We've seen another increase in new listing inventory this month, and as interest rates took another jump it has had a significant effect on sales numbers, in the Kelowna Real Estate Market, which has continued to temper home price growth.
The higher mortgage rates have caused many homebuyers to pause their search, especially, as there are further predicted interest rate rises, and leaving others unable to afford their next move.
Everyone, of course, has an opinion, and some are predicting quite the correction in the real estate market due to the interest rate rises.
The reality is there has been a downward adjustment on move-up buyer budgets, it has taken some first-time buyers and investors out of the market, and generally buyers are taking longer to decide and offering more aggressively. This clearly affects demand for homes, and with supply rising, we are bound to see downward pressure, but it is impossible to predict by home much right now.
Interestingly, Median Sale Prices showed a very modest rise, in all of the 3 main categories, which may be a sign that Sellers are holding slightly firmer during sale negotiations.
Kelowna and Okanagan Real Estate Sales July 2022
Compared to last month
Total sales reduced by 22.8%, with single-family home sales down 23.1% and Strata by 22.2%
Compared to last year
Total sales were down 49.5%, single-family homes sales were down 47.8% and Strata 49.6%.
Inventory Levels Central Okanagan July 2022
Inventory levels continued to rise -:
Total Listings July 2022 - 2,458 up by 6.8% from June (2302) and up 77.7% from July 2021 (1,383).
Single-Family Homes July 2022 1,396 up by 6.3% from June (1313) and up 97.7% from July 2021 (706).
Condos July 2022 464 up by 12.9% from last month (411) and up 69.3% from July 2021 (274).
Townhomes July 2022 282 down 2.4% from last month and up 103% from July 2021 (139).
Putting this in perspective, the peak number of listings in the last 10 years was 4,802 in June 2012, and inventory levels are still below numbers at the start of the pandemic in March 2019 at 2,850, with March traditionally being a slower time of year for inventory.
Median Real Estate Prices July 2022
Single Family Homes & Bare Land Strata
July 2022 $1,012,500 June $1,010,000 2021 $$901,500 showed a slight improvement last month but down from its March 2022 peak of $1,150,500. The median price is down 12% since March.
July 2022 $459,600 June 2022 $453,500 2021 $408,450 - Peak was March 2022 $520,000. The median price is down 11.6% since March.
July $689,500 June 2022 $684,000 2021 $619,450 - Peak was March $786,000. the median price is down 12.3% since March 2022.
My thoughts this month
In the same way, things became unpredictable when COVID started, the same situation applies now.
1. Inventory - we are seeing fewer Buyers in the Market right now, and homes are taking longer to sell. Also, August is often a slower month in the Central Okanagan as buyers tend to take their summer holidays, so I do expect inventory to continue to rise.
2. Prices - with supply up and demand down, it is inevitable that we will see prices continue to soften, but we have no idea how much this will be.
I agree with BCREA Chief Economist, Brendon Ogmundson's thoughts that the BC Real Estate Market in the next 12 to 18 months will be slow.
Brendon said "I think what we're saying right now is going to be a short-term phenomenon. It's going to be a lot like 2018 and 2019 when we saw very slow activity, some softening in prices, but longer-term, I think rates are going to come down, and there's also the demographic demand".
3. Wildfire Season - as we are in wildfire season, now it is very important that buyers remember to get a firm commitment on their Insurance and have a 'policy binder' when they have a firm purchase in place. Typically if there is a wildfire within 25 to 50 km of the area of your new home you may be caught out not being able to purchase new home insurance.
4. Buyers - the first thing you need to do is find out how much you qualify for and what your monthly mortgage repayments will be. With rising inflation, affordability is going to be very important. There are already some predictions that fixed rates may start to come down again soon. There is no need to rush into a purchase, but be careful of trying to 'time the market', as you may miss the perfect home.
5. Sellers - it is important to price your home correctly, as now is not the time to be aggressive. Expect buyers to make offers below the asking price and don't be surprised to receive a lowball offer or an offer subject to the sale of a home. The keyword is be prepared to 'negotiate'.
If you don't have to sell now, you may want to wait, but it could be 12 to 18 months minimum before the market turns again. It depends on how quickly the government gets a handle on inflation, and how soon supply chains recover.
This month's photo -: Black Mountain Golf Course July 2022.