After such an unprecedented and frenzied 2021 Okanagan summer real estate season which carried well into the new year of 2022, the whirlwind of competitions and equity gains in the Okanagan and Canadian housing market is seeing a path back to more balanced conditions with further market correction on the horizon.
Bank of Canada raised the overnight rate a full point last week, but more importantly, signaled further rate increases to come. Housing starts in the Vernon, Kelowna and Okanagan area were up 6.4K units meaning more home supply in the area, so more inventory for buyers to choose from, while bucking the Canadian trend of housing starts overall, which had fallen 3% in June comparing year over year. (obviously these are averages).
The Bank of Canada and US Fed Reserve blew it last spring/summer when they saw year over year and month over month, inflation and rising costs of living with prices increasing dramatically from rent (record highs) and shelter costs, to food, wages, and other cost of living items. Authorities, distracted by Covid, sat by as prices were particularly rising at advanced rates in the Real Estate Market across Canada and US. Governments were reluctant to act with dampening measures as they were racking in billions from sales of real estate building, materials and sales and covid matters kept “brilliant” minds focused elsewhere.
Vernon and North Okanagan Real Estate Sellers had won the Real Estate lottery with record high prices. While buyers were expected to get in a line and compete with 15+ other buyers on the same Okanagan home with many people priced right out of the area. There were winners and losers for sure but the polarization certainly could not be sustained and now with strong signals from the Bank of Canada these local bidding wars have quickly come to an end and sellers are not getting the record activity seen last year if pricing is not in line with the trends.
Today’s National Post headline “The froth is off: Canadian houses now selling at $200,000.00 discounts!" (Big cities)
With Okanagan home builds up and inventory rising, we are definitely moving to balance. The local and BC job market is still very strong. The Okanagan, like Vancouver Island, is still the number 1 or 2 spot in Canada for Canadians and Baby Boomers with lots of money to retire. Anyone still desiring employment is sure to find themselves opportunity. This isn’t going to change. We won’t be seeing a mass exodus from our desirable location. While we are seeing increasing numbers of young people return to Alberta after many years in BC and people returning to be with family outside of our area after covid lockdowns prevented much needed visits, there is still an influx to our beautiful prime location. Increase of over priced inventory as sellers attempt to capitalize on last year’s gains and interest rate announcements further trends toward stability.
Local buyers must balance another expected rate hike on Sept 7 against finding good value before the hike.
Sellers must dampen expectations of getting what their neighbour may have got for their home last summer against how serious they are about selling quickly in these months. Inventory increases, coupled with increased housing starts, and interest rate hikes leave little room for inflated prices.
Selling your North Okanagan home now is still very good while the fall market is likely to get tougher, so focus on what is best for you and your family now, whether you are an Okanagan home buyer or seller, and put last year's anomaly out of the equation and your mind. It was never expected to last! Fleeting, just like a summer romance!