SEASONS GREETINGS!It is a wonderful time to reflect on this year and I am feeling grateful and blessed for the support I receive from you, my clients and friends. I hope to continue being able to support you with all of your real estate needs. In October I mentioned that the Real Estate market in the Interior of BC was showing the beginning signs of levelling off. That levelling has continued into November which gives us one more month towards any kind of certainty that this correction is over. The Bank of Canada has maintained its overnight lending at 5% for the 4th consecutive time. The main reason for this is the inflation rate has come down to 3.12%. That is in contrast to 3.8% last month and 6.9% last year at this time. Therefore, it is getting close to their target rate of 2%. As far as corrections go, this was a pretty mild one. In 2008 the correction lasted 4 years. Here’s an interesting point: people talk of prices going down. Even in a correction, prices rarely go down substantially. When the year ends, prices in 2023 will have been stabilized and we didn’t see much of a decline at the end. I expect in 2024, a rise in house prices around 5-6%. In 2024 I expect the Bank of Canada rate to go down by 1-1.5%. |
| Looking forward to a happy and positive 2024 for all, and as always, this is just the real estate world according to Rom. Wishing you, your family and friends a fun and relaxing Christmas and holiday break! |
Tag: west kelowna
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Rom’s Real Estate Market Opinion – Dec 2023
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Rom’s September 2023 Market Review for the interior of BC
There are three terminologies that I personally use to describe what is going on in the real estate market in the Interior of British Columbia. They are: “a leveling off”, “a recovery”, and “a correction”. In the last two years we’ve gone from a recovering real estate market (Rising) to a leveling off and we are now in a correcting market. The characteristics of a correcting market are; reducing absorption (less properties sold in a said period of time), reducing sales, reducing prices with rising inventory, and rising days on the market to sell. That is exactly what we are experiencing right now. These five activities are happening all over British Columbia and likely throughout the rest of Canada or at least in most locations in Canada to various different degrees. The reason is that the major driving force pushing the market down is rising interest rates. Interest rates are governed federally.My prediction in the market going forward is that we will likely have 9 or 10 months of a correcting market. In the third and fourth quarters of 2024 the correcting market will likely start to level off. This will be spurred by the Bank of Canada starting to inch the interest rates down as inflation gets more under control. The correction will not be a dramatic drop in prices. We will likely see a moderate drop in prices. Perhaps a further 10%. The reasoning behind this assumption is that immigration is maintaining a relatively high demand and low inventory is maintaining a relatively low supply. This is why we have not seen a huge drop in prices so far.There are quite a few assumptions built into my prediction that may or may not come true. For instance, if the Bank of Canada continues to raise interest rates the correction will pick up speed and will last for an extended period of time. I see this ending in the last two quarters of 2024.We have had quite a few years of robust markets. British Columbia has the highest Real Estate prices of any province or State in North America. We recently passed Hawaii.Some of you may disagree with me or even dislike me for saying it but,”We needed a correction”.As always, this is just the real estate world according to Rom. I hope you are having an amazing Fall!
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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!
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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!
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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!
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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!
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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!
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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!
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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!
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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.
