At the beginning of August, it felt like everyone had gone on holiday, and general market activity was low.
Over the last couple of weeks, we have seen an uptick in online activity, showings and offers.
While Buyer offers remain predictably aggressive, for homes that are priced correctly for the current market, we are still seeing a reasonable level of activity, and I even got into a multiple-offer situation last week!
Interestingly, rising borrowing costs have seemed to affect higher price homes more, and I will be interested to see if this trend continues and whether buyers resign themselves to having to downsize their expectations, as interest rates rise further.
Kelowna and Okanagan Real Estate Sales August 2022
Compared to last month
Sellers will be pleased to hear that sales numbers were up across the board last month, with total sales increasing by 33.1%, Single-Family home sales up 32.8% and Strata by 31.4%
Compared to last year
Total sales were down 27.6%, Single-Family homes sales were down 30.9% and Strata 24.6%.
Inventory Levels Central Okanagan July 2022
Inventory levels started to hold -:
Total Listings Aug 2022 - 2,458 holding the same as July 2022 at 2,458 and up 78.2% from Aug 2021 1,379.
Single-Family Homes ( Homes & Bare Land Strata) August 2022 1,125 down 2.6% from July 2022 1,396, and up 110.7%% from August 2021 534.
Condos August 2022 500 up 8% from July 2022 463 and up 106.5%% from August 2021 (274).
Townhomes August 2022 293 up 3.2% from July 2022 284, and up 102% from August 2021 145.
Median Real Estate Prices July 2022
Single Family Homes & Bare Land Strata
August 2022 $957,500 July 2022 $1,012,500 2021 $900,000 back down under $1m an down from its March 2022 peak of $1,150,500. The median price is down 16.8% since March.
August 2022 $488,500 July 2022 $459,600 2021 $424,450 - Peak was March 2022 $520,000. The median price was up against last month but down 6.1% since March peak.
August $697,950 July $689,500 2021 $672,500 - Peak was March $786,000. the median price is down 11.2% since March 2022.
The good news for Buyers is that the median price for single-family homes fell back below $1m last month.
With the next Bank of Canada interest rate rise widely predicted at 0.75% next week, and a further 0.25% by the end of the year, it is highly likely that prices will continue to soften, but we could see a short-term 'florish' in sales by Buyers who have locked into a 90-day hold on a mortgage rate.
My thoughts this month
Everyone wants to know what is going to happen in the Real Estate Market in the next six months, so I have turned to some of the Canadian Bank Economists to hear their current views -:
RBC - " we believe the market will adjust to higher interest rates by early 2023. And in recovery will likely take a further few months to tighten demand-supply conditions, placing the bottom for prices around springtime (overall for Canada). We expect benchmark prices will be down approximately 12% from the recent peak nationwide. On a provincial basis, we think Ontario and British Columbia could record peak to trough declines exceeding 14% and see Alberta and Saskatchewan at the other end of the scale with drops of less than 3%."
"Canada's least affordable markets Vancouver and Toronto, and their surrounding regions, are most at risk in light of their excessively stretched affordability and outsized price gains during the pandemic."
Equifax - defaulting mortgages are still relatively low.. " the key variable to watch here is the labour market and at least for that for now, it is strong enough to support those at risk".
TD BANK - "Beyond the very near-term, there are competing forces shaping our view. On the one hand, global economic weakness probably means that 5-year bond yields (which underpin fixed mortgage rates) are not going to climb as much as previously thought through the end of this year, regardless of any tweaking in our forecast path of central bank policy rates. However, the stronger global slowdown should correspond with a potentially greater slowdown in Canadian economic growth than previously expected, or at least in the timing of it. When weighing the two, we think the latter factor will hold more sway and we have marginally downgraded our forecasts for Canadian home sales and prices, particularly in 2023. From 2022 Q1 - 2023 Q1, we expect Canadian average home prices to decline by 19%, which is in line with our June view. However, housing activity through much of next year should be somewhat more subdued compared to what we were thinking a few months ago. We are retaining the view that home prices will claw back only a portion of pandemic-era gains, making the downturn more of a recalibration, versus something more severe."
"Regional markets that saw the largest deterioration in affordability over the pandemic and those with a previously strong investor presence, are likely to experience a more pronounced retrenchment in prices. The housing market should begin to find firmer ground in the second half of 2023 and early 2024 - alongside an anticipated mild downtrend in mortgage rates."
Other things to take into account.
1. Impact of a tight rental market - is still making some Buyers 'stretch' themselves financially, as the benefits of home ownership still make financial sense.
2. Inventory - we saw inventory numbers hold steady last month, and single-family inventory fell. That could be either due to a delay in people listing and enjoying summer, some Sellers not being willing to sell in the current market, or affordability as some Buyers get priced out of the market. This is better news for Sellers, especially as we remain at relatively low inventory numbers in this area, and if this trend continues we should start to see prices flatten out.
3. Household sizes - demographic changes have seen households getting smaller for decades. RBC reported that even a relatively small decline in average household size has a big impact on the number of new housing units required to shelter Canadians. E.Gg over the 5 years leading up to 2021, the average household size declined by 0.02 people. That was enough to raise the total number of households by 140,000 (or close to 30,000 a year). This trend will be responsible for just under 90,000 of the 730,000 new households created by 2024-and will provide a significant boost in housing demand.
For Buyers - get pre-approved, be aware that the market has already adjusted a fair bit, and is likely to go a little further, but many are predicting a relatively soft landing, so no need to stop looking, providing you are going to hold the property for a least 3 years.
For Sellers - you property needs to show at its best, check you are priced for the current market and don't get insulted with a lowball offer, work with it to see whether you can make a deal!
This month's photo -: Views from Peachland August 2022