Tag: okanagan real estate

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!

July 15, 2024

Rom’s Nov 2022 Real Estate Opinion

Okanagan Market Prediction

The month of 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!

December 9, 2022
Rom’s Sept 2022 Real Estate Opinion

Okanagan Market Prediction

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!

October 21, 2022
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!

September 21, 2022
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.

June 23, 2022
Rom’s April 2022 Real Estate Opinion

What’s happening in the Okanagan Real Estate Market?

The Federal Government has announced 2 ways they are considering to slow down the upward pressure on house prices.

Firstly, a proposed ban on foreign buyers purchasing houses across Canada for the next 2 years. However, the percentage of foreign buyers in Canada has dropped from 9% in 2015 to only 1 % in 2020. I therefore don’t think this will have any real effect on house prices.

The second proposal is to invest billions into new construction. That is really the only way to slow down the house price increases. The market is driven by supply and demand. We either have to increase the inventory or decrease the demand. The demand for housing in April is still strong in the Okanagan. The absorption rate for March 2022 in the North and Central Okanagan is still above 60%. That means in March 60% of all the houses on the market on the first of the month sold in March. Therefore increasing the inventory should work to slow down the market.

We haven’t yet seen the effect on the market of the rising interest rates and in turn the increasing mortgage rates. Although it is still a great time to sell your home (especially if you own a secondary home!!), the increasing mortgage rates will price more buyers out of the market. Increased mortgage rates and increasing inventory should help shift to a more balanced marketplace.

The graphic below shows that the market is similar across Canada. The only place in the entire country where prices dropped was the Yukon and it was only by 1.5%. BC is in the top 3 for price increases.

However, you always have to remember that 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.

April 16, 2022
Rom’s November Real Estate Stats & Opinion

Okanagan Real Estate Report November 2021

*click images to enlarge

Rom’s Real Estate Opinion

The real estate industry is full of surprises; never a dull moment. That’s why I love this business so much. Very often people quote “history repeats itself”. It’s pretty hard to find historical data that illustrates that history is repeating itself in the Okanagan Real Estate market. This is all new territory.

Winter Real Estate

It is the time of year that, historically speaking, things should slow down. There are other reasons for a slowdown too. Interest rates are rising and consumer confidence is skeptical as to whether this market can sustain itself. People are expecting a slowdown. “The bubble has to burst”, some of my clients are saying.

However, the stats don’t lie and they never will. What’s happening in the statistics in the Real Estate market? They are RISING. If you recall last month I referred to the expected slow down and decrease in absorption simply because of the winter months. However, in November the absorption rate is rising.

Let’s check out the numbers

In the Central Okanagan, 71% of the residential inventory sold in November, up from 54% in October. Not only that, the inventory actually went down. What does this mean? As bizarre as it may sound, the demand for Real Estate in the Okanagan, which is already higher than ever in recorded history, is now starting to increase again. Prices are going to continue to rise.

The fact that we all live in paradise is no longer a secret. In my opinion over the next few months it has to soften a bit because winter is here. It softens every year at this time. However, as we get closer and closer to 2022 it is setting itself up for a very hot spring in the Okanagan Real Estate Market.

In Conclusion

As always this is just the real estate world according to Rom. Have an amazing Christmas and stay safe and healthy. Wishing you a Happy New Year and an end to this Pandemic in 2022.

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.

December 16, 2021
Rom’s October Real Estate Stats & Opinion

Okanagan Real Estate Report October 2021

*click images to enlarge

Rom’s Real Estate Opinion

This month the overall message for our real estate market is positive, (with a little bit of caution). The market is cruising along just as we predicted. Perhaps a little better than we predicted.

Let’s talk Absorption

The absorption (percentage of total residential inventory that sells on a monthly basis) in the Central Okanagan is staying strong at slightly above 50%. Usually there is downward pressure on absorption this time of year as the market slows for the winter. If you look back on previous years the absorption tends to start dropping in September and continues until spring. That has not happened yet.

Again, to be redundant, the absorption has to get below 20% before the upward pressure on prices levels off. Statistically, absorption has to get below 12% before you see prices trending downward. Year to date prices for residential properties are up 20+% in the Central Okanagan compared to the same time frame last year. Keep in mind this is residential properties only.

The Commercial Side

The commercial/industrial market, although not as robust as the residential market, is also showing strong gains. Most of the excess inventory we saw 3 to 5 years ago has been eaten up and prices per acre of industrial land are rising. Commercial lease rates are also rising and demand for development land is increasing. We are seeing more and more developers coming to the interior as they realize the lack of inventory is like a carrot in front of the donkey they are riding on.

Interest Rates

Now, here is the caution I spoke of. The Bank of Canada has decided to ease off a program called “Quantitative Ease” (QE). I am not an economist nor would I propose to understand the intricacies of this but here is what I know so far. The QE program is designed to push inflation and avoid deflation. The Federal Government buys billions in bonds weekly; which somehow keeps interest rates down, pushing people to buy more “stuff”: cars, houses, etc.

As of October 27, the Feds have decided to diminish these purchases to slow down inflation. This will put upward pressure on interest rates. We have already seen borrowing rates rise slightly in the last few weeks. At this stage I am not sure what will happen to interest rates or the effect on our demand for Real Estate in the Okanagan. I don’t think you will see huge jumps in interest rates. It would shut down the economy. Rather they will “creep” them up.

It does not take a rocket scientist to figure out that as interest rates went down, more people qualified and were able to buy. So guess what? As interest rates go up, less and less people will qualify to buy.

In Conclusion

I doubt we are going to see anything but a continued minor slow down as we end the year and walk into 2022. However, 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.

November 15, 2021
Rom’s August Real Estate Stats & Opinion

Okanagan Real Estate Report August 2021

*click images to enlarge

Rom’s Real Estate Opinion

The phrase of the month for August 2021 for the Okanagan Real Estate market is “Levelling Off”. I hate to be a broken record but this is what was expected. The insane market of the last 2 quarters of 2020 and the first 2 quarters of 2021 could not sustain itself. The market had to correct either by a crash or a levelling off; and levelling off is what it has done.

For the moment, it has stopped its minor correction and leveled off at a very strong market.

Why did it not crash?

That can be answered in 1 word: Inventory. (There isn’t any!) Low inventory will keep multiple offers coming and keep the prices rising. For the second month in a row the average price for the Central Okanagan is above $1,000,000. The demand from outside of the Okanagan continues to be strong which keeps the inventory low. Because the rental market is just as tight as the sales market, buyers have no alternative but to continue to push to buy in this market. I get a few calls per month from people who are desperately trying to find a place to live – buy or rent. For some reason they think I might have an “in” that other REALTORS don’t have. Of course the contrary is true.

The average inventory in August 2021 is 267. The average inventory in August 2020 was 536. That is slightly less than half the inventory of 2020, which was already low. That says it all about what is going on.

Conclusion

If anyone ever asks you what is going to happen to the Real Estate Market in the Okanagan you can most definitely state that it is going to stay strong for the next year at least. That inventory has to go up dramatically before the market direction will change. That can’t happen overnight. This winter we will have our seasonal slow down which will make a better time to buy for BUYERS! As always, that 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.

September 19, 2021