Loss of out-of-town buyers bringing Kelowna house sales to near record lows
Sales of single-family houses in Kelowna in July were the third lowest they’ve been in 30 years.
Since 1991, there were only two months of July that had fewer sales than the 124 that sold last month. Those were 1994 when 121 sold and 2010 when 105 sold, according to data compiled by Colin Krieg of Krieg Family Re/Max Kelowna Real Estate.
Yet, despite the fact that the number of houses listed for sale is extremely low (1,100 versus 2,000 during the economic slowdown of 2008-10), only 11% of those on the market did sell in July.
“Inventory is limited because there was such a high demand since we had all these people moving here in the last two years and we had so many sales,” Kraig told iNFOnews.ca. “Forty to fifty per cent were to people coming from out of Kelowna. That’s serious. Now they can’t sell their house in Vancouver or Toronto for big money so they’re not coming here anymore so our sales numbers went down. But, people aren’t listing their houses because they’re all sold.”
While there are still buyers out there, even locals who want to move to their dream home are unable to because they can’t be sure they’ll be able to sell their current homes in time so they risk ending up being “homeless.”
“When it’s a hot market, it’s easy,” Krieg said. “You buy first and you turn around and you know your house is going to sell overnight. That’s not the case now.”
Part of the problem may be a pause because of the shock of the big interest rate hike in early July.
It is possible that this past month was a bit of an anomaly since there have already been 190 single-family home sales so far in August, which is usually a slower month than July.
“Kelowna is still a really desirable place to live,” Krieg said. “That’s why our vacancy rate for rentals is still so tight. That’s a really good leading indicator of where our market’s heading. If, all of a sudden, you have massive vacancy rates we know, okay, we have a problem.”
High end buyers have backed off. Taking expensive waterfront homes out of the picture, the average selling price for single-family homes was $1.1 million in July. But 85% sold for less than $1.5 million and only three sold for more than $2 million.
READ MORE: Single-family housing prices take hit in Okanagan, Kamloops
Single-family homes are the “leading indicator” in the real-estate market so a similar drop-off in sales for condos and townhomes would normally be expected to follow in a month or two.
That’s not yet the case as, in both those markets, 18% of homes listed in July did sell, meaning those housing categories are in a “balanced” market as compared to a “buyer’s” market for single-family homes.
Given the fact that housing prices are still higher than last year in all categories (although they have fallen from peaks earlier this year) and rising interest rates, the buying focus seems to have shifted more towards townhomes and condos.
“There’s a bit it of a trickle effect happening where, if you have $700,000 to spend, or $800,000 to spend, you say: ‘OK. I can buy a really nice townhouse or an old 1970s house.’ What do you pick?” Krieg said. “A lot of people, especially the younger generation, say: ‘I’d like to have the newer product please. And, I don’t have to cut the grass.’”
READ MORE: iN PHOTOS: Most expensive house ever sold in Okanagan up for sale again
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