The trend is continuing, more and more price drops, and the sales are falling off. That being said certain homes are selling quickly. This past week I came across one that was sold in 4 days with an unconditional offer.
An issue that has been top of mind for years but is even more evident right now, in Kelowna's real estate market, is affordability. Kelowna is not the most affordable place to live, however, like other markets it is dictated by supply and demand. People (myself included) enjoy living here and it isn't necessarily all about living the cheapest way possible, but enjoying the benefits the region has to offer whether its the weather, people, or natural surroundings. As we look at affordability, Kelowna has become exponentially less affordable in the past year. Below is a chart from Mortgage Sandbox , which highlights the correlation with income and affordability for families.
When we are selling a property and marketing it to potential buyers, we have to keep in mind the certain demographics that can afford the type of property we are selling and ensure we are targeting the right demographic. This is a simple chart I refer to help put some things in perspective. One item that has the biggest impact on affordability is the supply. The demand for properties this past year was extraordinary, but supply couldn't keep up. Looking at the chart below there has been relatively the same construction starts in the last couple years to date.
That being said, right now, everywhere you look there are supply chain constraints. In Kelowna it is finding workers and physical supply of products. For instance ordering a garage door right now can take up to a year from when you order it to get it installed. As you will see in the chart below, which looks at the starts under construction, despite having relatively the same starts year to date as 2020 and 2021, currently there are more properties under construction than any other period and the numbers are increasing. Despite having a similar starts and what appears to be a good number of properties under construction, the main issue is with the supply chain and moving the construction through to the completion stage.
The good news is year to date completions are in line with the last two years as we look at the next graph. That being said, based on under construction numbers the chart should be closer to 2019. The issue isn't necessarily in getting the new construction, instead it’s moving the new construction to completion before the effect of increase in supply has an impact on the market place.
Supply and demand is the main driver in any market, the risk in delayed supply is also a surplus of homes all completed close to one another. These are just a few factors to watch out for in the next year or so. If you have more specific questions, reach out and I am happy to chat with you about them. Have a great week and feel free to reach out with any questions! Mark
Personal Real Estate Corporation
Coldwell Banker Horizon Realty
2021 Top 3% Internationally Coldwell Banker
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