Skyrocketing mortgage interest rates, a severe lack of affordable housing and wildfires trounced Kelowna's housing market in 2023.
Just-released, year-end figures from the 2,600-member Association of Interior Realtors show that sales slid 17%, value of sales plummeted 22% and prices faltered 5% to 10%.
This, on top of 2022, which was also a tough year for real estate in the city.
"Overall, 2023 was a bit of a weak year for real estate sales with three rate hikes, devastating wildfires and a lack of affordable housing and other outside factors all likely contributing to a general slowdown in transactions," said association president Chelsea Mann.
To put this in numbers, 4,029 residential properties of all kinds (single-family, townhouse, condominium, duplex, triplex, fourplex, mobile home, timeshare) sold last year, a 17% drop from the 4,834 sales in 2022.
The value of all residential sales last year was $3.4 billion, a 22% dive from $4.3 billion in 2022.
In 2021, as the housing market boomed in a post-pandemic frenzy, there were a whopping 7,461 sales worth $5.8 billion.
At the end of 2023, the benchmark selling price of a typical single-family home in the Central Okanagan was $966,500, down from $1,002,400 at the end of 2022.
The benchmark peaked in April 2022 at $1,131,800, just before runaway inflation drove mortgage interest rates up resulting in sales and prices tanking.
Comparing 2023's year-end $966,500 to the record-high of $1,131,800 results in a difference of $165,300.
That kind of loss is distressing to homeowners who've seen equity in their property erode big-time.
On the other side of the coin, for potential homebuyers, prices are down and presumably more affordable.
Not really so,
Jacked-up mortgage interest rates have stymied people's borrowing and buying power, actually making home ownership more unattainable.
The benchmark selling price of a typical townhouse in Kelowna at the end of 2023 was $731,600, which is actually up a bit from 2022's year-end of $726,000, but it's still $97,400 off the record-high set in May 2022 of $829,000.
For a typical condo, the benchmark selling price at the end of 2023 was $480,800, down from $502,800 at the end of 2022 and a $76,900 slide from the record-high $557,700 in April 2022.
"Buyers and sellers who have been waiting on the sidelines for potential interest rate relief may likely still be optimistically holding off pursuing their real estate endeavours to see if the new year will finally provide more favourable mortgage rates," said Mann.
That mortgage interest rate relief likely won't be seen until at least the middle part of this year.
When Montreal-based Pierre Cleroux, the chief economist for the Business Development Bank of Canada, was in Kelowna a couple of months ago he predicted interest rates would start slowly coming down in mid-2024 as inflation is tamped down.
However, he forecasted economic growth to continue slow at 0.4% through the year before interest rates can go down further in 2025 as inflation shrinks to its target of 2% and the economy ticks up to 2.6% growth.
