RomRealty

Tag: mortgage

  • Rom’s Real Estate Market Opinion – July 2024

    Rom’s Real Estate Market Opinion – July 2024

    Okanagan Real Estate Review

    Welcome to the Real Estate Review for the interior of British Columbia for July of 2024.

    The market in the interior of British Columbia is maintaining a healthy balanced trajectory. The absorption is well within that 12 to 20% range, indicating that we have a level balanced market between supply and demand.

    Inventory is rising throughout the province and in fact throughout the country giving buyers more to look at and forcing sellers to be more competitive in their pricing. . This is a result of houses coming on the market because of some of the political changes throughout the province and the country combined with a decrease in demand compared to the last few years.

    Interest Rates

    The Bank of Canada reduced its rate by 25 basis points to 4.75% in the beginning of June. The bank has also said they will continue to inch the rates down as long as inflation stays in check. At last check inflation was 2.9% which is just .9% above the bank’s target rate of 2%. This brings some uncertainty about further rate decreases in the short term.

    A balanced market is a healthy Market. A boom or a bust creates volatility and is not good for either buyers or sellers. We will see this trend continue throughout the rest of 2024 and likely see the beginnings of a rise in 2025.

    As always, this is just the real estate world according to Rom. Contact me today for all of your real estate needs!

  • Rom’s Real Estate Market Opinion – Feb 2024

    Rom’s Real Estate Market Opinion – Feb 2024

    The Real estate market in January of 2024 is sending us mixed messages.

    The stats for January indicate that the market is actually down in the Central Okanagan. The absorption in the Central Okanagan is below 10% for the second month in a row. If you look at these statistics you would say that the market is still correcting.

    However, I know that is not true from what other Realtor colleagues have been telling me. Every Realtor I know has been saying that the year started out strong or at least increasing from 2023.

    We have to remember that our stats are always 2 weeks to a month behind reality. When a Realtor writes a deal, the deal is not recorded as sold until the conditions are removed – which means the statistics could be outdated by up to a month.  You will likely see the absorption rise in February.

    We expect prices to rise in 2024 and we expect a fairly strong year. You can see, when we take a closer look at the MLS system, that even though the absorption is down for the month, sales increased in the last half of the month.

    In summary, in the next few months you will see an increase in sales, prices and absorption and a decrease in days on market to sell. This is called a recovering market. The spring market will create some of that upward pressure but as we compare month over month you will see that is increasing as well.

    As always, this is just the real estate world according to Rom. Contact me today for all of your real estate needs!

  • Rom’s June 2023 Real Estate Market Opinion

    Rom’s June 2023 Real Estate Market Opinion

    Okanagan Market Prediction

    Okanagan Real Estate Market

    I hope you are having a fantastic summer and staying cool in this heat!

    The real estate market in the Kelowna area is remaining strong and steady. Average absorption is rising and in some areas of the Okanagan, has passed the 30% mark.

    That tells us that the market will remain strong throughout at least the rest of this year unless the government decides to put up interest rates aggressively. Sales have caught up from the downturn starting in the second quarter of 2022 and extending to the first quarter of 2023. We have now surpassed the sales numbers of last year month over month.

    Home Price Index

    Hot topic: Interest Rates

    On July 12, 2023, the Bank of Canada hiked another 0.25%, bringing the rate that sets all rates to 5.0% and bank prime rates to 7.20%. We haven’t seen the policy rate start with the number 5 since 2001.

    For variable-rate mortgages, monthly payments will go up by about $15 for every $100K of mortgage balance. Stay tuned for the next rate decision on September 6.

    As always, this is just the real estate world according to Rom. I hope you are having an amazing summer!

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

  • Rom’s Feb 2023 Real Estate Opinion

    Rom’s Feb 2023 Real Estate Opinion

    Okanagan Market Prediction

    Light at the end of the tunnel

    As we predicted last month, we see some fairly positive light at the end of the tunnel in the real estate market in the interior of British Columbia. This light is coming from 2 directions.

    Generally, the spring market in real estate starts when the weather breaks. The weather started to break in the last week of February. Open houses are getting busier with more and more people out looking at houses.

    Secondly, the Bank of Canada decided to hold interest rates steady. This is the first time the overnight lending rate has not risen since February of 2022. Most of the consumer interest rates are based on the overnight lending rate.

    Record high inflation is beginning to come down with Real Estate prices leading the way. Fuel and grocery prices are expected to inch down in 2023 as well.

    Sales are up!

    Real Estate sales in the Okanagan in February, although down from February of 2022, have increased substantially from January of 2023. The absorption figures, which is the best statistic to use when trying to predict the future of the local markets, has increased moderately in all three zones as well.

    Not so fast…

    I cannot say at this point that the downward trend is over. The market always rises in the spring. However, I can say that combined with the interest rates, the spring market seems to be opening up fairly early and we should have a fairly active spring market in the Okanagan.

    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!

  • Should You Buy or Wait?

    Should You Buy or Wait?

    It is hard to believe January is already over. Is it my age, or is everyone feeling the time is going by faster?

    As the market is slower everywhere it is important to reach out to Buyers. Buyers have the impression not to buy or do the wait and see approach… sitting on the fence.  

    Is this a good time to buy real estate? I often get this asked. The answer is Yes!

    Rate-sensitive markets like real estate have fallen over 20% depending on the individual market due interest rates increases and inflation. But this is still an excellent opportunity for investors and new home buyers to take advantage of much lower real estate prices despite the current higher mortgage rates. It’s worth noting that despite much higher rates with lower purchase values, the monthly payments in many cases are very similar. Either you pay top dollars in a high market, 100,000+ more with a lower interest rate, or purchase a property much lower, with higher interest rates.

    Example:

    Taking the average Canadian sold price, a buyer today would save almost $160,000 on the down payment despite having a higher monthly payment of $257.

    With a short-term rate strategy, this buyer can lock in a 1-2 year fixed rate to ride out the current rate cycle and then be in a position to renew/refinance at future lower rates.

    Whereas waiting until rates come down, we could see real estate values return to growth, which would mean higher down payment requirements and more competition.

  • 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 Sept 2022 Real Estate Opinion

    Rom’s Sept 2022 Real Estate Opinion

    Okanagan Market Prediction

    308 Kelowna Autumn Stock Photos, Pictures & Royalty-Free Images - iStock

    The keyword for this month is stabilization. The absorption has stabilized, prices have stabilized and inventory has stabilized. There are some interesting things going on in this correction which is keeping this market stable and putting a fairly abrupt end to our correction, for now.

    Unemployment

    The most important one being that unemployment is at an all-time low. In most corrections unemployment rises. This country is seeing a new paradigm where businesses cannot get people to work. There are high paying jobs right across this country with no one to fill them.

    However, we expect another aggressive interest rate hike, possibly 75 points and at least another 25 points? hike in November or December this year.   This will likely put a damper on the stabilization in the upcoming months.

    Conclusion

    We have been getting so used to record low mortgage rate hikes and therefore it will take a while to get used to these higher rates.  However, keep in mind that the average interest rate since 1990 is 5.79%. We are still about a half a point below that average.

    As always, this is just the real estate world according to Rom. If you have any real estate questions give me a call or send me an email at any time.

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

  • Rom’s August 2022 Real Estate Opinion

    Rom’s August 2022 Real Estate Opinion

    Okanagan Market Prediction

    Whether the market direction is changing from down to up or up to down, trying to predict the immediate future of the market is like trying to hang glide with a frisbee. There is just not enough new data yet.

    Going Up

    The absorption in the Central Okanagan went from 11% in July to 15 % in August. Sales are up as well. As I mentioned last month the statistics in the market look much worse because of how they compare to the first quarter of 2022.

    There are lots of periods in the last 25 years where low double digit absorption or in some cases even single digit absorption was the norm. Prices as well have come down since the first quarter of 2022 and seem to be leveling off a bit.

    Interest Rates

    On September 7th the Bank of Canada raised the overnight lending rate by .75%. That sends us a message that they are not finished with their interest rate increases to reduce inflation. The mortgage rates are already following. With each increase a small sliver of the population can no longer buy at all or can no longer buy the type of house they want to buy.

    I hate to sound like a broken record but if they continue to push those interest rates up the downward pressure on prices and sales will continue proportionally. I believe that we will actually see a bit of an increase in absorption and sales activity when we do the statistics for September. Kids are back in school, parents have a little more time to house shop and traditionally we see a little bump in early fall.

    As always, this is just the real estate world according to Rom. If you have any real estate questions give me a call or send me an email at any time.

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

  • Rom’s July 2022 Real Estate Opinion

    Rom’s July 2022 Real Estate Opinion

    Okanagan Market Prediction

    The Real Estate market in the Okanagan is going through the predicted correction of the last couple of months.

    The big story this month is the market changes in the Kelowna area. Absorption has dropped to 11%. In general, a consistent absorption above 20% will create upward pressure on prices. A consistent absorption below 12% will create downward pressure on prices. That is exactly what we are seeing.

    Prices Changes

    The prices in the Central Okanagan area have come down about 10% since the beginning of the year. That is a fairly aggressive drop. However, it’s all relative, we saw a very aggressive rise in prices between February and April.

    Prices generally do not change nearly as aggressively as other statistics. The reason for this is the resistance of sellers to acknowledge a downturn in the market. It is also important to note that all prices do not change at the same rate. For example, homes under $800,000 are staying fairly flat while homes over $800,000 are coming down more aggressively.

    This is following an age old rule; the market always corrects from the top down and recovers from the bottom up. What that means is that the lower price ranges are less affected by a correction. The reason for this is the buyer pool is larger in the lower price ranges so the demand stays stronger.

    Interest Rates

    On July 13, 2022 the Bank of Canada raised their overnight lending rate by a full percentage point. This was the highest increase in 20 years. The government is doing everything they can to curb inflation and that is what is slowing the market. We will likely see a continued trend if they raise the rates on September 13th.  I suspect the depth of the market correction will dig deeper then.

    As always, this is just the real estate world according to Rom. If you have any real estate questions give me a call or send me an email at any time.

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

  • Rom’s June 2022 Real Estate Opinion

    Rom’s June 2022 Real Estate Opinion

    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.