Winter has a way of cooling things off – in more ways than one. The cooler temps of November brought slower sales to the Okanagan Region as the number of home sales continued to fall in the Kelowna area.
In November, there were 571 sales – a drop of 26.7% from the number of homes sold in October of this year. Slower doesn’t mean worse, however, as November 2016 sales were still 4.19% higher than the previous November.
The Okanagan Mainline Real Estate Board (OMREB) says sales figures have been dropping since the end of Kelowna’s super-hot summer market but are still ahead year-to-year of 2015.
Kelowna home prices reached heights never before seen in the market.
Has the bubble burst?
In the monthly report to the community, the Board says the market is returning to normal but it’s been gradual.
Other November highlights in Kelowna and the Okanagan Region include:
- The number of days on the market increased by 5 days, from 92 days in October to 97 days in November.
- There were fewer homes listed in November. Just 701 compared to the previous month when 884 residential units were put up for sale. This is further evidence that the market is becoming more balanced according to the OMREB.
- Sales figures are down but the average home price went up last month. The average in November was $467,815.36 which is 2.85% higher than the previous month and 16.71% higher than the November 2015 average.
The OMREB believes the average selling price rose last month because of the mix of home styles that sold. With more higher-priced homes selling the average will also skew higher. This could be in part because fewer lower priced homes sold as CMHC has put new regulations in place to save Canadians from themselves in terms of signing up for mortgages they can’t afford, especially in light of continuing low interest rates.
Buyers in the Okanagan, according to a survey conducted by the OMREB in October, 60.7% come from within the region. That’s more than 7% more than the survey statistics from September 2016. A further 13.4% hail from the Vancouver area which is 21.5% fewer than the previous month. The number of buyers from Alberta continue to decrease, down to 11.6% from 12.8% in September. The number of foreign buyers rose from 1.6% in September to 2.1% in October as foreign investors put off by the 15% tax on the coast start to look elsewhere.
There were also more first-time buyers in the pool as of October 2016.
Market analysts say the 2016 frenzy likely won’t be repeated as some of the escalated conditions just can’t be sustained throughout 2017.
Global News featured a story on the Kelowna market and interviewed Elton Ash, regional executive vice-president of RE/MAX Western Canada.
Ash predicts a 4% increase in the average home price in Kelowna and believes sales will remain strong. But the market will be softer, for two reasons both of which have been pointed out by the OMREB. One is the 15% tax in Vancouver and the other is the new mortgage rules making it tougher for new buyers to get into the market.
Ash says the bubble is bursting but no one is in for a hard landing because confidence in the Kelowna market is strong and the B.C. economy is in good stead with job creation and growth in the future. He adds that he doesn’t see a crash in the Canadian housing market anytime soon because there’s too many positive things happening in the province right now.