November was a surprising month for real estate in Kelowna and the Central Okanagan with the market experiencing a flashback to the days of November 2016 and 2017. We came out of October with slowing sales and softening valuations only to experience the absolute strongest year-over-year gains of 2019 with residentials sales up 32.97%! With 371 sales reported for the Kelowna real estate market that far exceeded the 279 sales in November 2018 and is literally sitting very close to 2016 and 2017 which saw 378 and 395, respectively. This is also quite the change from the October-November trend; for the past 5 years November sales dropped on average by 94 sales from October. This year the transaction count is down just 11 sales from last month! In addition to strong sales numbers the average selling price for residential properties also took a sharp rebound from last month, sitting at $615,471, just shy of the all time high in July of 2018.
Diving deeper into the data. November was a strong month for single family detached homes. There were 167 homes sold, up a solid 21.9% from 137 sold in November 2018 and not far off the 189 sold in November 2017. The average selling price climbed to $752,004 marking the high point for 2019 and also the highest since July 2018. That month was a bit of an anomaly itself where we saw average selling price surge only to drop the following month. As I noted in last month’s issue, our market typically sees somewhat softening values coming into the winter. This may mean that November’s valuations are again an anomaly or it may be signs that we are going to see values start climbing again towards record levels.
Kelowna condo sales were up by massive 36.6% for November with 97 condos sold compared to 71 sold in November 2018. Last month we took a very close look at why condo values were so much lower for October only for that figure to rebound with the average condo in Kelowna selling for $402,589, the highest in the past 7 months. Townhouses in Kelowna have had a good year and with 58 sales in November, this month has been no different. That’s a huge jump of 38.09% from November 2018. November also saw record breaking valuations for Kelowna townhouses which hit an all-time record high average selling price of $534,407!
Central Okanagan Avg. Selling Price for Past 12 Months by Market Segment
When experiencing a sharp change in a trend it’s always a good idea to look for explaining factors. For anyone actively thinking about taking part in the market in the near future, either by way of a purchase or a sale, it’s also important to balance the likelihood that the change is an anomaly or an actual change in the trendline. We must also use caution in how we use this data to predict the future because by itself it is just a snapshot in time. With every core product type selling in good quantities (for the time of year with the 10-year average of 298 November sales) and sold at strong valuations, the question is what’s changed? I don’t have an answer. There is nothing jumping out from the data that suggests an explanation. That leaves us looking outside of the real estate data. The federal election has come and gone. I believe the perceived stability that comes with no looming election may very well have something to do with this uptick in activity and confidence? Another factor is likely the seriously low mortgage rates available after a year of lenders progressively discounting rates further and further. We are now even seeing several lenders offering Kelowna home buyers better rates on high-ratio loans than on conventional loans with a down payment of 20% or more! So what about the future? I suspect December will return at least somewhat to being on trend for the time of year and the current macroeconomic climate. Year-over-year sales have been up for the past 5 months though so I wouldn’t be surprised to see them up again; however, I wouldn’t bet on the kind of increase we experienced in November. I also suspect we will see valuations across all product types come down again as we move into the winter months.
Looking at some other key performance indicators we can see that even with such strong sales in November we’re not seeing a return to a seller’s market. For inventory we currently have 2016 active residential listings going into December which is only ever so slightly lower than it was at this time last year, down 6.66%. With sales very close to 2017 levels for the month, inventory is still up 30.32% from November 2017 so we’re not experiencing the tightened climate that comes with buyers feeling pressured and without options. Kelowna and the Central Okanagan are currently showing 5.43 months of inventory. The average number of days it takes for a home to sell is currently 75 which longest it’s taken since last January. Overall the market is still moving a lot slower than it has been for the past several years. For perspective, the average number of days on market for November in 2018 and 2017 were 64 and 55, respectively.
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.