Should a prudent, price conscious home buyer be looking at investing in Kelowna’s housing market these days or should he be sitting this one out and renting until things cool off and prices come back down to earth?
Is Kelowna In A Housing Bubble?
I don’t think there’s any argument that the housing market in Kelowna has been insane this year. Multiple offer stories don’t even warrant a real estate office lunch room conversation anymore and homes are sometimes sold before hitting MLS.
It’s really difficult to schedule a home inspection unless a lot of notice is given and real estate lawyers are busier than they’ve ever been. Sellers are tougher to negotiate with and aren’t moving much from their asking prices if they’re even moving at all. You get the picture. The numbers reflect this…
Average Housing Sale Price $616,000
There have been 1,910 residential sales so far this year at an average sale price of $616,000 compared to 1,500 sales year-to-date last year at an average sale price of $541,000. That’s a 27% increase in unit sales and a 13.8% increase in prices. Can this continue indefinitely? Is an average sale price over $600,000 the new normal? Will prices fall once this bubble we read about bursts? Can a community like ours with an average household income under $60,000 support even higher prices? I’ll submit that the answers are Yes, Yes, No, Yes.
Let’s take a look at the above questions in a historical sense. Not really historical in terms of when Orchard Park Mall was a farm but let’s look back to 1996 only because that’s when I moved here. The year ending in 1996 was kind of dismal and lackluster but so was 1995 so it wasn’t an anomaly. The average selling price was $176,000 and that could buy you a newer grade level entry home in North Glenmore or a 1970s era bi-level in the Mission.
Ten years later prices jumped to $419,000. That 1996-2006 period saw a jaw dropping price increase of 138% despite losing our biggest private employer and a forest fire that we still talk about. People from away discovered us and they haven’t stopped coming. Even with the numbers jumping into the stratosphere this year, the 2006-2016 period saw housing jump a conservative 47%. If anything there’s a strong argument that Kelowna might still be undervalued.
There’s no housing bubble. Full stop.
Most people don’t like buying in this market I get the skepticism from potential buyers when the see what little you can get for $400,000 but I can’t see things going back to the way they were, way way wayback in December of 2015. There are just too many people who live in other parts of the country who’ve wanted to live here for some time, and now seems to be the time. These people aren’t flinching at new homes in Winfield with asking prices in the $700s and they all have like-minded friends with the same dreams of living in a place like ours.
Thanks for reading. Please follow me on Twitter at @smithap01 or visit my website at www.okanaganbc.com