There was a time not too long ago when Yellowknife homes virtually sold themselves. Multi-offer situations were commonplace, homes sold within days of listing, and it wasn’t unheard of for desperate buyers to walk up to people’s doors uninvited and try to persuade them to sell. Making a considerable profit on the sale of a home – even in just a few years – was the rule, not the exception.
These are not those days.
That general statement won’t surprise anyone who has been paying attention to our real estate market, but nor will it really help sellers make an informed choice between selling or staying put this year. To help out, we’ve conducted an in-depth analysis of the 2018 Yellowknife market where we break down the sales results in a number of different ways including by housing type, price range and season, and we’ve also made predictions for the 2019 market based on local and national factors. In this article I’ll be sharing some highlights from that analysis, but you can sign up to receive a free copy of the full market report by following this link.
In a nutshell, although our market has slowed, it’s still pretty darned good compared to much of Canada. The best way to illustrate this is to refer to what market analysts call the “sales-to-new-listings” ratio. A ratio of 40 or fewer sales for every 100 new listings (0%-40%) is considered a buyers’ market, 40%-60% is considered a balanced market, and 60% or more is a sellers’ market. As a point of reference, the national average in 2018 was 53.5%. In Yellowknife our market fell from a ratio of 66% in 2017 down to 60% in 2018. That’s not an insignificant decline, but it still leaves us far above buyers’-market territory. Basically, we are straddling the line between a sellers’ market and a balanced market.
Another important metric to consider is how long it takes to sell the average listing, also known as “average days on market.” In 2018 average days on market increased by two weeks from 80 to 94 days. As a result there was a pretty significant accumulation of listings by mid-summer. Sellers faced more competition for buyers than the year prior, and, although we don’t have reliable “days on market” statistics dating back further than 2017, it seemed like they faced more competition than at any time since the late 1990s.
Neither of these market indicators should really surprise anyone. Just over a year ago the Bank of Canada set out to slow down real estate markets across the country by raising interest rates and making it harder for buyers to qualify for a mortgage. MLS sales across the country declined by 11% in 2018 – a statistic that Yellowknife mirrored perfectly. Clearly the Bank of Canada accomplished its mission.
The good news is that the Bank of Canada of has recently sent signals that it will not be continuing with interest rate hikes in 2019. That’s not set in stone of course, but it is a big departure from the message they were sending a few short months ago. On top of this, on January 22nd, the Federal Government hinted that relief for first time home buyers might be coming down the pre-election pike. I can’t guess what that might look like, but any loosening of last year’s mortgage qualification rules, especially for young people, will have a big impact on our market.
So the national picture seems to be shaping up nicely for 2019, but what about the situation here on the ground in Yellowknife? There is no denying that there are some clouds on the horizon for the mining industry, but Yellowknife is still a very attractive place for people looking to accelerate their careers. We continue to draw a steady inflow of new homebuyers, and this is not likely to change any time soon. With each passing year it seems like the public sector becomes more important to our overall economic wellbeing, and it gives our real estate market a stability that other cities only wish they had.
My expectation is that in 2019, the Yellowknife market will do slightly better than it did last year, making up the 11% of MLS sales that it lost. The rising tide may not impact all price ranges and housing types, but overall we see numbers similar to 2017. And if the Federal Government follows through with a new package of incentives for first-time home buyers, we will do better still.
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