Rate hikes starting to tame Okanagan house prices
Benchmark price for a Central Okanagan house holds steady at $1.1M
Rising interest rates have finally taken some of the wind out of the Okanagan housing market’s sails.
With just two exceptions, benchmark prices decreased in June on a month-over-month basis for the three main housing types all across the Okanagan, according to fresh data from the Association of Interior Realtors.
“It’s not unusual that mortgage rates are impacting market activity, specifically in the higher-priced markets,” said association president Lyndi Cruickshank in a press release.
Benchmark properties are those with what the realtors’ association considers “typical” assets and are viewed as a more accurate indicator than pure averages.
“This is what typically happens when interest rates move upward. It makes buying a home more costly, making what a purchaser can afford more limited. We are seeing this effect, particularly in what is typically a higher-priced home type. However, this shift is creating a welcome opportunity for buyers to slow down in their decision making, which is a welcome relief for many.”
In the South Okanagan, the benchmark price of a single-family home slid by $10,000 in June on a monthover-month basis to $816,000, while the benchmark price of a townhouse dipped by $5,000 to $601,000. Only condos and apartments bucked the trend, with the benchmark price rising $4,000 to $438,000.
In the Central Okanagan, the benchmark price of a single-family home remained stuck at $1.1 million in June, while the benchmark price of a townhouse slumped by $67,000 on a month-over-month basis to $763,000 and the benchmark price of a condo or apartment shrunk by $15,000 to $537,000.
Finally, in the North Okanagan, the benchmark price of a single-family home slipped $9,000 in June to $799,000, the benchmark price of a townhouse dropped by $36,000 to $598,000, and the benchmark price of a condo or apartment fell $8,000 to $335,000.
At the same time, the 1,466 residential units sold across the association’s territory in June marked a decrease from the 1,687 that changed hands in May. The average time to sell rose during that same period from 41 to 45 days.
Conversely, the 3,265 new listings in June represented an increase from 3,166 in May, which Cruickshank believes will help moderate prices somewhat.
“Our inventory is gradually picking up and supply is growing. This is benefitting both buyers and people looking to sell and move,” she said.
“As we don’t expect any relief in terms of interest rates in the coming days, one will have to anticipate the market while pricing properties correctly.”
Since January, the Bank of Canada has raised its overnight lending rate from 0.25% to 1.5% in a bid to combat rising inflation, with another hike widely expected next week
Over that same period, the interest rate on a conventional five-year mortgage has risen from 4.8% to 6%, according to the Bank of Canada, while the prime rate has climbed from 2.5% to 3.7%.