Nanaimo housing market to favour sellers in 2021, prices expected to rise approximately 6.21%
Nanaimo real estate is likely to continue in seller’s market territory in 2021, with expectations for a steady year ahead, characterized by low interest rates allowing more people to enter the housing market, as well as a steady demand from mainland BC buyers. Low inventory is a common trend across many BC housing markets, putting upward pressure on prices. The average selling price of single-detached homes in Nanaimo increased to $602,905 in 2020 (Jan. 1 – Oct. 31), compared to $559,252 in 2019 (Jan. 1 – Dec. 31). The number of single-detached home sales increased 13.29% to 1,262 in 2020, up from 1,114 in 2019. The RE/MAX outlook for Nanaimo residential real estate in 2021 is an increase of approximately 6.21% in average price to approximately $470,738 across all property types, with an anticipated increase in sales of 12% for single-detached homes and 3% for condos, and a decrease in sales of 5% for townhomes.
Who’s Driving Demand for Nanaimo Real Estate?
Nanaimo has seen an influx of buyers from both Mainland BC, as well as the rest of Canada. Many of these buyers are upscale buyers from the mainland, and with more people moving to Nanaimo each year, this trend is expected to continue into 2021.
First-time homebuyers in the area are typically young couples seeking townhomes ranging from about $400,000 to $500,000. First-timers who had a difficult time buying real estate are unlikely to find any relief in 2021, with price increases continuing to grow. While there really was not any hesitation seen from first-time buyers in 2020, job losses due to COVID had an impact on their confidence. An improvement in job stability expected in 2021 will translate into more first-time buyers entering the market.
Move-up buyers in the Nanaimo area are typically families. There has been no hesitation from move-up buyers due to a lack of listings in the Nanaimo market. The demand has been causing move-up buyers to purchase now versus later. Another factor causing move-up buyers to buy now is the increased costs for new construction due to land values, material and a shortage of labour. The criteria that move-up buyers had for purchasing a new property has shifted, largely due to COVID-19, to put more of a focus on larger lots and more square footage. This is expected to be the case long term, with low interest rates increasing demand for properties in the $700K-1M range.
Condominium apartments saw an increase in sales of 4.44% from 2019 to 2020. Some challenges that the Nanaimo condo market saw in 2020 was a decrease in available units, down 70 units from 2019. As well, prices for condos increased 16.31% year-to-date as a result of the lack of supply in this sector. This is expected to continue into 2021 as supply is not keeping pace with demand. With more new construction coming in the next 6 months, it is expected that this will translate to approximately 320 condominium sales in 2021.
Nanaimo’s luxury real estate market is driven by move-over buyers from the mainland of BC as well as the rest of Canada. COVID-19 caused prices to increase and the demand for luxury homes to remain at a higher than normal level due to a lower housing supply being available. This trend is expected to remain long-term, with data pointing to a steady demand for luxury homes in the Nanaimo market.
Nanaimo’s Hottest Neighbourhoods
Nanaimo’s top-selling neighbourhoods in 2020 were North Nanaimo, South Nanaimo, and Departure Bay. This is due to larger property sizes, water views, and these neighbourhoods are closer to amenities such as major shopping hubs.
Nanaimo New-Home Construction
Nanaimo’s new-home construction market shows a low inventory, which has translated into a 13.29% increase in sale prices. Condo construction appears to be keeping pace with market demands, while single-family home construction is occurring at a slower pace than the current demand requires. Brand new homes are priced higher than their resale counterparts, impacted by higher land, material, and labor costs. Since mid-March 2020, new home construction has remained below 2019 levels, as well as the 3-year average.
Canadian Housing Market in 2021
Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.
Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:
Additional report findings include:
- 35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
- 45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
- Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
- 52% of Canadians believe real estate will remain one of the best investment options in 2021
“Despite the tragic impacts of the pandemic, our optimism in the strength of Canada’s housing market has always remained,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “While we’ve seen a significant shift in buyer preferences this year, we believe factors such as the supply issue, pent-up demand and historically lower interest rates will continue to fuel activity in 2021.”