mortgage rates for 5 year fixed term mortgages.  They do note that the inverted Canadian yield curve is sometimes a pre-cursor to a recession, but are not forecasting that.  Construction activity is up both in the residential and non-residential sectors and they are expecting consumer spending to recover.

Mortgage Rate Forecast Update, December 2019

BCREA Mortgage Rate Forecast Update for December 2019 has three highlights.

  • Wild year for interest rates.
  • Canadian economy: slow and steady
  • Why is the Bank of Canada holding back?

Wild year for interest rates:  The forecast notes; "One year ago, the Canadian yield curve was its usual upward sloping shape, with markets expecting gradual rate increases by the Bank of Canada. Based partly on those expectations, Canadian mortgage rates were climbing.  However, within 8 months the yield curve in Canada had inverted, bond yields tumbled, and Canadian mortgage rates were once again heading lower."  A normal yield curve shows yields (interest rates) increasing for longer term bonds over short term bonds.  An inverted curve is when the short term yield is higher than the long term yield.  The mortgage forecast (link above) shows the inverted curve for August and November of 2019 compared to the regular curve for November 2018.

The main reason for this change was that the two largest economies (China and US) entered a "mutually destructive trade war, which has in turn slowed global economic growth and caused a sharp retracing of interest rate expectations."

This situation has subsided with the US Federal Reserve cutting its rates three times and with the White House taking a step back from trade tariffs.  An inverted yield curve can be, but not always, an indication of a coming recession, though that is not in the forecast.

Canadian Economy:  2019 economy is expected to finish 2019 at 1.6% growth rate and forecasted for 1.8% growth in 2020, which is closer to the trend rate.  In BC, growth for 2019 is expected to be 2% and 2.4% for 2020, again consistent with the trend rate.

Bank of Canada:  During the tumultuous time in 2019 the Bank of Canada elected to not lower its rates as the US Feds had.  They judged the "potential of lowering rates igniting a further accumulation of household debt as a greater risk to the Canadian economy than deteriorating global economic conditions."

The overall results of all this activity was a reversal of rising mortgage rates, and expected further rate increases.  As is shown by the table below, rates are forecasted to remain flat in 2020 and below 3% and the Bank of Canada is expected to hold its current interest rates over this period.

Mortgage rate forecast table.

 Mortgage rates are influenced by two things:

  • The Bank of Canada's overnight rate affects variable mortgages and shorter term fixed mortgages (1 to 3 years and in some cases 4 year).
  • The bond rates tend to affect longer term fixed mortgages, typically 5 years and up.
A note on advertised rates 
Read More
Man sitting on the boardwalk with woman in a wheel chair in Paradise Meadows.

An enjoyable outing on a boardwalk in Paradise Meadows near Mt. Washington.


What was, What is, What will be, What to do

Forecasting by its very nature is not an exact science. Obviously, we can let you know what has happened in the past and what the current situation is today. What will happen in the future can be a difficult thing to predict, hence why most forecasts are updated quarterly. Also, local situations need to be considered. For 2018 we saw dramatic differences here on the Island than on the mainland.  On the Island we remained in a seller's market while much of the mainland moved to balanced markets, some with minor price reductions.  For 2019 we appear to be moving toward balanced markets here on the Island. Over the last four years the BC economy has out performed the Canadian economy.   

Government changes late in 2016 and 2017 had a strong effect in the lower mainland and little effect here on the Island.  The new mortgage stress test, which took effect January 1, 2018, plus rising interest rates, reduced demand in 2018.  Though had less impact here on the Island at the time, in 2019 we are seeing this impact with slowing markets.

Buying and selling real estate are major financial transactions the net impact of which is difficult to predict over the long term. It is advisable to closely examine your other reasons for making a change. It might be easier to focus on what is happening in your life rather than trying to predict what will happen in the world. And leave yourself some room in case things don’t go as anticipated. Ask yourself some “what if” questions. A conservative approach, some good soul searching, and research could possibly save you some stress down the road.

Ariel view of Courtenay with the Comox Harbour.

Ariel view of Courtenay with the Puntledge River flowing into the Comox bay.

Tip: Planning for things that do not happen is better than not planning for things that do happen.

What are Balance, Buyer's and Seller's Markets?

Water Buffalo in a Comox Valley field.

Water Buffalo (Bubalus bubalis) are a new addition on the Comox Valley agricultural scene.

For economists and analysts a balanced market is when the supply (listings) of housing and the demand (sales) are in equilibrium. In other words the supply and demand are such that there is not any real pressures on price, up or down, compared to inflation. Home price increases are keeping pace with inflation (around 2%).

Buyer’s market
Read More


Seller’s market
Read More


To predict and measure supply and demand in the market we use a sell/list indicator. This measures the number of homes that were listed in a year and compares how many of them sell. A sell/list ratio of 55% means that in a year 55% of the homes that were listed actually sold and 45% did not sell. A sell/list ratio between 50-60% usually results in a balanced market, below this is a buyer's market and above this is a seller's market. Please note that this is an indicator and sometimes markets don’t respond as predicted. What actually happens with price is the true test of the market's status, the sell/list indicator just helps us predict what is likely to happen.

This graph compares the sell/list ratio to what actually occurred with prices. The left side plots the average home price (orange line) and the right is the sell/list ratio as a percentage (blue line). It is for 2000 to 2019. It is a measure of how effective the sell/list ratio was at predicting changes in price. For the most part, it demonstrates that the sell/list ratio is a pretty good indicator. Only in 2009/10 did pricing and the ratio not react according to prediction. This is important as it demonstrates that supply and demand are only one component of the housing market. Sudden shifts in the economy or market confidence can have influences on the market. For the most part, the sell/list ratio is a good indicator on the pulse of the market.

Graph showing average home price increases and buyer's and seller's market.

GERRY, has a way of making the whole transaction experience pleasant and positive.  His incredible knowledge and attention to detail instils confidence in him as a highest-rated Real Estate professional. See Client Feedback for more client comments.

     About Gerry                                         Service and Integrity Above All

Information and Interpretation
Selling or buying real estate is a major financial endeavour with many factors to consider. While you have a wealth of information available to you on the internet, interpreting that information is another matter.

This is where I come in. Not only do I research and provide you the information you need, I take it to the next level and analyze and interpret that  information for you. I will tell you what I think, what we do is up to you.

As a client, your Realtor works for you, and this is a principle I hold dear.  I see my job as providing you with information, interpretation, services and guidance, not to push you on a course of action.

Unparalleled Service
I have a simple code, I don't sell, I service. I assume my clients are perfectly able to make their own decision once they have the information they need. I spend my time providing information, guiding people through the process, and making sure all the bases are covered, not in high pressure sales.

Over the years I have received very complementary feedback from clients. See Client Feedback.

Integrity, simply defined, is being honest and fair. This is further enhanced by one of a Realtor's prime duties, which is not to put anyone's interest above their clients, including their own.  This a duty I take very seriously. My personal outlook after over 30 years in business, is that whenever I experience high pressure sales I start to question the integrity of the person selling me.  Are they looking after my best interest or theirs?

The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. The trademarks REALTOR®, REALTORS® Realtor and the REALTOR® logo are controlled by CREA and identify real estate professionals who are members of CREA.

Blue illustration of Gerry Chwelos, Realtor, Pemberton Holmes.

Gerry Chwelos, REALTOR®


Tel: 250-8975465

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