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Okanagan Residential Market Continues Move Towards Balanced Conditions

Wednesday, Aug 08, 2018

KELOWNA, B.C. – August 2nd, 2018. Residential sales across the region of Revelstoke to Peachland

moderated slightly in July, with 742 sales posted to the Multiple Listing Service (MSL®), down 7% from

June, yet 23% lower than this time last year reports the Okanagan Mainline Real Estate Board (OMREB).

“I think we can officially say that we are moving towards balanced market territory, although we are still

at a point where the market tends to favor sellers more than buyers, yet not as much as in previous

years,” comments OMREB President Marv Beer, noting five months of consistently lower sales volumes

than last year, coupled with more new listings contributing to a growing inventory of available homes

that is 26% higher than this time last year.

 

Despite indicators suggesting the region’s market is transitioning, July’s average price held at $559,235,

2% higher than June and 11% over this time last year. Days on market, an indicator of how long it takes

to sell a home, was consistent with this time last year, at 65 days versus 63.

 

“It takes time for those active in the market to respond to changing market conditions, so sales activity

tends to fall before prices adjust. Likewise, days on market is also a factor to watch, with longer days on

market associated with downward pressure on pricing,” says Beer.

 

While a pull back from the highs of the last few years is expected, current home buyer activity is also

being dampened by government intervention. The Bank of Canada raised its interest rate July 11th for

the second time this year and is expected to cautiously hike interest rates over time. More restrictive

mortgage requirements are also having an impact, as is the specter of a provincial so-called speculation

tax.

 

Turning to buyers of homes in the region, it’s worthwhile noting some commonly-held beliefs about who

is actually driving buyer activity. The assumption is that foreign buyers and those from other provinces

are significant, a misconception somewhat fostered by the provincial government’s ads about the

speculation tax. The reality is that for eight years running (the timeframe OMREB has been collecting

buyer data) foreign buyers comprise less than 3% of the buying group at any given time and those from

other provinces are less than 15%, of which Albertans are around 10%, depending on the year.

 

The largest buyer group, at consistently 50 – 60%, comprises folks who already live here, with those

from the lower Mainland/Vancouver Island comprising the second largest buyer group at about 20%.

“The make-up of buyers of homes in this region, softening market conditions and continued federal

government intervention all would suggest that further interference in the market via a speculation tax

that would impact long-term BC homeowners far more than speculators, out of province, or foreign

buyers is not needed and makes no sense whatsoever,” contends Beer, noting that two-thirds of the

homes targeted by the tax are, in fact, owned by BC residents.