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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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  • 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 November Real Estate Stats & Opinion

    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.

  • Rom’s October Real Estate Stats & Opinion

    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.

  • 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 April Real Estate Stats & Opinion

    Rom’s April Real Estate Stats & Opinion

    Okanagan Real Estate Report April 2021

    Rom’s Real Estate Opinion

    In the current whirlwind real estate market, we are hearing many stories emerging of how fast-paced and wild the home buying process has become. I wanted to share a story with you all today.

    Home Buyers Debacle

    A local realtor detailed an experience she had trying to find a home for her clients to purchase. Her buyer clients had lost out a few deals by being out bid. They finally found a home they were not going to be outdone on and they offered $100,000 over list price. They considered not putting in any conditions because their financing was a slam dunk at only 20% loan to value and they trusted what they saw in the house when they viewed it. However , they were advised by their mortgage broker to put a condition of financing in anyways.

    They did not get the deal. The were told the winning offer was $50,000 less than their offer but had no conditions. The sellers put more value on getting a firm decision than getting another $50,000. My Realtor said the buyers were angry and blaming the other side. However, this is like no fault insurance. The sellers are just taking the best offer for them in their minds. The seller’s Realtor is just looking after their client. The buyer’s Realtor was careful not to push them to go into a risky situation. The mortgage broker was being cautious and protecting the buyers. If anyone is to blame it would be the buyers because they did not choose to take the risk. How can anyone truly blame them for that?  This is one crazy market when we are actually discussing that putting a single condition on an offer and offering $100,000 over list price was too conservative. At the end of the day people have to calculate and be comfortable with their risks. Then they have to accept the consequences and move on.

    Kelowna Stats

    The Stats this month are off the charts, in the stratosphere, or any other similar metaphor I can come up with. This month Kelowna’s absorption is 88%. That means that 88% of all the houses on the market on April 1 sold in April. The average days on market to sell (DOM) was 23 days in Kelowna. What that means is that the listing was activated, an offer was negotiated and all conditions were removed in less than 23 days.

    Conclusion

    On top of all that there is not a shred of hard evidence indicating that this market is going away anytime soon. Those who believe the bubble is going to burst are simply speculating and guessing at this point. However, even a broken clock is right twice a day. Sooner or later things will change.

    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 or it can be done completely remotely if you prefer. It is totally free.  As always, this is just the Real Estate World according to Rom.

  • Rom’s March Okanagan Real Estate Stats & Opinion

    Okanagan Real Estate Report March 2021

    Rom’s Real Estate Opinion

    Imagine in any given market, statistics were so off the charts that an experienced analyst says, “It must be a typo”. In March the absorption in the Central Okanagan was 99.76%! What does that mean? In March, virtually all houses that were on the market at the beginning of the month, were sold by the end of the month.  That is truly unbelievable.
    The average DOM (Days on Market to sell) in the Central Okanagan was 33 days. That is less than half of the 10 year average. The average sale price in March in Kelowna was $160,000 higher than the average sale price of the last 12 months. That does not mean prices have gone up that much. I had one Realtor tell me that he believes the market is rising $10,000 per month. There is no question, the Okanagan paradise we live in is no longer a secret.

    What does this all really mean to consumers and Realtors?

    People think we as Realtors must be having a heyday. In fact, I don’t think I have ever seen Realtors so frustrated. Almost all Realtors care deeply about their clients. They work hard to write offers that are legal and enforceable and with clauses to protect their clients, only to lose out to a higher bid over and over. Naturally, that is very frustrating for buyers and Realtors.
    One way to get an advantage for a buyer is to write an offer with no conditions on it. When the seller signs the offer the house is sold which gives that particular buyer an advantage over one with conditions. The problem is there are risks involved. A good Realtor will explain those risks in detail but at the end of the day buyers are looking for any way to create an advantage  for their offer. If you are a buyer in this crazy market be sure you understand the possible worst case scenarios if you make this type of offer. It does not mean that you should or should not make an offer like this. I personally have done it many times. It simply means you have to be informed, prepared and comfortable with the risks. Real Estate environments like this have been historically common in cities like Vancouver and Toronto but it is new here.

    Final Thoughts

    People are moving here in droves and there is no indication that this is going to let up any time soon. Our job is not to tell buyers what to do. It is to make sure they understand all their options, all the risks involved in those options and then take instructions from our clients. As a buyer you must move fast in this market to get the house you want. Pay attention to your Realtor, listen to their advice, make an informed decision and then act and act fast if you want to get a step up on all the other numerous buyers that are likely looking at the same property.

    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 or it can be done completely remotely if you prefer. It is totally free.  As always, this is just the Real Estate World according to Rom.

  • Rom’s January Okanagan Real Estate Stats & Opinion

    Rom’s January Okanagan Real Estate Stats & Opinion

    Okanagan Real Estate Report January 2021

    Rom’s Real Estate Opinion

    The Okanagan Real Estate Market is continuing its robust, upward direction. Many houses are currently selling for above list price! All signs point toward another robust year.

    A question I hear a lot these days is, “Is now a good time to sell”? Absolutely it is! This is one of the few times in my 18 years in this business where sellers do NOT think their homes are worth more than they are. Most sellers are surprised by what they can get for their home.

    Recent Scenarios

    I just had a new listing that some Realtors commented was ‘overpriced’. However, I received a total of 4 offers in 48 hours and one offer was $30,000 over list price. These stories are not the exception; they are the norm in this market. Just recently, an original condition 1974 home with a lakeview in the Lower Mission, Kelowna area had 15 offers! It was listed for $650,000 and then sold for $110,000(!!) over list price at $760,000.

    If you are thinking of making a move in the next 5 years, now is probably the best time you will see to sell your home.  However, one has to be a little cautious. You have to remember that the reason prices are rising is the inventory of homes to buy is so low.

    Adding in Offer Subjects

    There are 2 ways to avoid being homeless when you sell your home. First, you can put in your offer: “Subject to the sale of your home”. This means that you put an offer on a house that will be conditional to you selling your home. The problem with this solution is that this is viewed as a fairly weak offer, especially in this market. The seller has to count on you, the buyer, to price his or her home correctly to sell before they know their home is sold. In this market there are likely offers without this stipulation which puts you in a poor negotiating position.

    The second way, in my opinion is the better way to solve this issue. As your Realtor, to protect your best interest, I will put the following clause on the contract: “Subject to the seller finding suitable accommodation on or before (Date). This condition is for the benefit of the seller”. What this means is the sale of your home does not go through unless you find a home to buy or rent and then remove this condition in writing. The reason I think this is a better option is it is an extreme seller’s market. A buyer has much more motivation to allow the seller to find a home than sellers have to allow the buyers to sell their home. You will likely be more successful with the later solution than the former one.

    Final Thoughts

    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 or it can be done completely remotely if you prefer. It is totally free.  As always, this is just the Real Estate World according to Rom.

  • Rom’s December Okanagan Real Estate Stats & Update

    Rom’s December Okanagan Real Estate Stats & Update

    Okanagan Real Estate Report December 2020

    Rom’s Real Estate Opinion

    We have finally moved on past the year of 2020. It was a strange yet historic year on many different levels. The real estate market started out as predicted. It was shaping up to be a slightly better year than 2019. Then in March, the world was forced to pause a moment due to COVID-19.

    What happened in real estate after that was nothing short of miraculous. First, activity on almost all levels came to a grinding halt. Next, was a bounce back of all bounce backs! Come June, prices across the country rose in every area except Alberta. Here in the Okanagan most real estate companies experienced their best year ever.

    Residential prices rose 9% in the Kelowna area. Inventory is at an all-time low and still going down. Absorption is at an all time high and still going up.  And of course, interest rates are at an all time low.

    In short, we are in a real estate market boom.

    What about 2021?

    We are now half way through January, 2021 and there are no signs of slowing down. It is too early to tell for sure but it appears 2021 will be another banner year. People are moving here from Alberta and the Lower Mainland and that trend doesn’t appear that will change any time soon.

    However, this won’t happen if our inventory gets so low that there’s nothing to sell or the government shuts the country down again. Although, most indicators are that 2021 will be as strong or stronger than 2020.

    Final Thoughts

    One thing to remember. When the market is falling people will give you all kinds of reasons why it will keep going like that. When the market is rising people will give you all kinds of reasons why it will keep going like that. In either case it never does. 2021 will likely be a record breaking year.  As always, this is just the Real Estate World according to Rom.

  • Rom’s September Okanagan Real Estate Stats and Update

    Rom’s September Okanagan Real Estate Stats and Update

     

     

    Central Okanagan

    “Unusual market activity seems to be the theme this year, although not surprising considering there is nothing normal about 2020.  The pandemic has definitely made people look at things differently.  We are seeing higher demand likely due to post-quarantine lifestyle changes.
    The Pandemic lifestyle changes (who doesn’t want to live in the Okanagan), still record low mortgage rates, very low listing inventory and a continuing migration of buyers from the Lower Mainland are driving up prices from in particular single family homes to record highs.  The Albertan buyers were only making up 7% last month, likely due to the effects of the Pandemic to the oil and gas industry.  The Benchmark home price (better representation than average or median house prices) was $710,700, up 6.3% from September 2019!  It is also remarkable that the sales activity in the one million and up range tripled this year.
    It is interesting to note that the largest type of Buyers are couples without children (29%) last month, followed by couples with children (24%), see graphic. This led me to believe that more semi-retired and retired couples aremoving and purchasing in the Kelowna area.  Overall, 41% of all the buyers were out of town buyers!  Also noticeable is the large amount of first time home buyers last month, 24% of all the buyers.
    The average number of days to sell a home, always a good barometer to watch, barely nudged over August’s 89 days, coming in at 90 days.

    634.jpg

    BC Overall market

    The British Columbia Real Estate Association (BCREA) reports that a total of 11,368 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in September 2020, an increase of 63.3 percent from September 2019. The average MLS® residential price in BC set a monthly record of $803,210, a 15.3 percent increase from $696,647 recorded the previous year. Total sales dollar volume in August was $9.1 billion, an 88.3 per cent increase over 2019.
    chart

    “The provincial housing market had a record-setting September,” said BCREA Chief Economist Brendon Ogmundson. “Both total sales and average prices were the highest ever for the month of September as pent-up demand from the spring pushes into the fall.”

    “Average prices are skewing higher as demand for space during the pandemic drives sales of single-detached homes,” added Ogmundson. Total provincial active listings are still down about 12 per cent year-over-year, with some markets even more under-supplied as the pandemic continues to keep listings low.  Year-to-date, BC residential sales dollar volume was up 25.1 per cent to $49.7 billion, compared with the same period in 2019. Residential unit sales were up 12.5 per cent to 65,023 units, while the average MLS® residential price was up 11.2 per cent to $764,298.

    As always, this is just the Real Estate World according to Rom.