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3rd Quarterly Report

The Association of Interior Realtors just released the 3rd Quarter report on the Okanagan. This week email is going to look at this third quarter report so you have it right from the source. I have copied much of it below anything from the report has been bolded it for clarity reasons. If you do want to read the full report, click here. My biggest take away from the report is near the end regarding the mortgage payments and the consensus from Equifax reports that payments have been made on time, there could be a lag between the reports and what is being experienced on the front line, I had spoken to a lender yesterday and he was mentioning that they are seeing collections pick up drastically. Despite the positive news from the last reports there could be some issues on the horizon and more foreclosures coming. We are starting to see a few foreclosure listings come up but not enough to really notice a significant, let me know by clicking this link if you are interested in foreclosure properties and I can send you foreclosure listings directly as they come up.

“Sentiment regarding the Okanagan real estate market has recently soured as sales activity slowed down Earlier this year, sales were slightly below the 10 year average However, during the third quarter, the market experienced a notable plunge in activity, reaching a decade low for both August and September The market’s diminished performance was not solely a consequence of the summer’s forest fires elevated interest rates also played a substantial role in the overall decline in sales For Q 3 the Association of Interior REALTORS® recorded 2 068 residential transactions totaling 1 5 billion This represents a 1 0 drop in the number of sales and a 5 4 decrease in the dollar volume when compared to the same period in 2022 Caution among buyers has become the prevailing approach, with many choosing to wait on the sideline s until interest rates stabilize First time buyers and those with limited equity are nearly absent from the market, with activity predominantly fueled by buyers with existing equity

Despite the high interest rates affecting home prices, existing homeowners are benefitting from significant price appreciation over the past 5 years, helping mitigate the impact of interest rates when trading homes Between Q 3 2019 and Q 2 2023 the average value of new mortgage loans in the Central Okanagan increased by 70 654 to 399 930 In the same period, the average property price rose by over 210 000.

Notably, market dynamics have shifted over time Previously, sellers would often see clauses requiring the sale of their current home to be contingent on finding a new one, reflecting the area’s limited availability Today, the situation has reversed, with sellers looking to trade their current home for a new one and offers now contingent on the sale of their existing properties Inventories have returned to numbers last seen in 2015 with 5 005 residential listings as of September 2023 However, this inventory increase can be attributed to the deceleration in sales as the number of new listings remains somewhat consistent with historical averages for the region There were 4 715 new listings in Q 3 2023 a marginal 5 5 increase compared to the same period in 2022 Escalating interest rates have strained cash flow in many households According to the CMHC, the average monthly mortgage payment in the Central Okanagan surged by 30 from Q 2 2019 to Q 3 2023 Those most affected by the rising rates are homeowners who acquired properties at the market peak in 2022 with variable interest rates Yet, the market has not experienced increased foreclosures Equifax data indicated that Kelowna has a near record low mortgage delinquency rate British Columbia is considering new regulations to transform short term rentals into long term housing The move could increase the rental housing supply However, this could have an adverse impact on the Okanagan The region, known for its scenic beauty, has many secondary homes Many of these are not purchased as investment properties However, the additional short term rental income can be the deciding factor when buyers are on the fence about whether to make the purchase Many of the condominium projects currently under construction cater to this market Moreover, the proposed policy may disrupt the rental market, affecting students who benefit from lower rents as property owners can use the same properties for short term rentals during the off school season In September 2023 investors accounted for less than 7 6 of buyers, as per the latest buyers' survey from the Association of Interior REALTORS® The potential consequences of this government policy on the Okanagan housing market underscore the complexity of balancing housing supply and the local economy In September 2023 Canada's inflation dropped to 3 8 from August’s 4 0 Indicators suggest the August uptick was likely temporary Major financial institutions are predicting that the Central Bank will maintain its 5 policy rates due to recent inflation easing However, with inflation still above the 3 target range, a rate reduction seems improbable, indicating elevated mortgage rates for the foreseeable future. Going into the winter months, a sense of caution prevails in the Okanagan real estate market While there might be a temporary increase in sales in October from deals negotiated in September, the overall sales pace is expected to slow Moreover, the impact of the short term rental policy remains uncertain but will likely affect transactions Still, the surplus in supply is a win for buyers, providing more options Significant price corrections are unlikely, but the market has seen properties available now that would not be in different market conditions Additionally, sellers listing their homes during the winter months are generally keen to transact”

Things are always changing and we don’t know what the future has in store, at the end of the day regardless of the market, people still need a home to live and homes will continue to sell the prices and quantity of the sales just change. Reach out to get a home equity report done on your property. What in the world can we do for you? Let us know. Mark and Maddie


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