The Pulse: Kelowna Market Review August 2019


The Kelowna and Central Okanagan Valley continue to experience a strong real estate market. Whether this is due to reduce interest rates and the benchmark qualifying rate which has increased purchasing power or simply the fact that people want to buy in the Okanagan are anybody’s guess but the former surely have had their impact. Sales were up 7.92% over August 2018 with a total of 450 residential sales transactions.

But what may be even more telling is that sales are down just 17% from August 2017. While that may actually seem like a big drop when you see the big picture it’s rather optimistic. In March of this year, just 5 short months ago, sales were down nearly 40% from 2017. By May, this had dropped to being down by 30% and by July, Kelowna real estate transactions were down just 17% with this rate now continuing into August. Let me remind you: 2017 was a stellar year for real estate in Kelowna and surrounding area. Sales being down just 17% from what was a busy year are actually still very strong and even with what was definitely a slow start to the year, year-to-date sales are just narrowly below (-2.9%) the 10-year average.

Central Okanagan Avg. Selling Price for Past 12 Months by Market Segment

Average Price for Residential Properties is a performance indicator that speaks to purchaser confidence in the market. This figure is an average across all residential categories including: single detached homes, duplexes, condominiums, townhouses, and mobile homes.

How else has the market changed? While sales have been stronger than last year in recent months there are four other significant performance indicators that are quite a bit different from what the 2016-2018 market experienced.

Inventory - this is the number of active listings currently being advertised for sale. We’ve been experiencing an increase in inventory for quite some time and even with sales having picked up since the beginning of the year inventory continues to stay at a relatively high level. Inventory for the end of August 2017 is up down for the second month in a row but is still 5.9% higher than the end of August 2018. On the other side of that comparison, inventory is not as high as it was at the end of August in 2013 or 2014.

Months of Inventory - this is a supply ratio and represents the relationship between current sales demand and the level of inventory. In other words, how many months of sales the current inventory would sustain at the current rate of sales without adding new inventory. The Kelowna real estate market currently is sitting at 6.12 months of inventory. This is nearly unchanged since August 2018 but up quite a bit from the 3.61 months of inventory in August 2017. The current level months of inventory is however lower than August 2013 which was at 8.48 months of inventory.

Days on Market - this is the time it takes for a property to sell and tells a story about how home purchasers are behaving. Last month it took the average residential property 66 days to sell. This is also relatively unchanged since August 2018 but up quite a bit from the 47 in August 2017. On the other side of that comparison, residential property in Kelowna and the Central Okanagan are moving considerably quicker than they were in 2013 and 2014; selling in 32% and 24% less time, respectively.

Valuation - this is what properties are valued at based on the average selling price. Last month the average residential property sold for $571,300. This value is on par with August 2018 and is 8.67% higher than in August 2017. The average sale price of a Kelowna home remains just shy of the record high set in July of last year.

In summary, our market conditions are quite unique. We are seeing inventory levels somewhere in between 2013 and 2016 with months of inventory very similar to 2014 and 2015 - a good balanced market. Home purchasers are not panicking to make offers as soon as properties hit the market, therefore it is taking sellers significantly longer to sell their home than in 2016 and 2017 but sales are occurring significantly faster than the seven years previous (2009-2015). Finally, although the fiery hot market conditions are gone for now, values have experienced no significant drop and persist at more or less an all-time high. As we the autumn season nears I have a feeling we will continue to see a combination of typical seasonal trends blended with continued strength and optimism.

Nonetheless, it is a turbulent time. Global politics and economics are experiencing heightened instability with a US-China trade war, a no-deal Brexit, hyperinflation in Latin America, and tensions in the Persian Gulf. At home, we continue to be divided on how to manage our natural resources and have a federal election coming up in a matter of weeks. With so much noise surrounding dampening economic conditions around the world there is a very real possibility that our local real estate market will be affected and it makes for very difficult predictions of what’s to come.

All data is from OMREB/MLS® System. Interpretations of the data is done with the utmost care and attention, however, errors and omissions may apply. Selling and purchasing real estate comes with risk and should be discussed in depth with your real estate agent of choice.