What You Need to Know About the Comox Valley Real Estate Market

Vancouver Island continues to be one of the most enchanting places in British Columbia or perhaps Canada. But affordability? This is an entirely different story as prices continue to skyrocket throughout the region. Like many other parts of the western province, Vancouver Island, and its surrounding areas, including Nanaimo, Port Alberni, and Comox Valley, real estate markets keep posting exceptional growth, even as interest rates maintain their upward ascent.

For months, housing experts have stated that the overall Vancouver Island real estate market is out of balance. Whether it will return to balance or not remains to be seen, but it is clear that more supply needs to come online to help slow down growth or reduce prices.

That said, here is a brief look at the Comox Valley real estate market.

What You Need to Know About the Comox Valley Real Estate Market

According to the Vancouver Island Real Estate Board (VIREB), home sales totalled 741 units across all types of residences. But how did the various categories perform to kick off the typically busy home-buying season? Single-family home transactions soared 29 per cent from March to April, totalling 376 sales. Townhomes edged up one per cent month-over-month, with 83 units changing hands. Condominium apartment sales were down 11 per cent monthly, totalling 75 units.

The benchmark price for homes in the Comox Valley real estate market surged by nine per cent compared to the same time a year ago, topping $857,000. That said, prices for different home categories flatlined, real estate association data show. The price of a single-family home jumped one per cent from March, exceeding $774,000. Townhome prices were flat at $545,100, while condo apartment prices also trended sideways at $395,300.

Moreover, here is a pricing breakdown of the neighbouring places in the Comox Valley real estate market:

• Campbell River: $712,800, up nine per cent year-over-year
• Cowichan Valley: $779,300, up two per cent year-over-year
• Nanaimo: $815,900, up four per cent year-over-year
• Parksville-Qualicum: $896,400, up two per cent
• Port Alberni: $517,000, up three per cent
• North Island: $424,600, down one per cent

Housing stocks have improved after suffering years of “chronically low inventory.” Active listings of single-family homes advanced 33 per cent year-over-year, totalling 1,271 units. Active listings of apartments surged 25 per cent to 381 units, while active listings for townhomes soared nearly 50 per cent to 368 units.

“Listings have also had a healthy boost, which is positive news, and sellers are responding to changing market conditions with price adjustments,” said Jason Yochim, the VIREB CEO, in a statement. “More inventory means more choices for buyers, but sellers also need somewhere to go when their home is purchased. Additional listings are a win-win for everyone.”

New housing construction activity levels have been little changed. In the first quarter of 2024, housing starts totalled 33 units, down 15 per cent compared to the same quarter a year ago, according to Canada Mortgage and Housing Corporation (CMHC).

Now, how does this compare with the rest of the province? The British Columbia Real Estate Association (BCREA) published the latest data, showing that the residential average price in May fell 1.5 per cent year-over-year to slightly below $1.002 million. Home sales tumbled close to 12 per cent, totalling 8,075 units. Active listings surged more than 42 per cent to 39,602.

In addition, CMHC figures reveal that new construction activity has been robust across the province this year. Housing starts increased at an annualised pace of 14 per cent to 3,748 units in May.

“Markets could not match the surge in home sales that occurred this time last year,” said BCREA Chief Economist Brendon Ogmundson in a monthly report. “However, we are starting to see a pick-up in sales activity to more normal levels, which, combined with rising inventory, is helping to keep markets in balanced territory.”

Mortgage Rates

With sales activity expected to pick up in both Comox Valley and the broader national housing market, industry observers believe conditions could improve even more as interest rates start gradually coming down. The Bank of Canada (BoC) recently pulled the trigger on a quarter-point rate cut, trimming the benchmark policy rate to 4.75 per cent and lowering the yield on the five-year Canadian government bond.

This has prompted some of the big banks to trim their fixed mortgage rates. New data show that the Bank of Montreal, CIBC, and RBC reduced rates by as much as 15 basis points.

“It’s great news for people who are renewing,” rate expert Ron Butler of Butler Mortgage said in a social media post. “Rates are going from mostly all 5%-plus, to mostly rates in the [4%-range].”

This is roughly in line with what economists had anticipated at the start of the year, with mortgage rates projected to hover around four per cent.

Regardless of the coming rate cuts, Bank of Canada economists write in a new paper that rate hikes of the last few years will weigh on consumer spending and homeowners with mortgages.

“This increase directly reduces disposable income. At the peak, the average household with a mortgage will experience a 5 per cent decrease in its level of disposable income,” the economists stated.

Since March 2022, monthly mortgage payments have increased by an average of nine per cent. Staff economists expect average monthly payments will be 17 per cent above 2022 levels in the next three years.

What About the British Columbia Economy?

Home prices have performed well in a climate of higher interest rates. But now that the central bank’s restrictive policy efforts have travelled throughout the Canadian economy, what does this mean for British Columbia’s broader economic position?

TD Economics released its British Columbia economic forecasts. Bank economists expect real GDP growth to be 0.9 per cent in 2024 and 1.9 per cent in 2025. The unemployment rate is expected to increase to 5.7 per cent this year and 6.2 per cent next year. Existing home prices are projected to rise 1.5 per cent and 3.5 percent, while home sales will fall 2.4 per cent in 2024 and soar 20 per cent in 2025.

“The economy is still facing pressure from a subdued household sector, a cloudy external backdrop and lacklustre investment prospects,” TD economists said in a research note. “We see scope for a pickup in 2025, at which time the B.C. economy will likely regain its status as an above-average performer.”

RBC Economics is “keeping Ontario (0.5%) and B.C. (0.7%) at the back of our 2024 provincial growth ranking.” Affordability concerns and debt will run rampant in the western province over the next year.

“We expect the sharp drop in capital spending intentions will be a major drag on growth this year,” RBC economists stated in a recent outlook. “Lower interest rates will bring some relief to households and businesses, but this will do little to appease the intense prevailing affordability tensions in the province.”

What does this mean for first-time homebuyers? There might be plenty of turbulence ahead, and households could find it challenging to navigate moving forward.

Since price inflation is sticky, experts say the cost of housing is likely to remain elevated. Even if some of the bearish projections are accurate, the price of a home will probably continue to be much higher than what it was a few years ago.

This is why prospective homeowners must work closely with an experienced, professional real estate agent to help them find the best residential property suited to their needs and budget. With rates changing, inventory still scarce, and prices tumbling at a modest pace, the need for real estate agents has never been greater.