Kelowna home sales are booming in Kelowna. But there are so many up for grabs that bargaining abounds and the average selling price is on the decline.
It’s the brutal laws of supply and demand, said Royal LePage realtor Andrew Smith.
Sales activity is crazy busy, but there’s so much inventory that homes have to be priced right and there’s going to be negotiation down.
Smith points to the 1,741 singlefamily homes for sale in Kelowna.
It creates a market where buyers have an abundance of choice and can demand price reductions to get what they want.
If not, they move on to a similar home for sale in the ultracompetitive environment and get what they want for the price they want.
If a home is over-priced it will either get 10 showings in a week and no offers or no showings because potential buyers already know it’s too expensive, pointed out Smith.
For the most part, a home listed at $400,000 is probably going to sell for $388,000 after negotiation. And I’ve seen homes go from being listed at $400,000 to $388,000 and then to $375,000 because the market is telling them they aren’t going to sell otherwise.
Smith has a nice three-bedroom, three-bathroom home with a big living and family rooms listed for sale on Saddleridge Drive in West Kelowna for $394,900.
It’s worth every penny, but market it will likely sell for a little less after haggling.
The latest figures from the Okanagan Mainline Real Estate Board show that 363 homes of all kinds “ single family, townhouse and condominium “ sold in the Central Okanagan last month.
- Sales are good, but inventory is high, so the average selling price of a home in Kelowna remains soft, said Royal LePage realtor Andrew Smith.
That’s an astounding 49 per cent increase from the 243 sold in September 2012.
Yet, the just-released Royal LePage House Price Survey shows that year-over-year the average selling prices of a detached bungalow is down 1.4 per cent to $360,000 and a standard condo is off 2.6 per cent to $185,000.
This drop in prices is surprising as it is happening in an environment of healthy sales volumes, said Francis Braam, broker-owner at Royal LePage Kelowna.
Statistics from the Okanagan Mainline Real Estate Board are a little different because it breaks down home categories differently.
Detached single-family homes (which include two-storey houses as well as bungalows) currently have an average selling price of $466,000, a dip of 4.7 per cent from the $488,000 of September 2012.
Whatever figures you use, house prices are soft in Kelowna.
In fact, they are a still a long way off the average of $550,000 just before the recession hit in 2008.
There’s been much plunging and juttering since then, but generally the average price is recovering.
However, it’s still expected to take a few more years to catch up to the pre-recession price. That means it might be almost a decade before house prices recover to the pre-recession high in 2008.
There is a mentality out there that the Okanagan is on sale, so every property, no matter what it is priced at is subject to being negotiated down, said Smith.
As Canadians we also find it hard to sell our house for less than we paid for it and we don’t like to sell for less than our neighbor did.
Okanagan Mainline Real Estate Board president Karen Singbeil said we remain firmly in a buyer’s market.
Current conditions suggest stable to modest downward pressure on home prices, she said.
Successful home sellers typically have a sharp pencil when setting their asking price as a result of competition amongst sellers.
However, while mortgage interest rates are still low, they could be rising, which may spur some potential buyers on, eating up inventory and pushing selling prices a little higher.
Kelowna was one of only two cities in the Royal LePage survey to see a drop in the average selling price of bungalows.
The other was Saint John, New Brunswick, where the price is now $176,100, off five per cent from last year.
Most cities have seen slight gains.
For instance, in Edmonton the $337,800 is 0.7 per cent more and the $458,000 in Victoria is up 1.8 per cent.
by Steve MacNaull The Kelowna Courrier