There is a lot of noise in the media right now in regard to Real Estate in the Okanagan.
You might find yourself asking...
What is Happening in the Kelowna Real Estate Market?
We have had multiple outside influences to our Real Estate Market this year. Here are some factors that are effecting or could effect our market moving forward.
1) This year we have had the federal government increase the bank of Canada posted rate which has effected affordability. They have also implemented new rules as to mortgage qualification. All banks that are federally legislated need to have their buyers pass a STRESS TEST(which basically means the amount you qualify plus 2%). When people cant afford or qualify for as much, this usually means downward pressure on pricing. Many people that once would look to move into a new house, probably realize they are no longer able to qualify and may be stuck where they are for the time being. More resources about this rule change can be found HERE.
2) The provincial government has stated that in the fall they will issue a SPECULATION TAX, which is basically a vacant home tax. If a home is occupied by the owner for more than 6 months of the year or rented out for more than 6 months of the year, you are exempt from the tax. There is lack of clarity as to how they will tax the vacation condo market(commercial/ hotel zoning condos), or condos in stratas that do not allow rentals. Until they issue in fall, they could change or tweak some things. For this reason we have seen people waiting to act on properties like these. The government has already rolled back the amount of tax they were going to charge once, so there is a likelihood other things can change. Here is a chart as to their current plans for roll out. Here is the most recent info graphic from the provincial government.
3) Inventory remains low, but gradually climbing. The population in the Okanagan continues to grow and housing production has not been able to keep up with HOUSING DEMAND. Prices have remained stable and are up year over year. We will see if supply increases move things in the other direction, but for the time being they have not. Supply levels remain under 3100 units at this point in time.
4) The okanagan was recently hit with the FOREIGN BUYER'S TAX that has been in action in vancouver for over a year now. The tax has also been increased to 20%. Foreign buyers make up a very small number of our purchasers (around 2%-3%) so this shouldnt' have too much effect on our market. Below are our July 2018 Survey Results.
5) FIRE SEASON is upon us. Today, I look out and can't see too far ahead. Summer is typically when tourists come to buy, and when the fire keeps them away, it will very likely effect sales to some degree.
The Number of sales are down quite a bit year over year but prices remain stable. 2 charts are below (please see August stats will be lower as we are only in mid August at the time of this Blog)
Can our shortfall of supply outlast these market changes and keep prices stable?
Will buyers proceed with purchases once the speculation tax is implemented?
Kelowna is becoming more globally recognized. It's no surprise that many call it the best place to live in all of Canada. More and more people will continue to move here, and as we grow, there will be more job opportunities. We have a growing tech community, and there is always demand for qualified health care workers. With some of the best golf courses, wineries and lake views around, we will remain a hot spot for retirees and tourism. While the market historically moves up and down, growth is inevitable no matter what outside influences try to slow things down.
For your Real Estate needs, contact David Delorme of Coldwell Banker Horizon Realty today. To learn more about David, click HERE.