It’s been a tough month for the Kelowna Real Estate market. Every day we have seen price reductions as anxious Sellers come to terms with the fact that they have had fewer showings than they were expecting, and are left wondering what it’s going to take to get their property sold.
Buyer continue to sit on the fence, and indeed a number of them have not even visited yet to start the buying process, they are just sitting on the edges watching to see what the Real Estate market will do.
We have now seen the full impact on the Mortgage Stress Test, the threat of rising Interest Rates and the upcoming Speculation Tax that is about to be voted upon in the BC legislature during October, which will affect Kelowna and West Kelowna.
The impact of Government intervention in the housing market has certainly had a dramatic effect, where in some cases first-time buyers have seen their purchasing power reduced fine 25%.
Let’s take a look at this months numbers.
Kelowna Real Estate Market Sales September 2018
Overall Sales were down 13.6% on last month and 23.4% on this time last year. Single Family Home sales were similar last month, but there was quite a fall in Strata Sales 26.2% on last month and 30.9% on this time last year.
Short to Medium Term for the Kelowna Real Estate Market
In the Short-Term, we can certainly expect to see prices continue to soften. This will be partially due to usual wind-down into winter and also the general state of the market.
There may, however, be hope on the horizon!
If we look at the seasonally adjusted sales in the Central Okanagan area you will see what a dramatic fall, in numbers, we have experienced this year to date, but at the very end of the graph, you will see it just starting to rise again.
I did take the opportunity to speak to Cameron Muir recently, who is the Chief Economist for BC Real Estate Association about why he feels overall next year Central Okanagan Housing prices will continue to rise. Here are some of his points -:
1. He feels that we will very soon start to see a recovery from the Mortgage Stress Test, as Buyers start to adapt.
2. Migration has been a positive factor over the last few years, and while we don’t see too much international migration, we do see inter-provincial migration- e.g. from Students attending UBCO, and younger Families being drawn from the Lower Mainland to Kelowna due to more affordable housing – providing they can find jobs or work from home.
3. Migration from Alberta may continue to be more subdued as Alberta starts to do better economically and the Speculation Tax may also affect some buying decisions for future retirees. Interestingly though, in the last Conference Board of Canada Consumer Confidence Survey taken in September 2018, sentiment about making major purchases, like a home or a car, increased in British Columbia, and Quebec but declined in the Prairie region.
4. The number of Baby Boomers is still higher and they will continue to be active in the Central Okanagan.
5. Key Economic Drivers for the Province remains good – we have had 4 years above-trend growth and near full Employment.
6. While inventory is rising, if we look at a seasonally adjusted graph, you will see that we are still well below the Numbers of listings that we experienced in 2008.
On the potential threats side - as a Province we all looking at a high number of ‘new builds’ at the moment with 60,000 units being built throughout the Province and 42,000 those being built in Vancouver area, whereas in 2008 there were 28,000 units being built in Vancouver.
In Kelowna, we have a high number of condos being built in the downtown area, so we are running the risk of being overbuilt in Condos again. However, the Developers at Brooklyn in Downtown Kelowna, for example, have reported that the complex is 70% sold out, before their main launch.
So, if you are a Buyer, the next little while will be a good time to not be afraid to make an offer on something, as prices are forecasted to come back towards the end of next year and Interest Rates are looking to rise.
For Sellers, if you don’t have to sell now, you may consider waiting things out.
Everyone has different reasons for wanting to Buy or Sell. This is why it is so important to have a Professional ‘Team’ in your corner, which should include a Real Estate Professional, Lawyer, Mortgage Broker & Property Inspector.
To view Trish's previous month's Sales reports, the latest BC Real Estate Forecast and other helpful hints and tips on the local Real Estate Market, please view Trish's Blog at https://www.trishcenci.com/blog.html