Home sales in Kelowna continue their slide
Kelowna home sales have been on a slide for four straight months.
That’s long enough to officially declare the region’s real estate market is in a downturn.
And it’s no surprise. Tough new mortgage rules, interest rate hikes, record-high prices and the spectre of a speculation tax in Kelowna and West Kelowna have all contributed to scaring some people off buying their first home, buying a bigger or better place, buying a second property, or even downsizing as empty nesters or retirees.
“In a weird kind of irony, government measures to increase housing affordability are actually having the opposite effect, not just curbing housing demand, but affecting household purchasing power as well,” said Marv Beer, president of the Okanagan Mainline Real Estate Board, which represents more than 1,300 real estate agents.
“People aren’t able to qualify for the same amount of mortgage as before, and this, coupled with higher interest rates, means they can afford less, which is likely to be particularly impactful on first-time buyers and those at the lower end of the price range.”
The term downturn is relative, though. This descent is from record highs set over the last few years. So although the market may be in a dip, it is still healthy.
It can also be considered the cooling of an overheated market or the return to a balanced market after a long stretch of a sellers’ market.
The most telling statistic from the OMREB’s June figures is that 484 residential properties of all kinds (from acreages and single-family homes to townhouses and condominiums) changed hands last month, down 19 per cent from the 595 sales in the same month last year.
In the six months ended June 30, residential sales totalled 2,539, down 17 per cent from the 3,046 sales over the same period in 2017.
Over the past year, the time it takes for a residential property to sell has remained unchanged at around 45 days.
Despite softening sales, average selling prices remain strong for now.
The average selling price of a single-family home in the city was a near-record $717,720 last month, up slightly from $716,474 in June 2017.
The trend is even more pronounced for townhouses and condos.
The average selling price of a townhouse in June was $501,989, up 9.4 per cent from $458,872 in the same month last year.
The average selling price for a condo was $359,860 last month, up 12 per cent from $320,591 in June 2017.
“Price is typically one of the last indicators to shift, as sellers adjust to changing conditions associated with a normalizing market,” said Beer.
All these factors are at play while the Central Okanagan’s economy ticks along, the population increases and the housing shortage continues amid high prices and reduced affordability.
New home construction could help ease the problem for both homebuyers and renters.
Beer said the proposed speculation tax should be scrapped because it’s an asset tax, not a speculation tax, and serves to punish some homebuyers instead of increase rentals and affordability as the provincial government had hoped.
Beer said local government incentives and zoning changes can also help increase the amount of affordable and rental housing with new suites in existing homes and new construction.