This year many houses in Nelson are selling for more than the asking price.
“Because there is such low inventory, a seller will leave it open for viewing for three to five days and then consider offers,” says veteran local realtor Wayne Germaine. “More often than not there are multiple offers. Some are above asking price.”
He says some are $30,000 to $45,000 above. He knows of one property that was listed for $669,000 and sold for $702,000.
“It is stressful for buyers. Some have offered on multiple different properties and lost out each time. When one house comes up there might be 20 or 30 buyers that look at it.”
Sylvia Stevens agrees. She’s been selling real estate in Nelson for 22 years.
“It is a frustrating market for the buyers, and I have a lot of empathy for that,” she says. “Because they have to compete, it becomes difficult, especially on the first go-round because they are not quite prepared to be as competitive, as compared to someone who has lost out two or three times.”
Nelson numbers compared with Castlegar
Germaine says that so far in 2018, as of last week, there have been 32 residential sales in Nelson, not including condos, with an average price $513,484. In the full year of 2017 there were 122 sales with an average price of $431,000.
That 2017 average is 28 per cent above 2016.
In Castlegar, by comparison, to date in 2018 there have been 52 sales with an average price of $312,468. For the calendar year 2017, those numbers were 145 sales at an average price $296,000.
In other words, so far in 2018, Nelson’s average price is 60 per cent higher than Castlegar’s.
Stevens and Germaine agree on the obvious: the shortage of housing inventory in Nelson is the main issue.
“The solution would be lots of inventory,” says Germaine. “If all of a sudden 40 people decide they want to sell their house it will slow things down a bit. That is the only thing that is going to put the brakes on.”
Pushing out young families?
It’s not just inventory that’s needed, but affordable inventory, says Stevens, and she worries about the young families that want to move here, or local young families who want to buy for the first time.
“We seem to be pushing out our young families because they can’t afford to live here, so they seem to be heading out to the rural areas and Castlegar and Salmo. The ones that can still afford Nelson have some kind of family house, or parents putting money into it. I think it is unhealthy for any city when young families can’t afford to buy. It is frustrating for them, because there is huge interest in being part of Nelson. It is disheartening. The sellers are enjoying it, but you have to leave something on the table for the younger people coming up.”
Germaine says most out-of-town buyers are not just looking for an investment but they want to move here and live here. He says many may not notice what we consider high prices because they are lower than the cities they come from.
New mortgage rules
One recent development that could affect the market is the new mortgage rules introduced in Canada among regulated banks on January 1. This involves a “stress test” in which mortgage applicants are required to prove they could still afford their mortgage if interest rates were increased by two per cent.
“This has had an effect on how much buyers can afford here and have cut a few out of the market,” Germaine says. “The changes unfortunately affect first time home buyers the most. These are the people we should be helping to get into a home and out of renting.”