2016 was an interesting year to say the least, with the first and second half of the year differing greatly in their behaviour, it was very much a tale of two markets. While many may think that 2016 was an unprecedented year, the numbers show that it was much less active than 2015 in both prices and unit sales.
First, let’s take a quick look back at 2015 vs. 2016 and then we will look at a breakdown for what happened in 2016 and some of the reasons that may have caused the drastic shift in the market. Finally, we will take a look at what seems to be in store for the Squamish real estate market in 2017.
Throughout 2016, the volume of sales was down in the area’s two most active markets (single-family homes and townhomes) as compared to 2015; however, we did witness increases in prices. Meanwhile, apartments saw increases in both number of sales and prices. This is primarily due to affordability and investors buying due to the lack of rental property and good investment return.
Detached single-family homes saw a drop of 18% in unit sales and a price increase of 21% year-over-year. These numbers were matched by townhome sales which dropped by 17% and underwent an identical price increase of 21%. Bucking the trend, apartment sales increased by 5% with a price increase of 22% in 2016 versus 2015.
In total, there were 755 sales in 2015 and 680 sales in 2016 – an overall drop of 10%.
Looking more closely at 2016 market activity, there were substantial variations between the first and second half of the year. Of the 680 total sales, 430 came in the first 6 months of the year with the balance of 250 sales occurring in the final 6 months, representing a 44.5% decrease in total units sold. The largest decline over the course of 2016 was seen in single-family homes which witnessed a drop of 48%, followed by a 44% decrease in townhome sales and a 42% decrease in apartment sales.
It is worth noting that as of year-end there had not been any significant price changes in the median selling price of the units that did sell between July and December.
Understanding the Market
There are several factors that could have attributed to the drastic differences in the 2016 market. Both the provincial and federal governments were under pressure to help cool the housing markets, primarily in BC and Ontario.
- The provincial government came first with the foreign buyer’s tax. While the foreign buyers tax does not apply to Squamish, 39% of Squamish buyers come from the Lower Mainland where the tax does apply. As the tax slowed the markets south of Squamish, buyers stopped looking to Squamish as an option.
- CMHC rules for qualifying for a mortgage were tightened by the Federal Government, mostly affecting first time buyers. As a result, many would-be first time buyers did not move into homeownership thus creating a situation where other buyers were unable to sell their current homes and transition up to the next step of homeownership to larger, more expensive properties.
What Does it Mean for 2017?
So, what does the crystal ball have in store for 2017? With a slowdown in sales activity and more inventory coming into the market as we move toward spring, the signals are there that some price corrections will occur. The general consensus is that there will be a marginal price adjustment in the Squamish area. Given the drastic increase in price between the end of 2014 and now, this is not unexpected. The sales at the very end of 2016 have already started to show this trend and buyers are now taking the opportunity to slow down the purchase process and enjoy the ability to negotiate more easily with sellers.
In 2017 Squamish will very much be on the radar for many buyers. This is a positive sign but new product, along with an increase in inventory, will mean a more balanced market for both buyers and sellers.
For more information on the Squamish Real Estate Market, get in touch with one of our Realtors.