Monthly Archives: July 2019

Real Estate Cooling Down

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Summer is heating up in Penticton while the real estate market is cooling, according to the South Okanagan Real Estate Board.

“We are seeing a bit of a slow down,” said Dori Lionello, president of the SOREB. “Houses in the $500,000 to $700,000 aren’t selling as fast as they were.”

According to the SOREB June statistics, a total of 89 residential properties were sold in Penticton. Year to date, 432 residential properties have sold, down from 550 the same time period last year.

“Prices are stabilizing,” said Lionello.

It took an average of 62 days for a single-family home to sell in Penticton, compared 49 in 2018.

“If you price your house properly, it can sell faster,” she added. “I actually went into a bidding war on a home in Naramata but that is rare these days.”

As a realtor in Penticton, Lionello has some clients waiting to see if prices drop.

Despite the slowdown, the typical price of a single-family home sold in Penticton climbed in June to $567,585, compared to an average of $536,754 for all of 2019 so far, according to SOREB statistics.

The Penticton market remains tied to Vancouver market, Lionello said. For most of 2019, homes on the Coast weren’t selling and when they did, they had to drop their prices to do so. But Vancouver’s market is starting to see some movement.

Lionello currently has several clients from the Coast who have sold their homes and want to move to Penticton, some looking for waterfront.

“Vancouver homes are starting to sell again and a lot of those people are moving to the Okanagan,” she said. “We are exempt from the speculation tax here so that helps.”

Albertan retirees make up some of the migrants to South Okanagan, but for the most part, people sell their homes on the Coast to live the Okanagan lifestyle, she said.

“People are always going to want to live here, so a home is going to be a good commodity,” she said.

The South Okanagan, like Metro Vancouver, is coming out of a red hot market where bidding wars were the norm, she said.

“We had this hot market and then the federal government came in with the [stress test] and new mortgage rules that curbed activity. It’s all had a trickle down effect on the market,” she said. “In B.C., we now have the toughest mortgage rules. It’s so much harder for young families to qualify for a mortgage now so they just can’t get into the market.”

Summerland home prices continue to climb. The average home sold in June was $846,431 compared to $717,456 overall this year-to-date, according to the SOREB statistics.

However, homes sit for sale a lot longer than in Penticton. On average, it took 106 days to sell a home last month in Summerland.

“We aren’t seeing the inventory we saw in South Okanagan like in 2015, but we are still seeing a lot of great options for buyers,” said Lionello.

BC Home Sales to Rise in 2020

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Multiple Listing Service (MLS®) residential sales in the province are forecast to fall 9 per cent to 71,400 units this year, after recording 78,346 residential sales in 2018. MLS® residential sales are forecast to increase 14 per cent to 81,700 units in 2020.

The 10-year average for MLS® residential sales in the province is 84,800 units. The shock to affordability from restrictive mortgage policies, especially the B20 stress test, will continue to limit housing demand in the province this year.

However, a relatively strong economy and favourable demographics are likely creating pent-up demand in the housing market. Despite the policy-led slowdown in housing demand, the BC economy continues to be highly supportive of housing demand. After treading water in 2018, BC employment growth is expected to double to 2.2 per cent this year. In addition, the unemployment rate is forecast to continue its downward trajectory, falling to just 4.3 per cent in 2020, its lowest level in over a decade.

Against this backdrop, population growth fueled by immigration, as well as the millenial generation entering their household-forming years, provides a solid underpinning to housing demand. The inventory of homes for sale has climbed out of a cyclical low, leading to balanced market conditions in many areas and buyer’s market conditions in some communities and across some product types.

This shift in market conditions has enabled many potential home buyers to be sole bidders of the properties of their choice. Current market conditions are expected to provide little upward pressure on home prices this year, with the average annual residential price forecast to remain essentially unchanged, albeit down 2 per cent to $697,000.

Modest improvement in consumer demand is expected to unfold through 2020, with unit sales climbing 15 per cent and the average residential price increasing 4 per cent to $726,000.