Kelowna housing market is NOT crashing

The latest Royal LePage National House Price Survey & Forecast doesn't quite tell the whole story.

The report put the median selling price of a single-family home in Kelowna at $1,163,700 in the second quarter of this year, a 15.2% bump from the same time last year.

15% is substantial and points toward a healthy and growing real estate market.

But what the survey doesn't take into account is what's happening right now in Kelowna.

Skyrocketing inflation and higher mortgage interest rates have spooked potential home buyers.

That means way fewer sales -- 32% less in June, compared to May -- and selling prices are starting to slip.

"Call it a correction or an adjustment," said Francis Braam, the owner and broker of Royal LePage Kelowna.

"Over the last 90 days the average selling prices of a townhouse has come down around 8%, single-family homes down about 6% and condos have remained flat."

In the grand scheme of things, that is not catastrophic, considering that home prices across the board soared more than 30% to record highs during the pandemic.

In fact, even with the most recent dips, Kelowna prices are still historically high and largely unaffordable.

The benchmark selling price of a townhouse in June in Kelowna was $763,800, a condo $537,200.

"It's hard to predict," said Braam.

"But I don't think we're going to have a crash. To have a crash you have to have lots of people out of work and not able to pay their mortgage or rent. We don't have that. People are working and the unemployment rate is really low at 4%. So, what I think will happen is we'll continue to adjust with fewer sales and prices maybe going down a bit more. But really, prices could just hold flat for the second half of the year. We won't see dramatic price drops."

Braam refers to it as a "soft landing."

There's two sides to every story.

In this case, record-high prices were welcomed by people selling their homes because they could realize a cash windfall like never before.

The same record-high prices stressed and stretched potential home buyers and put Kelowna firmly into the realm of unaffordability.

But all is relative.

If a homeowner sells in Kelowna for big bucks and wants to stay in Kelowna, then they'll simply have to turn around and buy something else expensive to live in.

But realizing such home equity does make it possible to move up to a better and better place or downsize and pocket the extra cash.

Braam said it's a good time to make a move in Kelowna.

"There will always be transactions," he said.

"Any purchase is certainly going to be less stressful than it was six months ago. The panic buying, multiple offers with no conditions and homes going for well above list is over. Today's buyer can take their time and negotiate."

Home selling and buying will continue and prices won't take deep drops because fundamentally Canada doesn't have enough homes to keep up with population growth and immigration, according to Braam.