Buyers finding opportunities in Okanagan housing market
There are a lot of gloomy real estate stories around these days about high interest rates, high inflation and low sales driven by buyers unsure of what’s coming next.
Statistics on February housing sales in Kamloops and the Okanagan will be released later this week and the Bank of Canada is scheduled to make its next interest rate statement on Wednesday.
Despite that, the local real estate market is gearing up for its typical March blossom after a very quiet winter.
“More people than ever decided to hit the pause button (this winter),” Taylor McFadyen, a realtor with Faith Wilson - Christie’s International Real Estate, told iNFOnews.ca. “They took some vacation that was much needed for the first time in a couple of years so they were away and traveling and not necessarily thinking about purchasing or selling at that time.
“I’ve noticed, in the first week of March, it’s started to pick up again. I think we’re going to see a lot of activity in the spring and summer.”
The Central Okanagan was the fastest growing major metropolitan area in Canada during the last census period and that’s not slowing down, which means an ever increasing need for housing.
Coming out of COVID, there was a huge demand for housing coupled with a shortage of people selling, often out of fear they would not be able to find another place to buy in their price range given the panic buying of a year ago.
The Bank of Canada started hiking interest rates throughout 2022, going from 0.25% in January 2022 to 4.5% this January.
This week’s announcement is expected to keep the rate at 4.5%.
READ MORE: BoC expected to hold interest rate next week, one year after aggressive cycle began
That has changed real estate from a sellers’ market where multiple offers often led to properties selling for more than their asking price to a buyers’ market today, for those who can make the move.
“Buyers that are looking, the ones that really need to purchase, know they’ve got options,” McFadyen said. “They can go look at five, six, ten houses as opposed to just looking at one and having to throw an offer in that day. They can look at multiple properties, really decide OK, this is the one I would like to purchase, and then go down the due diligence road of conducting home inspections, looking at the details for the home, getting the time to sign off on their financing without being pressured to put an offer in quickly.”
The skyrocketing prices also peaked last year, reaching $1,129,000 for a typical single-family house in the Central Okanagan in March 2022. That dropped by about $150,000 by January of this year.
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That’s a good thing for buyers, in part because the lower prices may offset the higher mortgage rates people now have to pay.
“Don’t wait until market conditions change,” McFadyen advises potential buyers. “You can’t keep waiting a year or two years. Do something. Even if it ties the property up right now, you can get a short term mortgage for a year or two years. You can refinance it in a couple of years' time, hopefully when things have shifted back again. You’re going to get a pretty good price on your house you wouldn’t otherwise have.”
Of course, this is not such good news for sellers.
Still, if they adjust their asking price to something that is realistic in today’s market, they can still come out ahead.
“That was the challenge of the first six months with the increased interest rates,” McFadyen said. “A lot of the sellers were still thinking it was top of the market: ‘My neighbour’s home sold for $2 million so mine is worth $2 million.’ It’s a psychological thing. Some people who purchased a property for $300,000 20 years ago are looking to sell for $1.8 million while the market value might be $1.6 million. They’re still doing pretty good.”
But, there’s more to successful selling in this market that just the price.
“It’s important, more than ever, to price accordingly and make sure it’s marketed effectively,” McFadyen said. “I still see listings come up and somebody’s taken a few pictures on an iPhone and there’s no description of the property or any of the details that surround the property. Those are going to be a lot harder to sell right now than something that’s marketed appropriately with proper detail and proper photos.”
There is still interest in the Okanagan market from other B.C. locations, especially the Lower Mainland and Vancouver Island, he said.
Interest from Alberta has dropped off but there are still some buyers looking at this region. Ontario buyers are mostly gone but that’s not unusual for this time of year since they’re more likely to buy in the summer months, he said.
What has disappeared are the foreign buyers now that the federal government has put a two-year ban on them.
“People right now are cautiously optimistic,” McFadyen said. “There are a lot of people out driving around looking for properties right now. That wasn’t happening in January and February.”
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