It's the exact opposite of what was supposed to happen.
Generally, when interest rates are cut, the housing market perks up.
Yet, in August interest rates did slip, yet the Central Okanagan housing market did not react positively.
In fact, it faltered in counterintuitive defiance.
The bottom line is interest rates have not come down fast enough or far enough to combat the overarching unaffordability that's plaguing local housing.
Thus, potential homebuyers continue to sit on the fence, hoping for relief that never really comes.
.png)
"Demand doesn't seem to be translating into sales, despite recent interest rate cuts," said Kaytee Sharun, president of the 2,600-member Association of Interior Realtors.
"(It's an indication) that there could be various other factors impacting market activity or some sellers (and buyers) were merely holding out for the latest Bank of Canada rate cuts."
Home sales were trending upward at the end of July after a Bank of Canada interest rate reduction from 4.75% to 4.5%.
But, the momentum didn't continue into August.
In fact, sales of all types of homes slumped to 274 in August from 346 sales in July.
Benchmark selling prices also slid for a typical single-family home (from $1,025,200 in July to $1,018,100 in August) and for a typical townhouse (from $779,200 to $723,100).
The benchmark selling price for a typical condominium did manage to go up (to $505,500 in August from $493,800 in July) even though sales were fewer.
The current benchmarks are off the record-highs set in the spring of 2022 -- $1,131,800 for single-family, $829,000 for a townhouse and $557,700 for a condo.
The Bank of Canada did cut its rate Sept. 5 -- from 4.5% to 4.25% -- which was too late to impact August real estate sales in Kelowna.
But, it will be interesting to see if it affects September sales.
It was high inflation and high interest rates that cooled the housing market from late 2022 onward.
Inflation has come down and interest rates are coming down slowly, but not enough to spur the housing market.
That's because people got used to mortgage interest rates of almost nothing three years ago, so they balked at 5%.
Plus, housing in Kelowna remains unaffordable for many, especially potential first-time buyers who are not only faced with some of the heftiest prices in the country, but big down payment requirements and big monthly mortgage payments.
Thumbnail photo credits: Realtor.ca
