Nanaimo Real Estate Blog April 2007

Nanaimo residential construction turns hot

Home Construction

Nanaimo was the hot spot of residential construction on Vancouver Island last month. Contractors in the Harbour City built 134 new housing units -- projects that included an apartment building and several townhouse projects -- to more than double the 58 units that went up during the same month a year ago. According to the Canada Mortgage and Housing Corp., Nanaimo has 247 new housing units over the first three months of the year, compared with 165 over the first quarter of 2007. "Increased demand for both single and multi-family housing in Nanaimo boosted March's housing total housing starts on Vancouver Island," said Peggy Prill, senior market analyst with the Canadian Mortgage and Housing Corp.'s office in Victoria. A total of 287 new housing units were started on Vancouver Island in March. That was up from 250 during the same month a year ago. However, the 881 new housing starts for the first three months of the year are lower than the 952 built during the same quarter in 2007. All other major Island centers showed declines in new housing over the quarter. Greater Victoria had 391 starts over the first three months, compared with 468 a year ago. Duncan slipped to 46 from 61, Parksville-Qualicum 49 to 64 and Courtenay 148 to 194. A total of 86 homes were started in Victoria last month, down from 119 in February. The largest number of starts among local municipalities took place in Langford, where work began on 20 single-family homes. Saanich had 15 starts in March. "Certainly the level of pre-sales [on the Island] are continuing to be strong, although perhaps not quite as strong as in the last couple of years," Prill said. The federal agency is predicting that new home starts this year will be healthy, but not reach the numbers of last year. New home starts in B.C. urban centers decreased considerably to 29,800 (seasonally adjusted), from 47,400 in February. Nationally, the housing market cooled slightly in March, with construction slipping to 254,700 units from 255,600 the previous month, CMHC said. But last month's building activity was still stronger than most analysts had expected, given recent indications that Canada's hot market is beginning to retrench to more realistic levels. Forecasts ranged from 218,000 to 222,500 new units in March. "The high level of starts posted in February continued in March, thanks to the multiple segment and particularly condominium starts, which registered a significant rise in Alberta," said Bob Dugan, chief economist at CMHC.

"Nevertheless, the single-detached component, which is usually a strong trend indicator, decreased slightly. This is consistent with our view that the housing market will moderate gradually throughout 2008."

Mortgage rates drop to 11-month low

interest rates

Canadian banks have begun to lower fixed mortgage rates to their lowest levels since last spring. RBC Royal Bank announced Thursday that it would chop most of its mortgage rates by a fifth of a percentage point, effective Friday. TD Canada Trust followed later with similar cuts. The posted rate for a five-year closed mortgage drops to 6.99 per cent. That's the first time the posted rate for the popular five-year term has been below seven per cent since last May.

The posted rates for a one-year closed mortgage falls to 6.95 per cent. The Bank of Canada has cut its key overnight lending rate by a full percentage point since early December as it tries to keep the Canadian economy from following the U.S. into recession. That's led to a similar one percentage point drop in variable rate mortgages and other floating rate loans tied to the banks' prime rate. But fixed mortgage rates have been much slower to drop. Since the start of December, the posted five-year fixed mortgage rate has fallen by two-fifths of a percentage point, counting Thursday's rate drop. Longer-term mortgage rates reflect the cost that banks pay to borrow money in the capital markets. Analysts say the global credit crunch — triggered by the U.S. sub prime mortgage crisis — has made it more expensive for Canadian banks to access funds.

A further cut in the Bank of Canada's key lending rate is expected when the central bank makes its next scheduled announcement on April 22, so borrowers can look forward to a corresponding drop in their variable rate mortgages then.

Nanaimo real estate market continues to be strong into 2008

As we ease into mid April I am reviewing the real estate stats from VIREB. The statistics real eased for March 2008 continue to look encouraging. Lot sales year to date are up 73 percent with the price going up a modest 2%. I believe that this is due to more supply in the market (the number of listings is also up 64%). Last year 145 lots wear for sale, this year 264 lots are available. There was a large number of small lots that became available in south Nanaimo which would also bring the average price down.

Single family home sales are up 15 percent year to date and prices for houses are up 11 percent year to date. The are 536 homes for sale this year versus 467 last year.

Condo sales (apartments) are up as well; 10 percent up over last year. Prices are up as well 15 percent over last year.

Town home sales are down by 3% but their price is up by 15 percent. There were many new developments last year; Rocklands, Pinewoods, Nelsonwoods, just to name a few. The way new construction is going these stats may change as newer developments come online. The number of new listings year to date is up 53 percent. As of today (April 16th) only 30 of the town homes for sale are new, about a third of the active MLS listings.

I had buyers out this last weekend looking for town homes with covered parking under $300,000. There was not much out there to look at (seven listings total).

I read recently that Canada is in far better financial shape than our troubled neighbors. British Columbia is in even better shape with the lowest rate of foreclosures in the country.

I can always tell how things are in the Nanaimo market just by how many emails and phone calls I get. Things seem to be cooking right now. We'll see what happens April 22 when the bank of Canada reviews interest rates

School closures

I am saddened by the recent announcement of the closure of several schools in Nanaimo. Dufferin Cres. elementary, Mount Benson elementary NDSS and Woodlands. I went to three of those schools while growing up in Nanaimo. The plan is to rebuild Woodlands and use it to replace NDSS. The announcement comes on the heals of hearing that Malaspina will get it's full University status. The name of Malaspina will change to Vancouver Island University.

My first thoughts regarding both announcements were;

1) What will happen to the NDSS land (my hope is that it becomes part of the University lands.
2) How will these changes effect the property values around Woodlands and NDSS.

Nanaimo is growing and changing and I am open to both. I just hope that the decisions to close these schools were not made without thinking all the issues through.

Electrical safety matters: an inspectors perspective

In this second installment we will be addressing what I refer to as the ‘handyman’s nightmare’. These are electrical installations that are done by unqualified persons. Part 1 of the Electrical Safety Regulations of B.C. is quite clear on who can and cannot install electrical equipment in British Columbia. These illegal installations are quite common and exist in both commercial and residential installations. I go into greater detail on my web site, but in part they represent the greatest risk to the general public for potential fires and shock hazards.

The Insurance industry could very well void a claim if there is an incident where a ‘handyman’ installation exists. They may be present in residential dwellings in the form of secondary suites, new additions, completed basements, or just a newly installed microwave plug. Most people suspect dangerous wiring in older dwellings, which is more common, but the fact is the ‘handyman’ has also been installing unsafe electrical in new homes.

The unsuspecting layperson may not recognize them without a qualified agency, such as ours, after doing a risk inspection revealing the subtle, and sometimes obvious, signs. They can become very dangerous situations in commercial applications where the voltages are higher than single family residential.

As a past electrical safety inspector I personally observed some very disturbing and unsafe wiring jobs and those were just the tip of the iceberg. A great majority of unqualified persons feel it is not rocket science, and some just plain do not like any authority and inspection process. We have electrical as a regulated industry for a reason, and we also have the qualified and registered contractors to do a safe install so as not put people or property at risk. If I were to buy or sell a home, or a commercial property, I would not want to jeopardize the sale, or any form of liability, by relying only on a home inspector who is only allowed to do a visual electrical inspection. There can be hidden and unsafe existing conditions that only a qualified electrical inspection agency can identify, with their expertise and specialized equipment.

There is already a shift in the Insurance Industry to what is referred to risk based installations. If they require you to get an assessment of your electrical system, and necessary upgrades are completed, then you may qualify for a discount on your premiums.

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Doug Belcher REMAX Nanaimo

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Doug Belcher REALTOR REMAX