The Association of Interior Realtors provided their Quarter 2 report on the Okanagan real estate market. Overall as we follow the real estate market every week as part of the weekly email we are noticing the trends in real time. Taking a step back to looking a the current landscape the Association reports a feeling
It appears the overarching theme in 2024 so far is “People are hesitant to make decisions, and uncertainty has caused many to take pause. With no sense of urgency, buyers are waiting to see how the economy and interest rates evolve over the next few months.“
With the Provincial and Federal governments leaving their finger print on the housing industry a lot of the secondary home market taken out due to the short term rental restrictions and higher interest rates we have seen activity of buyers from outside the Okanagan decrease by 16% the first 2 quarters of 2024 which puts more emphasis on the following statement when it comes to the reality of affordability.
“The most recent data from Statistics Canada shows the median household income for a family in Kelowna was $111,020 in 2022. With a10% down payment and no other expenses, the maximum affordable mortgage for families is $742,179, highlighting the significant challenges of housing affordability in the area.”
That being said there is housing equity in the market place with 40% of homes in Kelowna reportedly being mortgage free and those that bought prior to 2020 even with a mortgage there is equity to be had.
The report goes on to say. “Despite the slowdown, the market is in a much better position than in late 2023. Buyers now have more options, greater negotiating power, and potentially lower prices, marking a significant shift in the real estate landscape that will stimulate medium and long-term activity. Buyer confidence is crucial for market activity. Major Canadian banks project a policy interest rate of 3.00% by the end of 2025. Economic growth is expected to rebound into 2025 and 2026 from the near-zero GDP growth seen through the second half of 2023. This stronger outlook will create a foundation for more favourable property market fundamentals and increased real estate activity next year.”
Time will tell how the market responds, with the rate drops it normally will take some time for it to filter through the economy.
All I know for home buyers during the rush between 2020-2022 I would assume would take a 4.6% interest rate just to have an opportunity to have more supply options and time to do proper due diligence.
We have more supply and lots of time for due diligence but buyers are still hesitant.
Have a great week!
