RomRealty

Tag: home financing Canada

  • Rom’s April 2023 Real Estate Opinion

    Rom’s April 2023 Real Estate Opinion

    Okanagan Market Prediction

    Cruising along

    The market is cruising along as we expected it would once the interest rates levelled off.

    Absorption is rising and is now above 20%. Prices are starting to inch up as well. Sales activity is still lower than normal when you compare April 2023 to April 2022. The reason for this is a lack of inventory.

    Fun Fact

    Here’s a fun fact… Of the G7 countries (Canada, France, Germany, Italy, Japan, England and the United States), Canada has the lowest housing per 1,000 people. France is in first place.

    In order for Canada to catch up to France, we would have to build 3.5 million more homes on top of the 2.3 million homes expected to be built by 2030. On top of that, Canada has now increased its annual immigration goal to 500,000 per year.

    What all this tells us is that the inventory problem is not going away any time soon and is going to get worse before it gets better. The result of that is continued upward pressure on prices; the very thing the government is trying to avoid.

    Rest of 2023

    Prices will rise slightly for the rest of 2023. Interest rates look like they are going to remain steady for a while which will gradually increase buyer demand further.

    It’s a great time to buy Real Estate in the Okanagan!  However, you always have to remember, that’s just the world according to Rom.

    Please remember, I am NEVER too busy for any of your referrals!

  • Rom’s Jan 2023 Real Estate Opinion

    Rom’s Jan 2023 Real Estate Opinion

    Okanagan Market Prediction

    It’s a new year!

    I hope your 2023 has started off on a positive note! The big real estate stories for January 2023 are the absorption rate and the number of sales.

    Absorption Rate

    The absorption rate is down for the Central Okanagan zone encompassing Kelowna and surrounding areas. It is down to 9.01%. This is 3% below the important limit of 12%. Traditionally below 12% we will see downward pressure on prices.

    Number of Sales

    The other important statistic to note is the number of sales. Sales are down approximately 50%.  What this says is the demand has decreased dramatically. This decrease in demand for housing is a direct result of the rise in interest rates. As interest rates rise fewer and fewer and people can afford to buy a house.

    There is a silver lining in this cloud

    For the last few years sellers have been dictating to buyers what their house is going to sell for. Now buyers have a choice. The market has shifted to a more balanced market and in some places a buyer’s market. Sellers have had to get aggressive in their pricing in order to compete with other sellers. Sellers who refuse to accept that the price of their house has come down in the last few months, are sitting on the market with no offers. This trend is a good thing for buyers. They have more inventory to look at and can bargain more aggressively.

    Interest Rates

    On January 25th the Bank of Canada overnight lending rate was increased by 1/4 of a percentage point (25 Basis Points). This sent a message that the bank is softening its aggressive attack on inflation. The next interest rate announcement is on March 8th. I believe we will see a similar 25 basis point increase.  The bank desperately wants to slow the economy and bring down the inflation rate. However, if they keep an aggressive direction, it will increase mortgage defaults and foreclosures and that is not good for anyone.

    However, you always have to remember, that is just the real estate world according to Rom.

    Please remember, I am NEVER too busy for any of your referrals!

  • Rom’s Dec 2022 Real Estate Opinion

    Rom’s Dec 2022 Real Estate Opinion

    Okanagan Market Prediction

    The Year 2022

    2022 was a whirlwind of a year. In the first quarter of 2022 our prices rose, our absorption was through the roof and sales were record highs.

    After that it’s been mostly downhill. By the second quarter of 2022, prices dropped an average of 10 to 15%. Then they levelled off. Prices have remained relatively constant since the end of the second quarter.

    December

    Absorption dropped dramatically in December. However, if you look back historically December absorption generally has a fairly dramatic drop from November. This is simply because half of the month is spent around vacation, holidays and family.

    What’s ahead in 2023?

    It will be interesting to see what happens in the first quarter of 2023. I believe there will be some downward pressure on prices in 2023. This will be caused by a continued increase in the interest rate.

    The next announcement for the Bank of Canada is on January 25th. My guess is that it will either be raised 1/4 or 1/2 of a percentage point. These two possibilities will have very different results to the buying consumers across Canada.

    A quarter of a percentage point will show that the Bank of Canada is softening their approach on interest rates. A half of a percentage point will show the consumers in Canada that they are definitely not finished yet. If interest rates go up another half a point at the end of January we will see continued softening in sales and prices.

    “After a very strong first half of 2022, we began to see market activity moderate amid consistently rising interest rates imposed by the Bank of Canada,” says the Association of Interior REALTORS® President Lyndi Cruickshank, adding that “although inventory levels remain tight, the high interest rates will continue to subdue market activity in the coming months.”

    However, you always have to remember, that is just the real estate world according to Rom.

    Please remember, I am NEVER too busy for any of your referrals!

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  • Rom’s Nov 2022 Real Estate Opinion

    Rom’s Nov 2022 Real Estate Opinion

    Okanagan Market Prediction

    The month of10 Things to Do to Make the Most of a Kelowna Winter | Hike Bike Travel November is following in the tracks that we expected it to. The first quarter of 2022 saw a huge price increase. The second quarter saw a 10 to 15% price drop.

    Past to Present November

    Since then it’s been flat as a pancake. Prices and absorption have stabilized for the last 4 or 5 months. The real change has been the number of sales. The number of sales in November of 2022 is basically half what they were in November of 2021.

    A Balanced Market

    Sellers are no longer sitting with their REALTORS trying to decide which offer, over list price, they are going to accept. They are having to be more conservative with pricing and they have to consider their first offer because there might not be another one.

    As much as this seems like the sky is falling it really is simply “back to normal”. This is what a balanced market looks like. It just seems worse because it followed such a boom.

    Interest Rates

    There is still downward pressure on prices but the market is resisting….for now. The interest rates will tell the last chapter of this story. On December 7th the Bank of Canada raised its interest rate by 50 points to 4.25%. The bank also signaled that a pause in rate hikes could be coming. Although I think there may be one more increase at the beginning of next year.

    However, you always have to remember, that is just the real estate world according to Rom. Wishing you and your family a Merry Christmas and a very happy new year!

    Please remember, I am NEVER too busy for any of your referrals!

  • Rom’s July Real Estate Stats & Opinion

    Rom’s July Real Estate Stats & Opinion

    Okanagan Real Estate Report July 2021

    Rom’s Real Estate Opinion

    The market is progressing exactly in the direction that we anticipated. Things are settling down but definitely not crashing.

    Think of the market in the last year as something like a Chicken Little scenario from the 1943 Disney Movie. For the last 6 months the market has been running around with his hands waving in the air screaming and yelling that the sky is falling. In other words, the absorption was ridiculously high, the inventory was ridiculously low, monthly sales we’re breaking all historical records and price increases we’re breaking all historical records.

    What’s happening now is Chicken Little is settling down. The absorption in the Central Okanagan (Peachland to Lake Country) has now dropped to between 40 and 50%. The inventory is still very low and sales have dropped to a reasonable level. However, let’s keep this in perspective. Absorption between 40 and 50% is still off the charts for our area. A balanced Market is considered to be 12 to 18% depending on which expert you listen to. Below 12% indicates that you can expect price decreases and it is also considered a strong buyer’s market. Above 18% is considered a seller’s market and you can expect price increases with this level of absorption. 40% is a long way above 18%…

    Where is the market going to go from here and why?

    What has to change in order for prices and sales to drop dramatically? If we look at the inventory for July 2021 and compare this with inventory levels in July 2020 and 2019 then this July inventory level is less than half the other 2 year averages.  Although over time inventory levels will typically gradually increase as more houses will be built, more construction and development. However, in order for the market to change dramatically to even approach a balanced Market the inventory has to increase dramatically; likely more than double. Is this going to happen? This is the big question.  We will not get rid of multiple offers on the same property until that inventory increases. That is just basic logic. 

    Conclusion

    I think we will see this present direction of the inventory, absorption and sales start to level off at these relatively higher levels. The market has settled down from its Chicken Little level to its “normal” place in the regular cycle. 

    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.  As always have to remember that’s just the Real Estate World according to Rom.

  • Rom’s May Real Estate Stats & Opinion

    Rom’s May Real Estate Stats & Opinion

    Okanagan Real Estate Report May 2021

    Rom’s Real Estate Opinion

    There is a very tiny crack in the foundation of the Real Estate market in the Okanagan right now. Sales are actually down in the Kelowna area. If you look back over the years there is almost always an increase in sales from April to May. The tiny crack continues into the absorption rate (the amount of sales versus the amount of listings at any time). There is almost always an increase in absorption from April to May; this year it is actually down.

    One of the phrases that I use in real estate is “A month does not make a market”. In other words this may just be a slight downward blip. If this is a real trend, it will continue for at least the next few months. I do believe this is what we will see. There will be a slight flattening of the market in the next few months but it will hardly be noticeable.

    There are 2 possibilities to explain this change. First, the market is starting a minor (or major!) correction. We have peaked and will start to see things settle down. Second, the market is “too good”. We saw this happen in 2007. The demand is so high and the supply is so low that sales are decreasing because people have nothing to buy. In my ever so humble opinion it is a combination of the two.

    The market was so ridiculously hot that it could not sustain itself. It was inevitable that it was going to slow down at least to light speed. Many Realtors are saying that their buyers are saying “I give up”. They have been disappointed so many times making offers on houses and losing out to other buyers. Some buyers have decided not to make their move until the market slows a bit and there is more inventory to choose from.

    Conclusion

    Personally, I am glad to see this crack in the foundation. The market was super hyper.  It was no fun telling my buyers to go into a multiple offer battle, $50,000 over list and still have no chance of getting the property they want. It needed a bit of a time out.

    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.  As always have to remember that’s just the Real Estate World according to Rom.

  • Rom’s November Okanagan Real Estate Stats and Update

    Rom’s November Okanagan Real Estate Stats and Update

    Okanagan Real Estate Report November 2020

    Rom’s Real Estate Opinion

    The market rebound from a devastating Spring 2020 was surprising for everyone, including every Realtor® and top economists across this country. Since that time we have seen nothing but record breaking gains across the board, (other than Alberta which has been hit with the oil crisis). Sales are up, inventory is down, absorption is through the roof and prices continue to rise across the Central Okanagan.  The absorption rate for single family homes was over 57% in the month of November, breaking new records again.  This means that 57% of the total house inventory sold in one month.  Even in the boom of 2005-2008 we didn’t see these numbers.

    Canadian Real Estate Trends

    Let’s look at one of the trends that is arising from the global pandemic and allow me to make a prediction. There is no question that people are trending away from big cities in this country. Major Real Estate organizations are beginning to predict a slow down in Canada because of this trend. One of the things that is significantly different between the stock market and the Real Estate Market is that the Real Estate market is incredibly local. Very often 2 markets separated by a relatively short distance can be experiencing completely different markets.  To look at “Canadian Real Estate” stats and make decisions locally based on them is not an effective methodology.

    The 2 largest economies in Canada are Vancouver and Toronto. To give you an idea of how large the Real Estate markets are in these cities consider this. There are approximately 110,000 Realtors in Canada. 62% of them work in Toronto and Vancouver. That means that when a report talks of Canadian Real Estate they are primarily talking about Real Estate in Toronto and Vancouver.

    So let’s get back to our trends. If consumers are moving from the cores of the 2 major cities in this country the reports on Canadian Real Estate will be that sales in Canada are dropping. However, the fringe communities will likely benefit from that trend. The outlying suburbs of Toronto, Vancouver, Montreal and Ottawa are already reporting an increase in sales. Here is the kicker: the Okanagan is an outlying area of Vancouver.  That may seem strange being it is 4 hours from Vancouver. However, an increased number of people in Vancouver are opting out of city life and coming to the Okanagan.

    Final Thoughts

    My prediction is that as long as the government does not shut down the country, in 2021 you will see news reports that the Canadian Real Estate market is beginning to soften. However, our stats in the Okanagan will remain strong as migration from Lower Mainland and Alberta continues. As always, this is just the Real Estate World according to Rom.

    Wishing you and your family a wonderful, safe and healthy Christmas and Holiday Season.
  • Rom’s Real Estate Opinion & Stats June 2020

    Rom’s Real Estate Opinion & Stats June 2020

    Kelowna Real Estate Report June 2020

    Rom’s Monthly Real Estate Opinion

    Below you will find the ‘benchmark’ prices for properties. This provides us with a much better idea of the current market rather than using ‘average’ or ‘median’ prices.  ALL property prices (Condo’s, Townhomes and Single Family), went UP compared to June 2019.  
    Despite the Pandemic, the real estate market is active and properties are selling. Moreover, the market has bounced back to an astounding level. It is right back to where we thought it would get to before COVID-19 hit. There is no algorithm for the effects of COVID-19 on the Okanagan Real Estate market. World renowned economists really don’t have any idea either. 
    In Kelowna, the absorption rate for June was 24.39%. This means that 24.39% of all residential inventory in the Central Okanagan sold in June!  It hasn’t been that high since April 2018. There were 261 residential sales in June in the Central Okanagan. That is the highest number of sales since July 2017.

    So, what is going on?

    How can the market be flourishing when unemployment has shot up and the GDP has shot down? There are 2 factors creating this.
    First, banks and governments have stepped up hugely. The pandemic did take eligible buyers out of the market. However, every time the interest rates dropped another fraction of a percentage point, multiple new buyers were now able to buy. Remember, the market is driven by the buyers. There was also a backlog of buyers who were ready to purchase but were waiting out the Pandemic.  Since we entered phase 3 here in BC, consumer confidence returned and therefore real estate activity spiked.
    Second, the market and the economy are not doing well in Alberta. Edmonton seems to be doing slightly better than Calgary but they are both hurting because of COVID-19 effects and the bust of the petro-chemical industry. This is driving some to pull that retirement trigger earlier than previously planned and move to the Okanagan. 
    Please remember this is just the world according to Rom.
  • Kelowna condos – Now a good time to buy or sell?

    Kelowna condos – Now a good time to buy or sell?

    Is it now a good time to buy or sell your condo?

    These have been challenging times for all of us and some of the real estate market sectors have been and will be hit harder than others.

    I am expecting the condo market to take quite a hit; maybe not right away but over the next few months.  When comparing the condo market from April & May 2019 to April & May 2020, the Median Condo prices are already down by 7%.

    I feel that these are the main contributors to this happening:

    1. Market saturation of new condo’s, especially in the downtown core of Kelowna

    2. New tightening rules of CMHC that will be in effect as of July 1, 2020.  This will make it more difficult for (first time) home buyers to qualify for financing

    3. Mentality shifts as a result of the COVID-19 pandemic. Buyers prefer to live in a single family home with their own yard rather than dealing with elevators and small living spaces.

    Therefore, I expect that the demand for 1/2 duplexes, townhomes and single family homes will increase.  However, I don’t think the market of condo’s under the $425,000 price mark will be touched by this.  This is simply because at that price point there is no alternative to a condo.

    Please remember that this is just the real estate world according to Rom.

    Have a real estate question? You can contact me anytime by text, phone or email.  I would love to have a chat with you to discuss the market or your buying/selling plans. I look forward to hearing from you!

  • KELOWNA CONDO CLOSE TO DOWNTOWN!

    KELOWNA CONDO CLOSE TO DOWNTOWN!

    FOR SALE: 205-1125 BERNARD AVE, KELOWNA, BC$289,800

    PRICE REDUCED!

    Spacious and inviting one bedroom, two bathroom condo close to downtown Kelowna. This large condo features 9’ ceilings and an open floor plan kitchen, dining and living space complete with nice laminate flooring and a cozy fireplace. Just off the living room is a large outdoor deck with excellent privacy. The master bedroom features brand new carpet and its own ensuite bathroom.

    Along with another full bathroom, this condo comes with a laundry room that is spacious enough to use as storage. Also included is a separate locker room for storage and secured underground parking with security cameras. There are no rental restrictions and one pet (under 20lbs) is allowed. Excellent location with shopping and a bus stop only steps away.

    For more details, please contact Rom Houtstra at 250-317-6405 or email him at rom@romrealty.com.