When looking at the real estate market, hindsight is normally always 20/20 but when looking into the future and the predictions in the market it can be tough top predict. This week we are looking into BCREA’s forecast for the second quarter of 2023. If you want to se e the full forecast click here.
Kelowna, BC's real estate market has been in a low-activity equilibrium over the past year. However, after a year-long adjustment to prices, spurred by the sharp, rapid rise of interest rates, most markets are now seeing a return to rising home prices. While home sales remain close to 25% below normal, the inventory of homes for sale has not accumulated significantly as potential sellers have held off on listing their homes in a slow market. Nevertheless, the right homes are going fast, and pent-up demand is waiting to be unlocked. An uptick in home sales to start the spring, despite still high mortgage rates, indicates how much pent-up demand there is in the market. However, unlocking that demand will almost certainly require a more substantial decline in interest rates. With the Bank of Canada on hold and fixed mortgage rates still stubbornly high, home sales are unlikely to fully normalize this year.
According to experts, annual MLS® home sales will reach 75,530 units in BC and 8,000 units in the Okanagan this year before lower rates and strong population growth push sales to 90,100 units in BC and 9,500 units in the Okanagan next year. Looking beyond this year, the impact of record high immigration and a likely decline in interest rates will put further pressure on prices. However, experts are hopeful that an uptick in market activity will bring more listings to the market and that recently announced changes to provincial zoning will expand the housing stock, moderating future price growth.
Despite the current low-activity equilibrium, the market shows no signs of financial vulnerability or highly motivated sellers. As sales recover into an under-supplied market, prices will likely continue to rise month-over-month and finish the year higher than at the start. However, on an annual basis, average prices are still expected to be down about 6.1% from a record high in 2022. Kelowna, BC's real estate market may not be as robust as a couple of years ago, but there are still opportunities for savvy buyers and sellers. The city's natural beauty and booming economy make it an attractive destination for those seeking a comfortable lifestyle, and with the right strategy, both buyers and sellers can achieve their real estate goals. Time will tell with the forecast what eventually will come true or not. I hope everyone has a great week, and reach out if you have any questions. Mark and Maddie