There has been a lot that has happened this year which has all been out of the unpredictable. No economist really has an idea what to predict for the future and there are always two sides to the coin. If you are conservative or concerned with your home's property values, here is are the top three things to watch out for in 2021!
1. Foreclosures
Expect foreclosures to increase with the government allowing payment deferrals of Mortgages for up to 6-months that was introduced in April have now come to an end in October. According to CMHC 12% of Kelowna's loans were deferred in August. What to keep an eye on here is the increase in foreclosure properties. When the pandemic started and unemployment jumped, without government intervention everyone anticipated for foreclosures to climb. Up to this point, foreclosures there are 12 active foreclosures and 23 foreclosure sales in the last 6 months compared to 20 foreclosure sales for all of 2019. It remains to be unseen if banks will be more willing to work with people unable to pay their mortgage and delay foreclosing or as they determine if refinancing might be an option, however, expect for foreclosures to increase in the new year as mortgage deferrals are coming to an end. The good news if foreclosures do jump, there are a lot of investors waiting on the sidelines to deploy their cash which should eat up some of the supply. If you have been looking for foreclosure properties, be a bit more patient. The good news is Kelowna is seeing 40% of buyers coming from outside the Okanagan, which may continue to eat up the supply and keep prices stable.
2. Condo Supply
In 2017, 125, 857 guests stayed at Airbnbs in the Okanagan Valley. In Kelowna, it is estimated that 4,900 units are used for short-term rentals. Condo months of inventory are at a low much as the rest of the real estate market currently, indicating a seller's market. However, looking further into the condo supply which will affect the overall pricing, the expectation is for the supply to increase which will bring downward pressure on condo prices. The reason for the increase in supply is the condo completions that are happening in downtown Kelowna which was set to increase condo supply by around 4,000 units over the next five years. As well as short-term rentals which make a good portion of the condo's downtown might be hit if travel especially international travel is down. There is also a reduction of demand for condo's as people are choosing homes, less dense areas as a way of mitigating health risks of being in highly populated areas or requiring that 3rd or 4th room to be able to work from home that condo's don't always offer. With Canada announcing this morning approval of a vaccine, it could increase international/domestic travel come the new year in which regardless if people get the vaccine or not will increase optimism throughout the tourism industry and people staying and buying the rentals. 3.Rented Properties
If you are buying a rental property and taking over the tenant, be sure to do your research on the tenant as good tenants may be tougher to find. During the wave 1 lockdown, the suspended evictions for tenants. Beginning September 1st, renters were then required to pay their monthly rent in full and pay any rent arrears accrued until the end of August.
For example, a tenant who typically paid $2,000 per month and couldn’t make their April, May, June rent payments would need to pay $2,800 per month for the 10 months beginning October 1st to pay back their arrears. Experts are expecting rent prices are expected to decrease as more tenants are unable to pay the rent. Some advocates are expecting mass evictions which will also lead to increased homelessness. If this does end up to happen it remains to be seen if more Government policy will be put in place to help alleviate homelessness. You will also want to make sure you are diligent in screening your new tenants if you do have a turnover or purchasing a tenanted property. The good news,
-Mark