- Kelowna Votes
The worst of the price slashing is likely over in Kelowna's confusing and rapidly changing housing market.
The ReMax Fall Canadian Housing Market Outlook pegs the average residential sale price in Kelowna as of Aug. 31 at $933,112, an 11% tumble from its peak of $1,050,000 in February.
11% represents a significant $116,888 price drop.
And it's probably not finished falling, according to Kelowna-based ReMax Canada executive vice-president Elton Ash.
"I imagine the total price drop will end up to be around 15%," said Ash.
"So, that means the average residential sale price bottoming out in the high $800,000s."
We did the math and a 15% plunge from the pinnacle of $1,050,000 is $892,500.
"The market is definitely adjusting and changing. Confusing is the best way to put it," said Ash.
"But we also have to remember that home prices escalated rapidly through 2021 into early 2022. So, a bottom of $890,000 is still more than the average residential sale price of $785,472 on Aug. 31, 2021."
That's true, but it still doesn't negate the fact that most homeowners will see $157,500 in value (the 15% difference from $1,050,000 to $892,500) in their home simply disappear.
Ash said there's still a shortage of housing in Kelowna and Canada and demand will come back shortly, so while home prices are adjusting and rebalancing, they will certainly not collapse.
If you bought at the peak, you're probably kicking yourself right now.
If you're trying to sell your home, you're likely having to reduce the price repeatedly.
And if you're looking to buy a home, you're probably holding off to see how low prices can go.
Potential buyers willing to pull the trigger can likely negotiate a good deal.
However, it's all relative.
The potential buyer on the precipice of a bargain likely just had to sell their previous home for a steal.
For its outlook, ReMax compiles the average residential sale price by lumping in all sales of single-family homes, townhouses and condominiums.
The Association of Interior realtors breaks out benchmark selling prices of the three categories of housing.
The association's benchmark in August for a typical single-family home was $1,018,000 down from the record of $1,132,000 in April, a townhouse $772,7000 from $829,000 and a condo $526,700 from $557,700.
The mortgage interest rate hikes and runaway inflation that set off price drops, also prompted a substantial slowdown in sales.
The outlook shows there were 3,568 home sales in Kelowna Jan. 1 to Aug. 31 this year, a 32% dive from the 5,227 sales over the same period last year.
"The market will pick up again, likely in mid-2023," said Ash.
"But in the meantime, there will be a flattening out through the fall and the winter."
Current mortgage interest rates at 5% for a five-year, fixed term are scary considering they were as low as 1.9%.
However, that's also relative.
A 5% rate would have made people ecstatic in the 1980s when mortgage interest rates climbed as high as 20% amid a fierce recession.
"We don't have a recession now. What we have is unusual times where the Bank of Canada is making oversized increases that scare people in an effort to curb inflation," said Ash.
"But interest rates are still historically lower. And Kelowna's housing market is still historically good."
Kelowna's economy is still strong, employment is high and people are moving to the city from elsewhere in the province, country and world.
"That all means there will be demand for housing and we don't have a lot of supply, so sales and prices will begin to go up eventually," summed up Ash.
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