What is happening to our house prices?
In the Central Okanagan stats show that the average price has dropped slightly in May 2022 compared to April 2022. BUT! A month does not make a market.
What it does mean is that the crazy frenzy of multiple offers (all over list price!) is over. If we see a continued, gradual increase in interest rates that will be a strong indication of things to come. Year to date our house prices are up 21%.
Interest Rates
On June 1st the government raised the overnight lending rate .5 percent (50 Basis points). That is the third rise since the new year. The talk is that they’re going to do the same thing on July 13th with the next overnight lending rate announcement.
Personally, I think they should wait to see what the true effect is on the rises they have done so far on our housing market and our economy.
My opinion is that the market will shift to a forecast of further declining prices (starting late May). We will likely see a gradual drop in the high end market but a more significant drop in the median market.
It’s still a Sellers Market
The absorption rate (the percentage of properties sold versus inventory at any time) for May 2022 in the Central Okanagan was 28.86%. It is still a seller’s market. The absorption rate will have to go below 20% to show a true shift to reducing prices and a balanced market between sellers and buyers.
I believe we will see a continued softening of the market as we go forward and as the government continues to raise interest rates.
As always, this is just the real estate world according to Rom.
If you would like to find out what your home is really worth in a market like this give me a call or text me at 250-317-6405 and I would be happy to evaluate your home. It can be done completely remotely if you prefer. It is totally free.
