March 2024 Comox Valley Market Report

March 2024 Comox Valley Market Report

Marching into the Market: Comox Valley Homes Spark with 6.3% Surge, Yet a Silent Sales Symphony Plays On

In this March Market Update:

  • Real Estate Quote of the month

  • Comox Valley February 5 yr. home prices

  • Interest rates

  • Inflation expectations

Quote of The Month:

"Location, location, location." – Lord Harold Samuel

Comox Valley February 5 yr. home prices

In this month's real estate update, the spotlight falls on a noteworthy headline figure—the average home price has surged by 6.3% compared to the same period last year, transitioning from $789,735 to the current average of $842,226. While this initial glance may hint at a robust and flourishing market, a more thorough analysis reveals a nuanced narrative. A closer examination indicates a lateral movement in the market, triggered by the escalating challenges as mortgage debt begins to exert pressure, challenging homeowners with rising interest costs.

Volume Matters: A Closer Look at Sales Activity

One crucial factor demanding consideration is the volume of sales transactions. Despite the apparent increase in average prices, the Comox Valley has witnessed a decrease in sales volume, with a notable drop of -7.69%. This statistic prompts a fundamental question: Was the surge in average prices truly reflective of a thriving market?

Interpreting the Data: Quality vs. Quantity

Recognizing the driving forces behind the surge in average prices is essential. It's not solely attributed to heightened demand or competitive bidding; instead, the lower sales volumes suggest that the price increase might stem from reduced sales activity influenced by seasonal trends and overall market conditions.

For example, in the previous month, the average price for Single Family Dwellings in Zone 2, excluding Island, ocean, and acreage activity, hovered just below $600,000 (meaningless with very little sales). These variations are particularly noticeable during the winter months. Essentially, the current state of the market may be more indicative of a temporary pause in activity rather than an overwhelming surge in demand.

As illustrated in the graph above, the average price appears to be trending sideways with a subtle uptick. In summary, the market seems to be moving laterally with some downward pressure. The upcoming spring season is anticipated to provide a clearer direction.

New Home Builders Step Back with a home shortage?

Talking with new home builders in the Comox Valley reveals a common thread—many builders are choosing to postpone new home construction this spring, grappling with challenges of escalating construction costs homebuyers are struggling to afford. Over the years, new home regulations have played a role in the steady rise of construction expenses. The fundamental principle of supply and demand appears to be experiencing an intriguing misalignment.

Despite a robust demand for housing, the supply of affordable homes remains conspicuously scarce. Instead, the region is witnessing a notable uptick in mass apartment construction. Interestingly, some of the available living options range from residing in a van to being provided with a tent or navigating life on the streets. Paradoxically, amid these alternatives, the ability to construct a genuinely inexpensive home for personal use seems elusive.

Looking back to 2008, more than 4000 homes in BC were crafted by owner-builders—an initiative that has seen a significant decline, with the current number now standing at well under 1000 owner-built homes annually. This reduction of over 3000 homes signifies a notable shift in the wrong direction! The stark contrast between the high demand for housing and the scarcity of affordable options underscores the urgent need for innovative solutions to bridge the gap and restore a more balanced housing ecosystem.

Looking Ahead: Navigating the Real Estate Landscape

As we navigate the ever-evolving landscape of Comox Valley real estate, it becomes crucial for both buyers and sellers to stay informed and adapt to the changing dynamics. While the increase in average prices indicates a market with potential, understanding the nuances of sales volume is paramount for making informed decisions.

In the coming months, I will continue to monitor and report on the trends shaping our local real estate market. My goal is to provide you with the insights needed to make informed decisions as you navigate the exciting journey of buying or selling a home in the beautiful Comox Valley.

Quarterly topic: Interest rates unchanged for February

Bank of Canada wary of premature rate cuts as underlying inflation persists

OTTAWA (Reuters) -Members of the Bank of Canada's (BoC) governing council were concerned about cutting borrowing costs too soon amid persistent inflation when they decided to keep the key overnight rate on hold on Jan. 24, minutes published on Wednesday showed.

The policy-setting governing council was "particularly concerned about the persistence of inflation and did not want to lower interest rates prematurely," the minutes said.

The Bank of Canada (BoC) aims to keep inflation at 2% and has increased its key overnight rate 10 times in 17 months to a 22-year high of 5% to tame inflation.

Shelter price inflation, which includes mortgage interest costs, rent and components related to house prices, remained the biggest contributor to above-target inflation, the minutes said.

"Members expressed concern that, going forward, shelter price inflation would continue to keep overall inflation elevated," the so-called summary of deliberations said.

The governing council was worried that if the housing market rebounded more than expected in the spring of 2024, shelter inflation could keep inflation materially above the target even while other price pressures abated, the minutes said.

Canada's shelter costs, which account for over a quarter of its CPI basket, rose 6% in December year-on-year even as overall inflation figure came at 3.4%.

Governor Tiff Macklem, while addressing a press conference at the Montreal Council of Foreign Relations on Tuesday, said the BoC expects a modest increase in prices in housing in 2024 and that was built into its forecasts.

The minutes showed that the BoC was also fretting about increase in wages amid zero productivity growth, which could have further inflationary pressures. Wages have been growing between 4% and 5% annually.

"Members expected wage growth to moderate gradually," the minutes said.

The central bank also sees risk to growth as restrictive monetary policy could impact consumer spending and could case a marked contraction in economic activity, forcing the BoC to ease interest rates "earlier and more quickly than anticipated".


Inflation expectations:


The content presented in this newsletter is intended for general informational purposes only. Real estate market conditions are dynamic and subject to change, and the data shared herein is based on the best available information at the time of publication.

While I am committed to ensuring the accuracy and reliability of the statistics and market information presented, it is essential to recognize that my analysis is crafted from independent research and may differ from mainstream analyses that rely on distinct data sources. Real estate markets are influenced by a multitude of factors, both internal and external, which may not be fully captured in the provided data.

Readers are strongly encouraged to conduct their own research. I provide this information in good faith, and for those seeking a more personalized and detailed analysis tailored to their specific needs, I am available for individual consultations. Your trust in my dedication to delivering accurate and valuable information about the real estate market is sincerely appreciated.

MLS® property information is provided under copyright© by the Vancouver Island Real Estate Board and Victoria Real Estate Board. The information is from sources deemed reliable, but should not be relied upon without independent verification.