Okanagan luxury housing market stabilizing
Now that the Bank of Canada has signalled its intention to hold the line on interest rates, a luxury real estate broker expects the Okanagan market to settle into a more stable pattern after years of dizzying price increases.
“Certainty breeds confidence,” said Faith Wilson, who operates an eponymous Vancouver-based firm under the Christie’s International Real Estate banner that also does business in the Okanagan.
“We’re in a new market now. You can look at data from the year before, but once you hit the end of December and you’re coming into January, everybody’s waiting to see how things are going to play out. So getting this interest rate hike out at the get-go is good and then we wait to see how the market is going to perform,”
The “luxury” market is loosely defined as properties valued at over $2 million and is generally more insulated against rate shocks than the conventional market.
“Somebody that’s buying a luxury property at $2 million may be more affected by interest rates than somebody who’s buying
a vineyard or winery for $15 million or $20 million,” explained Wilson, who noted luxury buyers may still be more exposed to other forces, like stock markets.
But even people who will never be able to
afford to buy into the luxury market should pay attention to what happens there due to what Wilson calls the “trickle-up effect.”
“If prices hit a certain point, buyers see there’s value for them to get into the market, say first-time buyers, so they push the market up, they push those other buyers up into another level and so on and so on, so it pushes up,” she explained.
And despite the forecast calling for interest rates to remain steady for the foreseeable future, Wilson still expects plenty of action in the market.
“I think there is room for prices to move around. Especially if the lower end of the market is going to be the one most affected by interest rates – and it stands to reason that it would – then you’re going to see that affect the market generally,” she said.
“My sense now is that the low, low interest rates have come and gone, and we will adjust to the fact that we’re back to more stable interest rates – and the rates are still really good.”
Wilson has been watching the Okanagan luxury market ticking along nicely and doesn’t foresee that changing because the region is standing on its own two feet and becoming a destination for more than just retirees.
“In the Okanagan generally, it’s not a retirement community anymore or it’s not as tied to, say, the Vancouver market as it used to be,” she said. “It’s becoming its own entity.”