A little motivation for this Wednesday- on my regular hikes behind my home I always come across these two trees (one as I am heading up the mountain and different one on my way back down). When I see these trees I use it as a reminder when plans aren't working out or maybe it was a tough day, to keep going. These trees didn't plan on being bent the way they are but they diverted changed course but never stopped growing.
Keep growing and keep going my friends no matter how tough it gets! Reach out if you ever need anything!
This week we are going to look at the Who, What, When, Where, Why and How right now of buyers for the 1st quarter of 2022, which I guess that makes it the 5 W's and 1 H. There are definitely pockets of the market that is hotter, than other areas. Right now seems to be a bit of a transition with the increase in interest rates, war in the Ukraine, Canada banning foreigners buying properties, and workplaces asking employees to come back to the office.
The purpose of effective marketing is knowing who the end buyer is and working the marketing backwards so you know who you are going to market too . Breaking down the Buyer survey for homes, for the Association of Interior Realtors first quarter in 2022. To get a sense who is buying homes, and what type of properties are currently selling.
Who
Looking at who is buying right now there is a pretty equal split across the board and in this situation I don't think that there should be any surprise with this breakdown. At 27% the top buyer type are couples with children, we don't know the situation of each of these buyers, however, with Covid and quarantining, we did see a shift to people and families looking for bigger homes and more space. Couples without children the next highest at 23% and empty nesters/retirees behind that at 20%. This all to me seems to make sense no matter the market but even more and more now, as having two sources of income is pretty much needed with the increase in home prices and mortgage rates, 50% of the buyers are presumed to have 2 sets of income coming in and of the 20% of the retirees and empty nesters, there is a higher chance based on being on fixed incomes that these purchases were downsizers or at least more of a lateral move which leads us into the what buyers are buying.
What
What are the origins of the buyer, is what I look at for this one. Looking at the trend 54% of the buyers are from within the association. This number is increasing slightly as during middle of the pandemic the number was hovering closer to 50%. This is maybe a sign that buying in the Central Okanagan might get a bit easier, with less competition from outside, but also affects the sale side of things to know who might be buying your home.
When
These are all the buyers from the first quarter of 2022. In another email I will go over how the segments have changed over the years which gives us a sense of trends and what direction the trends are going.
Where
This one is pretty self explanatory as well. With the purchase areas it gives you a sense of the sales throughout the Okanagan.
Why
Looking at the type of properties buyers are buying, gives us insight to what the purpose of the purchase was for, giving us more information. Looking at the type pf property types being purchased, the number one was for revenue investors at 20% of the buyers. This will be interesting to keep an eye on, with the interest rates increasing, to see if there is a dip. However, with such high rents right now in the Okanagan there is a good chance this number might stay steady. Right behind investors was buyers making a lateral move to similar properties, at 19%. This one surprised me a bit initially, as there has to move to something similar there has to be some sort of benefit, in my opinion, to go through the hassle of moving and lets be honest, moving is expensive. With the limited inventory on the market, the lateral moves makes it tougher to find that one thing better in a similar property type, however, with the rapid increase in home prices and rates starting to increase, maybe that was enough to get these buyers to take some equity out and make the move, or they are moving from a different location which we will get into later.
For the other segments of the property types, they seem to all make sense and pretty well evenly split. Prediction: With inflation the way it is right now, and wages/fixed incomes not being able to keep up, I would suggest that we may see the downsize trend to increase. Keep this in mind if you are thinking of downsizing as there is a chance you could continue to go up against more and more competition.
How
How people are buying the home based gives us a sense of maybe how sensitive the market will continue to be with mortgage rate increases. With 54% of the market with conventional mortgages, this likely will continue as CMHC does not insure properties that sell over $1M in the Okanagan. The increase in the home prices is making the need to have 20% down or more imperative, especially when talking about single family homes. High ratio mortgages are considered with less than 20% down and that would need to be insured by a mortgage insurance company which comes with additional charges.
With over a third (35%) of the market being all cash, this is a sign to me of strong buying power right now in the market, and gives a sense that potentially a third of the buyers buying, could potentially be subject free or not needing a financing subject condition.
There has been a lot of equity increased in the last year for peoples houses, part of this might be people downsizing or buying recreational properties. With inflation, people are looking to park some cash in investments that is not as susceptible to inflation and real estate is one of those investments over the long run.
Have a great week and feel free to reach out with any questions or if there is anything I can do for you!
Mark
Mark Coons
Personal Real Estate Corporation
Coldwell Banker Horizon Realty
2021 Top 3% Internationally Coldwell Banker
Mobile: 250-801-0361
Email: markcoonsrealty@gmail.com