The Kelowna real estate market started the second half of 2018 continuing this year’s pattern for lower sales and greater inventory compared to 2017. Once again, the word on the street is, it’s a balanced market. However, a change from the past few month’s consistency was seen in valuation and not in the direction many thought it would. Kelowna and the Central Okanagan saw record breaking valuations with the average overall residential sale price increasing by 6.1% and the average single family residential sale price increasing by 9%, which both represent the largest month-over-month valuation increases seen since March. Valuations have been relatively flat for the past few months and then suddenly skyrocketed. For this issue of The Pulse let’s take a more in-depth look at valuation.
One statistic of note that was pointed out by Jerry Redman, Managing Broker at RE/MAX Kelowna, is that July saw an increase of high-priced, luxury sales. To be more specific, in July sales above $1.5M made up 7.17% of all residential sales! This is up from just 2.54% in July of 2017. That’s a huge increase helping push the percentage of sales above $1.0M to nearly 20% (18.83% to be exact). For those that don’t like percentages: 1 out of 5 homes sold this past month sold for a million dollars or more.
Another statistic of note is that nearly a quarter (23.77%, up from 19.68% in July of 2017) of all sales occurred at a price between $600-700,000. This price range has the greatest percentage of sales followed by the next range of $700-800,000. When you look at July of 2017, the greatest percentage of sales were in the $500-600,000 price range, which also made up about a quarter (24.13%) followed by the next range of $600-700,000. This show us that while those $1.0M+ sales are pulling up the average, there are also other factors putting upwards pressure on valuation.
The graph to the right illustrates this valuation shift; the percentage of homes sold in almost every price range under $600,000 decreased and the percentage of homes sold in almost every price range over $700,000 increased, compared to last July.
In my opinion the takeaway here is that pricing could be volatile. Key market indicators are saying that pricing should be in the process of leveling off and possibly even decreasing, yet the month of July saw the opposite. It’s taking a few days longer to get that sold sign out on the lawn but for now sellers are still getting record setting prices for their Kelowna and Okanagan homes.