The Kelowna real estate market (and Central Okanagan) experienced a typical October with slowing sales and softening valuations. Overall residential sales were in fact up by 1.59% year-over-year though which suggests that our market is relatively stable right now; not changing due to policy or economic factors but trending inline with the past 3-6 months and down slightly due to the time of the year. With that being said sales of single family homes dropped from the same time last year for the first time since June. There were 383 residential homes sold in October compared to 377 in October 2018. Of those sold this year, 165 transactions were single family homes which compared to the 173 sold in October 2018 represents a decrease in sales for the category of 4.62%. With sales numbers for condos and townhouses relatively flat compared to last year it was the sale of lots that kept the numbers up for the month. With 27 lots sold last month compared to just 4 in October 2018, that’s a 675% increase. Wow!
Last month I hypothesized that September’s slower condo sales could spur October condo sales as it had done in the two years previous and that proved to be the case. We saw 104 condo sales last month compared to the 88 sold in September of this year. This is a 18.2% jump month-to-month. As noted, last year saw a 17% jump from September to October. In sharp contrast, we saw just 53 sales of townhouses last month compared to the 68 sold in September of this year. That’s a 22% decline month-to-month. This is not entirely surprising as townhouse sales have been declining since May of this year; however, the number of transactions in any given month had been significantly higher than in the same month in 2018 until now. The townhouse category will be one to watch closely through the winter months.
Central Okanagan Avg. Selling Price for Past 12 Months by Market Segment
The slowing sales were accompanied by softening values with average sales prices dropping in all categories. Overall, residential properties sold for an average of $548,137 in October. This was a significant drop; down 9.5% from $605,651 last month. Last year valuations dropped as well from September to October but only by 6.9%. So what’s different this time around? The first element that stands out pertains to condos. Condos sales made up 27% of all home sales (not that far off a third of all sales). The average sale price for condos in October came in at just $318,115. That’s the lowest since last December and before that it hadn’t been that low since January 2017. Month-over-month, we experienced a 17.9% drop in average condo selling price and a 8.69% drop year-over-year. The question is how well does this number reflect actual valuation of condos and to know that we need to analyse the sales a little more.
Immediately we can see that the average living space of sold residences was lower in October than in September and when looking closer we can see a change in the product composition (the differentiating factors) that’s been selling. In September there were only 3 studio residences sold and 14 one-bedroom condos that sold (together making up just 15.45% of all condo sales for the month). In October there were 9 studios residences sold and 27 one-bedroom condos that (together making up 34.62% of all condo sales for the month. Anyone can see why this would have a significant impact as one-bedroom condos sell for less than two-bedroom condos. When we look more closely at the different product compositions individually we see the valuation drop closing. For two-bedroom condos, the number of transactions were flat with 59 sold last month compared to 58 sold in September. The average selling price last month was $336,996 compared to $379,486, for each month respectively. We’ve now gone from a 17.9% reduction to an 11.2% reduction in value which is quite a bit closer to the drop in value seen in other categories. Single family homes sold at an average price down 4.28% month-over-month and townhouses down 6.1% month-over-month. Taking a bit of a deeper dive we can also see a variance in selling price category. In September only 3 Kelowna condos sold for less than $250,000 compared to 10 in October. On the other end of the spectrum, September saw the sale of 6 condos more than $500,000 compared to only 1 in October. Removing these from the calculation and you get an average sale price of $356,426 in September and $356,662 in October. The only question remaining is did we see the number condos priced above $500,000 decrease and priced below $250,000 increase because of market conditions or because of the product being sold. After looking at the listings I’d say it was mostly the latter. In summary, condo values appear to have softened but not as much as the raw statistic makes it appear.
Leading the way for lot sales was the Lakestone community in Lake Country which saw the sale of 6 individual lots including a nearly 2 acre condo development site. An additional 4 lots were sold in West Kelowna’s Shannon Lake neighbourhood in the Tallus Ridge development. The remaining 17 lots sold were located throughout the region.
Also right on trend for the time of year is current inventory. October closed out the month with a total of 2,315 residential properties listed for sale. This is a 3.38% drop from October of 2018’s inventory count of 2396. With sales numbers and inventory relatively consistent with last year, so is the supply ratio. We are currently sitting at 6.04 months of inventory compared to 6.32 months of inventory seen at this time last year. Overall, we’re seeing a slight buyer’s market which is likely to last for the next few months but we have no reason not to be optimistic that we will re-enter a balanced market or possibly see a seller’s market in the Spring. The time it takes for homes to sell for October was an average of 76 days which is up from 61 days in October 2018 but was only a small increase from last month.
Seller’s Corner
Thinking about selling your home in Kelowna? This is what you need to know. The autumn and winter selling season is slower which means it can take longer to sell your home and homes do tend to sell for less money at this time of year but that doesn’t mean yours has to and you get the final say in whether you accept an offer or not. Listing your home for sale in Kelowna at this time of year does offer a few advantages:
Exposure - put yourself in a buyer’s shoes for a moment. At the end of July there were 2,845 homes advertised for sale in Kelowna, West Kelowna, Lake Country, and Peachland. That month there had been 923 new listings or 30 new residential listings every day! Today there are only 2,315 listings meaning nearly 20% less homes to look and the number of new homes listing for sale is down to about 22 every day. Buyers can therefore spend more time looking at each listing. So while there may be fewer families searching for a home there is less competition for their attention presenting a home seller with a unique opportunity. Furthermore, with the colder weather locally and even more so throughout the rest of the country, people will be spending more time inside and more time online - again increasing your chances of catching their attention.
Serious Buyers - the warm Spring and Summer Okanagan weather gets people out and about and this includes touring open houses and even booking showings with little intention (if any) at purchasing a home in the immediate future. This includes tourists that think, “Maybe we could live here? Let’s go look at some homes.” For you, the home seller, this means frequently preparing your home and the interruption of vacating your home for all those viewings even though many of them are just “kicking tires”. During the autumn and winter selling season we tend to see the quality of home buyers increase. People who are willing to dress up their kids in jackets and boots and spend an afternoon in the cold, driving around in the rain and snow, are generally more motivated buyers ready to make a purchase.
Local Market - not every neighbourhood or market segment behaves the same way at any given time of year. This one is not really an advantage but me highlighting the fact that the disadvantage that comes with slowing sales and softening values may not be impacting you as much as you think. For example, there are many investors look for homes that need to be updated so if you’ve got a home that sounds like this you could see a lot of interest while your neighbour’s home which has already been updated sits on the market for several months as they periodically reduce their asking price.
Buyer’s Corne
Ready to buy a home in Kelowna? This is what you need to know. The autumn and winter selling season is slower which means you can generally take more time to consider your options you also might be able to find the deal you’ve been looking for with homes typically selling for less money at this time of the year. There are two benefits to buying at this time of year that come to mind:
Seller Motivation - if the Seller’s Christmas lights are up on their home that’s been on the market since the Spring there is a good bet they are either entirely unreasonable in the price they want to sell for or they are eager and willing to get a deal done. But it’s not just those sellers. Just like buyers who are looking for a home at this of year tend to be more serious and ready to make a purchase, sellers who list between November and February also tend to be more serious, pricing appropropriate and motivated to get a deal done.
Buyer’s Market - the next few months will surely see both the number of listings and the number of sales drop; however, they tend to do this disproportionately at this time of year. This means that the listing to sale ratio will increase to a point where we have a slower, slight buyer’s market. This slower market means less competition for you (fewer people looking to purchase) so you can take a little more time to consider your options and view numerous homes for sale. Furthermore, don’t hold back on making on offer when you’ve found the right place. If a seller hasn’t had other offers or maybe hasn’t even had people come to look for a few weeks, they just might jump at your bite.
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.